GlaxoSmithKline boosts full-year earnings forecast as Shingrix leads sales growth in Q3

Headline results for the third quarter:

Prescription drug sales

£4.5 billion ($5.8 billion)

+7%

Overall revenue

£9.4 billion ($12.1 billion; forecasts of £9 billion)

+16%

Profit

£1.7 billion ($2.2 billion)

+13%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

CEO Emma Walmsley noted that GlaxoSmithKline "made further good progress in Q3, with sales growth across all three businesses." She remarked that the company advanced assets in respiratory, HIV and, "notably, oncology, where we are on track to file three innovative medicines by year end, following positive pivotal trial data." Commenting on the performance of Shingrix, Walmsley said it "will be a material contributor to the company's growth for some time," indicating that at times, GlaxoSmithKline has struggled to keep up with demand. "Obviously it (Shingrix) has performed ahead of our initial expectations, which is why we have been working extremely hard on improving and accelerating our supply," Walmsley added.

Also during the quarter, the drugmaker finalised its new consumer healthcare joint venture with Pfizer.

Meanwhile, GlaxoSmithKline provided no new details regarding its H2 blocker Zantac (ranitidine), which was recalled in all markets earlier this month after authorities in the US and UK raised concerns over possible carcinogen contamination in some ranitidine-containing drugs. 

Other results:

  • Vaccine sales: £2.3 billion ($3 billion), up 20%
    • Shingrix: £535 million ($690 million), up 87%, ahead of expectations of £464 million ($597 million), led by "continued strong uptake" in the US, with Germany and Canada pushing up sales as well
    • Fluarix/FluLaval: £371 million ($478 million), up 22%, due in part to a prior-year returns provision reversal in the US
    • Bexsero: £255 million ($328 million), up 23%, with strong demand across all regions and share gains in the US
    • Cervarix: £15 million ($19 million), down 73%, reflecting competitive pressure in China and lower demand elsewhere around the world
  • Established pharmaceuticals sales: £2.2 billion ($2.8 billion), down 1%
  • HIV product sales: £1.3 billion ($1.7 billion), up 5%
    • Triumeq: £651 million ($839 million), down 3%
    • Tivicay: £441 million ($569 million), up 2%
    • Juluca and Dovato: £119 million ($153 million); with combined growth from the two-drug regimens "more than offsetting" decreases in the triple-combination drug Triumeq "as the business transitions to the new portfolio"
  • Established respiratory product sales: £939 million ($1.2 billion), down 8%
    • Seretide/Advair: £418 million ($539 million), down 32%
  • New respiratory product sales: £806 million ($1 billion), up 25%
    • Ellipta product sales: £603 million ($777 million), up 21%, with sales of Trelegy Ellipta reaching £139 million ($179 million), driven by an increase in US market share; Relvar/Breo Ellipta sales were down 3%, including a decline of 26% in the US due to pricing pressures and the impact of generic Advair on the US market for inhaled corticosteroids and long-acting beta-agonists
    • Nucala: £203 million ($262 million), up 40%, as the product continues to benefit from global rollout; US sales gained 37% in the quarter to £119 million ($153 million)
  • Benlysta: £172 million ($221 million), up 42%, with US sales gaining 39% during the quarter to £150 million ($193 million)
  • Zejula: £64 million ($82 million), sales of the newly acquired PARP inhibitor were £38 million ($49 million) in the US and £26 million ($33 million) in Europe
  • Consumer healthcare sales: £2.5 billion ($3.2 billion), up 30%, primarily reflecting the acquired Pfizer legacy brands

Looking ahead:

GlaxoSmithKline now expects earnings per share to be flat this year on a constant exchange rate basis, lifted from an earlier forecast of a decline by 3% to 5%. The company indicated that the new guidance partly reflects a lower expected effective tax rate of around 17% for the year.

Pipeline update:

GlaxoSmithKline disclosed that during the quarter, early-stage development of the RIP1k inhibitor GSK3145095 in pancreatic cancer was terminated as part of ongoing portfolio prioritisation, while Phase I work on the PI3Kd inhibitor GSK2292767 for respiratory diseases was also scrapped. The company added that the RIP1k inhibitor GSK2982772 for psoriasis, rheumatoid arthritis and ulcerative colitis has been moved from Phase II development "back to research," while an Ebola vaccine in mid-stage testing has been transferred to the Sabin Vaccine Institute.

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