After a shaky 2015, GlaxoSmithKline (GSK) returned to form in the first quarter of the year with strong growth reported for all three of its businesses.
Group sales were up 11% to £6.23bn ($9bn), with positive contributions from pharma, vaccines and consumer health and a welcome return to form – just about – for the respiratory business. Operating profit also showed healthy growth, rising 19% to £1.56bn.
Last year GSK suffered an anxious period as its respiratory franchise – led by asthma and chronic obstructive pulmonary disease (COPD) treatment Seretide/Advair (fluticasone propionate/salmeterol) – showed the effects of downward pricing pressure and increased competition.
In the first quarter respiratory sales still declined to £1.42bn, but only by 2% as a 24% drop for Seretide was offset by gains for new-generation products such as Relvar/Breo (vilanterol/fluticasone furoate), Anoro (vilanterol/umeclidinium bromide) and severe asthma debutante Nucala (mepolizumab).
Sales of Anoro and Breo were £33m and £111m, respectively, while Nucala’s first contribution following its approval for severe asthma towards the end of last year was £7m. Collectively they managed to negate Seretide’s £145m decline.
Meanwhile, strong gains for HIV drugs – up 57% to £729m – also boosted GSK’s top-line, while there were solid gains for vaccines (up 23% to £882m) and consumer health (rising 26% to £1.76bn), providing an endorsement of GSK’s recent asset swap deal with Novartis.
“I think this was a very robust performance”, said chief executive Sir Andrew Witty, who is planning to retire from the company next year. With 20% of revenues now coming from products less than four years since launch, the company is on course for its goal of £6bn in new product sales by 2018, he added.
GSK has also raised its guidance for the year on the back of the strong quarter. “We now expect to see our core earnings rise by between 10% and 12% at constant exchange rates,” said Sir Andrew.
“What we’ve seen in Q1 demonstrates the strategy we’ve been pursuing is capable of delivering both sales and earnings growth from a set of balanced businesses underpinned by a productive R&D organization,” he told investors.
“That’s important as the trading and pricing environment remains as challenging as ever over the next couple of years.”