Pharma Times | Kevin
Grogan
GlaxoSmithKline has posted a decent set of fourth-quarter results, though
the main story was the increasing returns the UK drugs giant says it is getting
from its R&D spend.
First to the financials and operating profit, before major restructuring,
was £2.08 billion, compared with a loss of £37 million in the like,
year-earlier period. That latter figure was a result of legal charges linked to
the controversial diabetes drug Avandia (rosiglitazone) and excluding those,
operating profit inched up 1%. Group turnover was down 3% to £6.98 billion.
Pharmaceutical sales were flat at £4.90 billion, due in part to generic competition and "the increased impact of European austerity measures". The latter effect, plus US healthcare reform measures reduced sales by £85 million in the quarter.
Pharmaceutical sales were flat at £4.90 billion, due in part to generic competition and "the increased impact of European austerity measures". The latter effect, plus US healthcare reform measures reduced sales by £85 million in the quarter.
Advair/Seretide (salmeterol and fluticasone) for asthma and chronic
obstructive pulmonary disease, was again GSK's top-seller, up 2% to £1.35
billion. The Avodart (dutasteride) franchise, for the treatment of benign
prostatic hyperplasia, increased 17% to £206 million, while Lamictal
(lamotrigine) for seizures and bipolar disorder, grew 9% to £141 million.
There were also strong performances from heart drug Lovaza (omega-3-acid
ethyl esters), up 10% to £158 million and asthma inhaler Ventolin (albuterol),
which brought in £171 million (+23%). However, the bloodthinner Arixtra
(fondaparinux) fell 30`% to £56 million as a result of generic competition in the
USA, while copycat versions of Valtrex (valaciclovir) on both sides of the
Atlantic sent the herpes treatment down 23% to £76 million.
GSK and Human Genome Sciences' Benlysta (belimumab), the first new drug for
lupus in 50 years, had sales of £15 million. Vaccine sales were down 18% to
£810 million, hampered by the lack of pandemic flu vaccines that boosted the
figures a year ago, while consumer healthcare turnover increased 3% to £1.27
billion.
Arguably the best news for GSK came with chief executive Sir Andrew Witty
(pictured) revealing that the company's expected R&D rate of return has
increased to 12% from 11% in 2010. He said this "reflects both the
progress of our late-stage pipeline and the impact of targeted reductions in
fixed R&D costs", adding that "we are on track to deliver our
long-term goal to improve returns to around 14%".
DPU review details
Sir Andrew went on to give some details about GSK's
recently-concluded performance and funding review of its 'discovery
performance units' (DPUs), which were set up in 2008. Each group comprises 5-70
scientists and focuses on one particular disease or pathway.
Before the review, the firm had 38 DPUs, and four more have been created,
while three have been closed; of the remaining DPUs, six have received
increased investment and five have had their funding cut. Sir Andrew said that
based on the review, "we expect to deliver up to 30 new assets into
late-stage development (typically Phase IIb) over the next three years".
He added that this would mean GSK "is moving towards sustainable
replenishment of its late-stage pipeline, with no increase in cost".
Sir Andrew noted that during 2011, it bought back shares worth £2.2 billion
pounds and "we are currently targeting repurchases of £1-2 billion shares
in 2012". He added that net proceeds from the recent £426 million sale of
its non-core North American over-the-counter brands to Prestige Brands Holdings
will be returned to shareholders through a supplemental dividend of five pence.
Discussions with other potential buyers to shed other assets, including OTC
weight loss drug Alli (orlistat) are taking place.
Nevertheless, the results fell short of analyst estimates and GSK shares
ended the day down 1.4% at £13.99