Pharmaceutical giant GlaxoSmithKline (GSK) returned to profit in the second quarter of this year after losses during the same period last year, the company has announced.
GSK made £614 million before tax, against a pre-tax loss of £178 million in the second quarter of 2017.
Earnings per share rose to 9p, against a loss per share of 3.7p per share past time. There will be a GSK stock dividend pay-out of 19p per share for the quarter and GSK expects the total dividend for the year to be 80p a share, unchanged from 2017.
Long-term strategic priorities
Shares initially rose after the GSK news but were down 45.8p, or 2.97%, in late morning trading in London at 1,496.6p.
But she announced a restructuring of the company designed to cut £400 million out of its annual cost base in order to release resources for research and development to allow GSK to capitalise on healthcare industry trends. “Innovation is the first of our three long-term strategic priorities I set out for GSK last year.”
“Improving the performance of our pharmaceuticals business and strengthening our R&D pipeline is fundamental to this. Today, we have announced the start of a new approach to R&D which aims to capitalise on the assets we have in our promising early-stage pipeline and build the next wave of growth for GSK.”
GSK will not rule out job losses as a result of the cost-cutting, which will focus on administration costs and on improving the company’s supply chain.
Future focus on the immune system
Group sales in the second quarter were flat at £7.3 billion compared with the same period last year, but on a constant exchange rate basis, ignoring currency fluctuations, they were 4% higher. Within that figure, using constant exchange rates, pharmaceutical sales were 1% higher than last time, healthcare sales 3% higher and sales of vaccines 16% higher.
Ms Walmsley said sales growth “reflected strong commercial execution of the three new launches we have prioritised”. These were of the Trelegy Ellipta, a single inhaler containing three medicines for the treatment of chronic obstructive pulmonary disease; Juluca, “the first two-drug regimen, once daily single pill for HIV, and Shingrix, a new treatment for shingles.”
Looking to the company’s changes to R&D and to current trends in healthcare, Hal Barron, GSK’s chief scientific officer and head of R&D, said, “At the core of this new approach is identifying new medicines by focusing on ways to modulate the immune system, leveraging the vast amounts of human genetic data now being generated, analysing this complex data with machine learning and creating an accountable culture.”
Dr Barron added: “This combination of science, technology and culture will generate new insights, improve our probability of success, enable us to focus and, most importantly, create new medicines that will have important benefits for patients.”