Glaxo beats hopes with profits rise
Pharmaceuticals giant GlaxoSmithKline today said soaring sales of its asthma drug Advair and diabetes medication Avandia drove profits up 16%.
Glaxo’s haul for 2005 of £6.73bn (€9.8bn) beat expectations in the City and came on the back of an 8% rise in turnover to £21.66bn (€31.5bn).
Sales of best-selling Advair surged 22% to more than £3bn (€4.5bn), while Avandia was up 18% to £1.3bn (€1.9bn) and vaccines were up 15% to £1.4bn (€2bn).
Chief executive Jean-Pierre Garnier said Glaxo had a "great finish" to an "excellent year" and predicted further growth in 2006.
He gave a long-awaited update on cervical cancer vaccine Cervarix, which is seen as one of Glaxo's main opportunities for growth currently in the pipeline.
Mr Garnier said Cervarix would be would be filed for approval in Europe “in the next few weeks” and in the US before the end of the year.
Glaxo said it was also seeking “accelerated approval” for a vaccine which could protect millions of people worldwide from a bird flu pandemic.
It came on the day that the World Organisation for Animal Health said a strain of the H5N1 virus had been found in poultry stocks in Nigeria – the first reported case of the disease in Africa.
About 160 cases of the virus have been reported worldwide, and more than 80 people have already died.
Glaxo said it was in discussions with governments around the world on plans to prime people for a possible bird flu pandemic and stockpile the vaccine, called Relenza.
Glaxo posted a 13% rise in fourth quarter turnover to £5.91bn (€8.6bn) while pre-tax profits were 21% higher at £1.61bn (€2.3bn).
Its earnings per share rose 47% in the final three months of 2005 while over the full year it as 21% up. Glaxo forecast 10% growth in 2006.
Shares in Glaxo were down 10p before the results were announced at midday and immediately gained 24p to stand 14p ahead.
Pharmaceuticals expert Jeremy Batstone, of Charles Stanley stockbrokers, said: “Glaxo has beaten forecasts largely due to sales of Advair, its top selling asthma drug.
“But earnings growth forecasts of just 10% may have disappointed some with people hoping for growth in the mid-teens.”
Mr Batstone welcomed the positive updates over Cervarix and Relenza, but added many investors had hoped the cervical cancer drug would be filed for US approval before the end of the year.
“Pipeline news is broadly in line with expectations and not really very much better,” he said. “But that is always the problem for Glaxo. Because expectations are driven up to such high levels it is always really hard to exceed them.”
