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GSK chief positive about future

GSK's second quarter results have improved on the first quarter, a trend which CEO, Andrew Witty, believes will continue

GlaxoSmithKline(GSK)'s second quarter results have improved on the first quarter, a trend which CEO, Andrew Witty, believes will continue in the second half of the year. He is also pleased with the strategic progress made since the company's new priorities were laid out in 2008, and cites good growth in the consumer, vaccine, European and emerging markets businesses.

In a statement released on July 22, he said: "In the second quarter, Group turnover was down 2 per cent, impacted by the performance of our US pharmaceuticals business, where sales declined 15 per cent to £2.3bn."

"In contrast, revenues across all other areas of GSK's business grew. We saw particularly strong performances in key investment areas such as emerging markets, up 14 per cent to £0.7bn and consumer healthcare with sales up 9 per cent to £1.2bn." 

New product sales achieved £377m in the second quarter, compared to £265m in the first quarter of 2009, with the vaccines, Rotarix and Cervarix, significant contributors.

Witty was keen to point out that GSK had strategies in place to combat strong generic competition in the US and gain long-term future growth. GSK currently has six products filed with the Food and Drug Administration. 

"Increasing diversification of GSK's business is core to our strategy and I am pleased to see evidence of our move towards a more balanced business," he continued, adding that "31 per cent of sales generated in the second quarter could be categorised as 'white pill/western market'. This compares to 38 per cent in the second quarter of last year. This quarter also saw 17 products generate sales of more than £100m, compared to 14 this time last year."

GSK has invested more than $2bn to develop and manufacture vaccines and treatments for influenza. Since the outbreak of the H1N1 virus, it has increased production of Relenza and developed an H1N1 adjuvanted vaccine. Witty stated that the company has contracts in place to supply 195 million doses of the vaccine by the end of 2009, and anticipates further significant orders.

He highlighted two key developments in the late-stage pipeline. GSK plans to file Menhibrix for meningitis in infants aged two months and over in the US later in 2009. Further, phase III trials of the Horizon respiratory development programme will start in COPD in October. 

Phase III results were announced earlier this week for Benlysta, which could become the first new treatment for systemic lupus in more than 50 years. In addition, phase III trials started this quarter for Mosquirix, GSK's malaria vaccine.  

Witty stressed that GSK would continue to simplify its operating model and reduce costs, saying: "we are very much on track to deliver our target of £1.7bn annual pre-tax cost savings by 2011." 

22nd July 2009

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