GlaxoSmithKline reported Wednesday that sales of prescription drugs in the third quarter increased 3 percent year-over-year to 4.2 billion pounds ($5.6 billion), while revenue from vaccines climbed 5 percent to 1.7 billion pounds ($2.3 billion). The company noted that sales of new products, including Tivicay/Triumeq, Relvar/Breo Ellipta and Nucala, surged 44 percent to 1.7 billion pounds.
In the quarter, GlaxoSmithKline's overall sales lifted 4 percent to 7.8 billion pounds ($10.3 billion), in line with analyst estimates, with revenue from the company's consumer health unit up 5 percent versus the prior-year period to 2 billion pounds ($2.7 billion). Profit for the three-month period jumped 50 percent to 1.2 billion pounds ($1.6 billion), in part due to cost savings associated with the asset swap with Novartis.
CEO Emma Walmsley commented "performance in the quarter showed continued progress with sales growth and improved operating margins." Walmsley noted that the results were "driven by targeted cost savings and restructuring and integration benefits, which particularly benefited vaccines and consumer healthcare."
In the three-month period, revenue from GlaxoSmithKline's respiratory products rose by 1 percent year-over-year to 1.6 billion pounds ($2.1 billion), with sales of Seretide/Advair declining 13 percent to 743 million pounds ($985 million). Regarding other products, sales of Relvar/Breo Ellipta surged 44 percent to 225 million pounds ($298 million), fuelled primarily by growth in the US. Meanwhile, revenue from Nucala reached 91 million pounds ($121 million).
In addition, sales of GlaxoSmithKline's HIV portfolio improved by 16 percent to about 1.1 billion pounds ($1.5 billion). Sales of Triumeq surged 33 percent to 621 million pounds ($823 million), with revenue from Tivicay jumping 46 percent to 364 million pounds ($482 million). The drugmaker added that sales of established pharmaceuticals were down 4 percent in the quarter to 1.4 billion pounds ($1.9 billion), which the company attributed to disposals of certain assets earlier this year.
"We remain on course for our full-year earnings," Walmsley added, with growth of between 3 percent and 5 percent, on a constant exchange rate basis. Commenting on the results, Simon Gergel of Allianz Global Investors, said the performance was "encouraging," noting "we are seeing the benefits of the Novartis transaction coming through with margins gains in vaccines and especially in consumer healthcare, where they reported a 20 percent margin for the first time, in line with their 2020 target."
The earnings report comes after GlaxoSmithKline unveiled plans in July to eliminate more than 30 clinical and preclinical drug development programmes and consider options for its rare diseases unit in an effort to focus on four key areas. Walmsley noted that the drugmaker will specifically seek to bolster its consumer health business as rivals leave the sector, with the company possibly purchasing Novartis' stake in the drugmakers' consumer healthcare venture created as part of the companies' asset swap, whilst also weighing a move for Merck KGaA's consumer health business.
"We would look at these assets and really look at them carefully in terms of their complementarity...but it is a question of looking at them and making sure we stay focused on returns," Walmsley explained, adding "our first priority is focused on improving our largest business, the core pharma business, and R&D within that." For related analysis, read ViewPoints: GlaxoSmithKline's dilemma.
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