GlaxoSmithKline narrowly beat revenue expectations for the third quarter as it benefited from strong sales of its new shingles vaccine and shrugged off the threat from a possible generic competitor to its blockbuster respiratory drug Advair in the US.
The UK drugmaker said it was “tightening full-year guidance range towards the upper end of previous expectations” and now expected full-year adjusted earnings per share to grow 8-10 per cent in constant currencies.
Emma Walmsley, chief executive, said GSK was “confident of meeting this even if there is an introduction of a generic competitor to Advair in the US before year end”.
The company had previously said it expected adjusted earnings per share growth of 7-10 per cent for 2018 but warned that if a generic competitor was launched, this would fall to between 4 and 7 per cent.
Sales of its Shingrix vaccine for the year were now expected to be between £700m and £750m, GSK said, up from previous forecast of between £600m and £650m, in what Ms Walmsley described as “a remarkable start” for the treatment.
Turnover was up 3 per cent in the quarter to £8.1bn, a 6 per cent rise stripping out foreign exchange fluctuations, as sales climbed across all three of its units: pharmaceuticals, vaccines and consumer healthcare.
A cost-control programme was also paying off, GSK said, helping lift total operating profit 2 per cent year-on-year to £1.9bn. Pre-tax profits were flat, however, at £1.7bn, faced with a 5 per cent currency headwind.
GSK has in the past been criticised in the City for failing to reap the commercial rewards from its medicines, despite a high number of regulatory approvals. However, Ms Walmsley highlighted its “strong commercial execution for key products and new launches, notably Shingrix, together with an effective focus on cost control”, as driving the company’s improved performance.
She also touted a 42 per cent rise in free cash flow on last year to almost £2.4bn in the year to date.
Ms Walmsley has vowed to overhaul GSK’s research and development performance. On Wednesday, the company announced it was shutting down work on five early-stage drugs in its pipeline as it sought to redirect resources to more promising projects.
She said: “These are all terminations . . . which are based very simply on not meeting data thresholds. We wanted to be more proactive about intervening earlier to stop things . . . so that we can really focus our resources on the big bets that will have a meaningful impact for patients.”
Earlier she had highlighted “positive late stage data” on a long-acting, injectable HIV medicine that the company hopes will help it capture a bigger share of the HIV market against arch-rival Gilead.
Analysts broadly welcomed the results. Andrew Baum, at Citi, said that with the company facing “increasing anticipated pressure on ViiV [its HIV business] and respiratory, Shingrix becomes the critical driver of near term earnings outlook”.
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