GlaxoSmithKline (GSK) lost almost two thirds of its sales in China in the third quarter of 2013 as a result of the ongoing bribery scandal, which pegged overall group sales back to a 1 per cent rise.
Chief executive Andrew Witty said it was hard to gauge how long the investigation into the affair will last and its long-term impact on the company, and conceded that GSK has “a profound need to earn the trust of the Chinese people again.”
The 61 per cent drop in Chinese sales meant that overall pharmaceutical and vaccines sales were flat at £4.21bn ($6.82bn), with gains in the US, Europe and Japan offset by a 9 per cent fall in emerging markets. Consumer healthcare was a bright spot for the company with a 4 per cent increase in sales to £1.3bn.
This time last year, China sales were growing at a 15 per cent lick for GSK and added £209m to the company’s top line, a little over 17 per cent of the company’s emerging market sales. This quarter, however, the proportion is under 8 per cent.
GSK’s chief financial officer Simon Dingemans told investors yesterday that the “drag” of China is masking momentum elsewhere in the business. There was solid sales performance elsewhere in the world – particularly a 5 per cent gain for Europe – as well as increases in operating margin and core earnings per share, the latter up 16 per cent to 28.9 pence for the quarter.
“We continue to expect to deliver for the full year 3 to 4 per cent earnings growth in constant currency terms on turnover growth of 1 per cent,” he noted.
Looking at GSK’s top pharma products, Advair/Seretide (fluticasone propionate and salmeterol) for chronic obstructive pulmonary disorder (COPD) sales fell 1 per cent to £1.21bn, with price increases failing to completely offset volume declines, and overall the respiratory portfolio was under pressure with sales down 2 per cent to £1.69bn.
On the plus side there were strong gains for lupus treatment Benlysta (belimumab) – which brought in £42m in the quarter – kidney cancer therapy Votrient (pazopanib) which climbed more than 80 per cent to £91m and Amgen-partnered Prolia (denosumab) for osteoporosis, which added £13m.
Witty emphasised that GSK is entering a new product launch phase with four approvals since the start of the year – including quadrivalent flu vaccine FluLaval and Tyverb (lapatinib) for use alongside Roche’s Herceptin (trastuzumab) for metastatic breast cancer.
There were also launches for melanoma drugs Tafinlar (dabrafenib) and Mekinist (trametinib), Tivicay (dolutegravir) for HIV via GSK’s ViiV joint venture with Pfizer and Shionogi, and new COPD therapy Breo Ellipta (fluticasone furoate and vilanterol).