GlaxoSmithKline's Q4 sales drop 10 percent; signals return to growth for respiratory portfolio

GlaxoSmithKline announced Wednesday that fourth-quarter sales declined 10 percent year-over-year to 6.2 billion pounds ($9.4 billion), although the figure met analyst estimates, as revenue from the company's respiratory portfolio slipped 11 percent on a constant currency basis to 1.7 billion pounds ($2.6 billion). Profit in the three-month period reached 1 billion pounds ($1.5 billion), versus 2.5 billion pounds ($3.8 billion) in the year-ago quarter.

Sales of respiratory products have been hit after Advair lost patent protection in the US and the country's largest pharmacy-benefits manager stopped reimbursing prescriptions for the asthma therapy. Quarterly revenue from Advair met estimates at 1.1 billion pounds ($1.7 billion), while sales of the product's successor Breo Ellipta reached 38 million pounds ($58 million), exceeding analyst estimates by 35 percent. CEO Andrew Witty suggested that sales of Advair were likely to continue falling in 2015.

However, the executive cited the recent approvals of the new respiratory drugs Incruse Ellipta and Arnuity Ellipta, remarking "we are starting to see some early indications of how increased coverage and our new portfolio will help us regain market share and deliver improved performance in respiratory." Witty commented "the most important thing for us to get right in the short run is our respiratory business," adding that the division would return to growth in 2016."It is our intention to build a portfolio of respiratory medicines, not to have one medicine replace Advair one-for-one," Witty said.

GlaxoSmithKline reported that quarterly sales of pharmaceuticals dropped 5 percent to 4.2 billion pounds ($6.4 billion), hit by lower sales in the US and Japan, while revenue from its vaccines division fell 9 percent to 846 million pounds ($1.3 billion). The drugmaker noted that revenue from HIV drugs in its ViiV Healthcare unit climbed 25 percent on a constant currency basis to 462 million pounds ($704 million), with sales of oncology medicines jumping 30 percent to 335 million ($511 million), led by Votrient and Promacta.

Meanwhile, GlaxoSmithKline said that quarterly sales in the US decreased 9 percent year-over-year on a constant currency basis to 2.1 billion pounds ($3.2 billion), with revenue in emerging markets flat at 1.6 billion pounds ($2.4 billion). Sales in Europe declined slightly by 1 percent to 1.6 billion pounds.

For the full year, the drugmaker recorded revenue of 23 billion pounds ($35 billion), down 13 percent versus 2013, while profit reached 2.8 billion pounds ($4.3 billion), versus 5.6 billion pounds ($8.5 billion). "No doubt last year was a tough one, but I am pleased about how we responded," Witty commented, noting that some of the "headwinds" experienced in 2014 will continue in the first half of this year, but a stronger performance is expected in the second half.

Witty added that the company has made "good progress" toward completing its previously announced asset swap with Novartis, which was cleared by regulators in Europe last week. The executive stated that 2015 financial guidance will be provided after the transaction closes in the first half.

Separately, sources on Wednesday suggested that GlaxoSmithKline has hired advisors ahead of a possible partial initial public offering for ViiV. The company initiated a strategic review of the division, which is a joint venture with Pfizer and Shionogi, in October last year.

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