Glaxo's Profit Exceeds Estimates as HIV Drug Sales Soaredby
Vaccines revenue gained 32 percent; consumer up 55 percent
Witty says benefits of 3-way asset swap becoming evident now
GlaxoSmithKline Plc, the U.K.’s biggest drugmaker, reported third-quarter earnings that surpassed analysts’ estimates as sales of HIV drugs, vaccines and consumer health-care products climbed. The shares jumped.
Profit excluding certain costs dropped 5 percent to 1.72 billion pounds ($2.6 billion), assuming there was no currency fluctuation, the London-based company said in a statement. That compared with the 1.48 billion pounds average of 10 analysts’ estimates compiled by Bloomberg. Earnings per share declined to 23 pence, topping the 19.4 pence a share average of 11 analyst estimates.
New medicines such as AIDS treatments Tivicay and Triumeq helped offset slumping revenue from Glaxo’s biggest drug, Advair. Chief Executive Officer Andrew Witty also completed a three-way asset swap in March to add vaccines and create a consumer health joint venture, and has pledged to discuss Glaxo’s pipeline of experimental drugs with investors on Nov. 3 in New York.
“The beat clearly came from the integration” from the Novartis deal, said Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich. “The key concern remains that the existing portfolio of respiratory products is facing tougher and tougher times.”
Shares of Glaxo jumped 2.9 percent to 1,407.50 pence as of 1:14 p.m. in London trading, and earlier climbed 4.3 percent, or the most in two months.
“The benefits of the recent 3-part transaction are becoming evident in our sales and earnings performance,” Witty said in the statement. Next week’s R&D presentation will also showcase new drugs and vaccines “which we believe has significant potential to drive long-term performance.”
Total sales at Glaxo climbed 11 percent to 6.13 billion pounds. Revenue from the pharmaceutical division, its biggest business, declined 7 percent following the sale of the oncology business to Novartis AG, while vaccines surged 32 percent and consumer health-care climbed 55 percent.
HIV drug sales surged 65 percent globally, with Triumeq bringing in 211 million pounds, exceeding analysts’ projections. Tivicay generated 157 million pounds in revenue.
Glaxo reiterated that core earnings per share will probably decline by a “high teens” percentage this year as it faces pricing pressure on Advair in the U.S. and Europe, and higher costs of businesses acquired from Novartis. That guidance excludes potential income from the proposed divestment of ofatumumab, which was announced on Aug. 21.
In 2016, core EPS will reach double digit percentage growth, assuming that the exchange rate remains unchanged, Glaxo said.
(An earlier version of this story was corrected to show that earnings per share declined.)