LONDON, Oct 31 (Reuters) – GlaxoSmithKline sales
fell 8 percent in the third quarter, hurt by continued pressure
on drug prices in austerity-hit Europe and lower demand for
vaccines compared to a year ago.
Sales of 6.53 billion pounds ($10.50 billion) generated
“core” earnings per share (EPS) down 13 percent at 26.5 pence,
as Britain’s biggest drugmaker suffered another tough quarter.
Analysts, on average, had forecast sales of 6.67 billion
pounds and core EPS, which excludes certain items, of 27.8p,
according to Thomson Reuters I/B/E/S.
GSK, like its rivals, has suffered a string of patent
expiries in recent years and is struggling to grow sales, even
though it has come through the so-called “patent cliff” earlier
than others.
Chief Executive Andrew Witty said the results were impacted
by demanding prior year comparisons, product disposals and
continuing weakness in Europe.
The worsening situation in Europe is a significant burden,
with sales in the region falling 9 percent in three months to
end-September.
Until July, GSK had been predicting a return to sales growth
this year. It revised its 2012 sales outlook down to flat at
mid-year and reiterated this forecast on Wednesday, with the
caveat that this excluded any further deterioration in Europe.
The vaccines business suffered a particularly difficult
comparison in the third quarter, since Japan bought a large
amount of the company’s Cervarix shot against cervical cancer a
year earlier and GSK also shipped a lot of flu vaccine a year
ago.
Excluding these vaccine factors and the impact of product
disposals, GSK said sales for the latest quarter were broadly in
line with last year.
Witty is diversifying GSK to cut reliance on “white pills in
Western markets”, the part of the business most vulnerable to
price cuts and generic competition. The strategy involves a push
into both emerging markets and non-prescription consumer health.
The heart of the company, however, remains its pipeline of
prescription drugs, where GSK is stepping up investment on
experimental medicines for diseases ranging from HIV/AIDS and
cancer to chronic lung conditions.
Part of the investment involves buying up rights to products
previously shared with other companies, as GSK did in July by
buying Human Genome Sciences for $3 billion and again this week
with a revamped deal for HIV drug dolutegravir.
