GlaxoSmithKline's fourth-quarter sales jumped 21 percent year-over-year to 7.6 billion pounds ($9.5 billion), besting analyst estimates of 7.5 billion pounds ($9.4 billion), boosted by the performance of new products, including Tivicay, Triumeq and Relvar/Breo Ellipta. Profit in the three-month period reached 257 million pounds ($321 million), versus a loss of 354 million pounds ($442 million) in the prior-year period.
CEO Andrew Witty remarked "we expect the sales momentum of our new products to continue." However, the executive warned that the company faces "some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US, and this is reflected in the guidance we have issued today."
In the fourth quarter, sales of Advair/Seretide fell by 20 percent versus the year-ago period to 975 million pounds ($1.2 billion). Earlier this month, Teva received FDA approval for AirDuo RespiClick, which contains the same active ingredients as Advair, for the treatment of asthma, although GlaxoSmithKline cautioned that the generic drug was not deemed fully substitutable for Advair. Meanwhile, the FDA is set to consider Mylan's submission of a substitutable Advair competitor next month, while a second generic version of Advair developed by Hikma Pharmaceuticals and Vectura is also being reviewed by the US agency.
GlaxoSmithKline estimated that the approval of generic competitors would reduce full-year Advair revenue to 1 billion pounds ($1.3 billion), versus sales of 3.5 billion pounds ($4.4 billion) last year. Witty stated "once we are through this window of Advair, the company doesn't really have any material patent expirations until the late 2020s, which is an extraordinarily long period of time."
Witty further remarked "the next 24 months will be significant for GSK's pipeline and it marks the start of another intense period of R&D activity for the company, as we expect important data read-outs on around 20-30 assets in HIV, respiratory, immuno-inflammation, oncology and vaccines".
Regarding other quaterly results, GlaxoSmithKline noted that sales of HIV drugs reached 1 billion pounds including 530 million pounds ($664 million) and 290 million pounds ($364 million) in revenue for Triumeq and Tivicay, respectively. Additionally, revenue from Relvar/Breo Ellipta totalled 207 million pounds ($259 million).
For the full year, GlaxoSmithKline amassed 27.9 billion pounds ($35.0 billion) in revenue, up 17 percent compared to 2015, above analysts estimates of 27.7 billion pounds ($34.7 billion). Meanwhile, net income plunged from 8.4 billion pounds ($10.5 billion) in 2015 to 912 million pounds ($1.1 billion) for the year ended December 31.
GlaxoSmithKline indicated that core earnings per share, in constant currencies, are set to be flat to slightly lower in 2017, if there are substitutable generic copies of Advair in the US by mid-year, as many analysts expect. If generics aren't launched, core earnings per share are predicted to increase between 5 percent and 7 percent. Commenting on the news, UBS analyst Michael Leuchten said that although 2017 outlook might cause confusion, the forecast was largely in line with expectations.
Emma Walmsley, current head of the company's consumer healthcare division, is set to succeed Witty as chief executive following his retirement at the end of next month. Last December, GlaxoSmithKline unveiled several changes to the membership of its board and committees, in addition to the creation of a science committee.
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