Pressure on sales in the US and China caused a 13 per cent decline in revenues at GlaxoSmithKline (GSK) in the first quarter, compounded a slow take-up for new respiratory drug Breo.
Competition for GSK’s biggest-selling drug Advair (salmeterol and fluticasone) for asthma and chronic obstructive pulmonary disease (COPD) was a key factor in the decline, with downwards pricing pressure and delisting from the formularies of some pharmacy benefits managers in the US.
Breo (vilanterol and fluticasone) is a direct successor to Advair and was approved in the US last year, but GSK chief executive Sir Andrew Witty told investors yesterday that the new drug had “started a bit slower than we would have liked.”
First-quarter turnover came in at £5.6bn ($9.5bn), with Advair sliding 15 per cent to £1.04bn – dragging down US sales by 10 per cent – while Breo (known as Relvar in some markets) added just £3m to the pot since its launch in the US in the fourth quarter. Profits at GSK also went on the slide, coming in at £668m compared to £961m a year earlier.
Witty put the lacklustre performance of Breo down to slow introduction of reimbursement coverage in the US, although he noted that Medicare Part D coverage for the new product was now running at 70 per cent, up from 3 per cent on January 1.
GSK’s respiratory franchise will also get a boost from the launch of combination COPD therapy Anoro (umeclidinium and vilanterol) and also monotherapy Incruse (umeclidinium), which has just been approved in the US and Europe.
“For many people in the outside of the company, there is great focus on the apparent reliance of GSK on Advair,” commented Witty. “Clearly Advair had a difficult quarter… yet the group delivered 2 per cent earnings per share growth,” he added.
Quarterly turnover in China was also down 20 per cent to £137m on the back of the ongoing corruption investigation, although GSK did manage a 2 per cent rise in emerging markets turnover overall.
Not interested in AZ offer
Witty also downplayed any suggestion that GSK might be interested in a counter-offer for AstraZeneca – currently facing an unsolicited £60bn takeover offer from Pfizer – telling investors he was unconvinced by the merits of megamergers in the pharma sector and did not want GSK to be diverted from its “core R&D business”.
He also pointed out that an offer would be disruptive as GSK has just announced a major asset swap deal with Novartis that Witty said would “surgically enhance” its vaccines and the consumer health businesses.