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GSK revenues hit by Eurozone price cuts

UK pharma firm no longer expects sales growth in 2012

GlaxoSmithKline (GSK) has said it no longer expects to return to sales growth in 2012 in the face of price cuts and austerity measures introduced in many European countries.

Overall, GSK took a 7 per cent price hit during the second quarter, while the overall European pharma market is also flat or possibly even declining in terms of sales volumes, said the firm's chief executive Andrew Witty on the results' conference call.

Revenues fell 2 per cent to £6.46bn ($10bn) - with pharma sales down by 3 per cent to £4.44bn - while operating profits slid 7 per cent to a little over £2bn. Meanwhile, the vaccines business was flat at £763m and consumer healthcare dipped 2 per cent to £1.28bn, held back by supply constraints.

"The reality is the pressures on pricing have knocked off the small amount of growth which we had originally hoped to deliver [in 2012]," said Witty, noting that greater levels of parallel trade also had an impact.

Among GSK's leading products, asthma and chronic obstructive pulmonary disease (COPD) drug Seretide/ Advair (salmeterol/fluticasone) brought in £1.27bn - almost unchanged from the same period of 2011 - while benign prostatic hyperplasia treatment Avodart (dutasteride) added 6 per cent to reach £197m.

There were also gains for anticonvulsant Lamictal (lamotrigine), up 14 per cent to £147m, and cardiovascular therapy Lovaza which gained 4 per cent to £157m.

GSK's oncology and cancer support portfolio was another bright spot. Tykerb/Tyverb (lapatinib) for breast cancer rose 5 per cent to £60m, sarcoma therapy Votrient (pazopanib) gained 77 per cent to reach £39m, and Promacta/Revolade (eltrombopag) for low platelets counts advanced 76 per cent to £30m.

Big decliners included anticoagulant Arixtra (fondaparinux sodium), sliding 36 per cent to £47m on generic competition, as well as antiviral drug Vatrex (valaciclovir) which fell by 24 per cent to £66m.

Lupus drug Benlysta (belimumab) - one of the assets included in the £3bn purchase by GSK of Human Genome Sciences - continued its slow start since being launched in 2011 with sales of £12m in the quarter.

GSK will respond to the sales pressure by looking at ways to take costs out of the business in areas such as administration and sales/advertising operations, said Witty.

The company is still hopeful of a return to growth next year as it emerges from the other side of a major crop of patent expiries and the massive $3bn fine related to illegal promotion of drugs in the US.

It is also banking on some bright prospects in its late-stage pipeline, including new once-daily asthma and COPD drug Relvar/Breo which is designed to replace twice-daily Seretide, and seven other projects which could reach the market in the next two years.

Witty confirmed on the conference call that BRAF inhibitor dabrafenib has just been filed for approval in melanoma in Europe, with a US filing following in the coming weeks, while MEK inhibitor trametanib will also be filed in the same indication in both the US and Europe shortly.

26th July 2012

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