New drugs breathe life into GSK's respiratory business

New drugs for asthma and chronic obstructive pulmonary disease (COPD) grew GlaxoSmithKline's respiratory sales in the second-quarter - for the first time since it lost patent protection for blockbuster Seretide/Advair.

The turnaround in the unit was a key factor in a return to form for GSK, with a second consecutive quarter of growth after a tricky couple of years which has seen generic competition erode around £2bn-worth of Seretide (salmeterol and fluticasone propionate) sales.

New asthma and COPD drugs such as Relvar/Breo (vilanterol/fluticasone furoate) and Anoro (vilanterol/umeclidinium bromide) added £243m ($319m) in the quarter, more than offsetting a 13% decline in Seretide sales to £900m although the respiratory unit as a whole had flat growth.

While US patent protection remains in place - likely until 2017 - there is still a sizeable drop in store for the Seretide/Advair franchise. GSK is hoping that approval of a new triple therapy - currently in late-stage trials - will help it cope with that eventuality.

Outgoing chief executive Sir Andrew Witty said the product's relative importance to the group is “dropping quickly" and - even if there is a big fall-off in the US - "it would hurt in the year [but is] no longer strategic in the sense that it once was".

A firmer respiratory business - coupled with strong growth for HIV drugs through the ViiV Healthcare joint venture which grew 44% to £865m - helped group sales rise 4% to £6.5bn overall. The weak pound - which has plummeted in the wake of the Brexit vote last month - also had a role to play.

GSK's vaccines unit added £960m in the second quarter - up 11% - with the rise driven largely by meningitis vaccine Bexsero, which saw sales more than double to £97m. Consumer health grew 7% to £1.69bn.

Growth was driven by all three divisions - pharmaceuticals, vaccines and consumer health - and put the company on course for earnings growth at the top end of expectations (up 11%-12%).

The results are a boost for Sir Andrew, who had promised a return to earnings growth in 2016 and told investors yesterday that the turnaround was a result of "growth in new product sales, continued cost control and delivery of restructuring and transaction benefits".

He also pointed to the strength of GSK's R&D pipeline, highlighting the new triple therapy for asthma, the recent EU approval for gene therapy Strimvelis, progress with its T-cell therapy for soft tissue sarcoma and first-in-class ICOS agonist 3359609, amongst others.