Witty reports sustained growth for GSK

Upon the announcement of GlaxoSmithKline's (GSK) Q1 results, Andrew Witty, the company's CEO, said he believes GSK is delivering sustained business performance and making good progress in achieving the strategic priorities of growing a diversified global business; delivering more products of value; and simplifying the operating model.

"Our sales growth is multi-sourced with good performances in our pharmaceuticals business, driven by vaccines, respiratory and dermatology products and in our consumer healthcare business. In all of these areas, sales were especially dynamic across emerging markets where we continue to gain market share," said Witty.

Group turnover grew 13 per cent, aided by sales of pandemic influenza products (pandemic vaccine and Relenza). Excluding these products, underlying sales grew 4 per cent to £6.6bn. Sales from 'white pills/western markets' for the first quarter were approximately 27 per cent (excluding sales of pandemic vaccine). This is down on the 32 per cent of sales achieved in Q1 of 2009, which Witty said was a reflection of the growing diversification of the business.

Established products, such as Seretide/Advair and newer products, such as Cervarix, Synflorix and Tykerb helped to drive good underlying performance. Total new product sales were over £400m (+65 per cent) and, including pandemic products, reached more than £1bn. 

Consumer healthcare business grew significantly faster than estimated global market growth this quarter, with sales up 9 per cent.

This first quarter also saw some early signs of recovery for its US pharmaceuticals business, with sales down 1 per cent comapared to a decrease of 24 per cent in Q1 2009.

Witty welcomed the passage of the US healthcare reform bill, which he believes will bring essential healthcare to millions of previously uninsured Americans and provide greater certainty and stability for the industry. The reform means increased discounts for medicines, particularly related to government programmes like Medicaid, but Witty noted that GSK had absorbed the impact of this in Q1 and will offset any further impact through operational performance.

Simplification and cost-containment initiatives should deliver annual cumulative cost savings of £2.2bn by 2012, he continued.

Further, the integration of Stiefel looked set to deliver up to £155m of savings by 2012.

As a result, GSK has increased the dividend for the quarter to 15p. Witty concluded that he remains confident in GSK's prospects for the year.