GlaxoSmithKline reported earnings growth across all of its main units in 2017, but warned that generic copies of a major product could undermine its performance this year.
For the year ended December 31 revenues rose to £30.19bn from £27.89bn in 2016, while pre-tax profit improved to £3.53bn from £1.94bn. The improvement was helped by a sharp fall in operating expenses from £3.01bn to £1.61bn.
However, the drugs giant posted a loss in the fourth-quarter, compared to profit in Q4 2016, reflecting the impact of US tax reform together with an increased impact of charges arising from higher valuations of liabilities.
GSK said that its earnings performance for the year ahead would be influenced by the timing and impact of us generic competitors to its Advair asthma treatment drug.
Three new launches
“In 2017 GSK delivered encouraging results from across the company with sales growth in each of our three global businesses, an improved group operating margin, adjusted earnings per share growth of 4% at constant exchange rates and stronger free cash flow,” said CEO Emma Walmsley, who took over last March upon Sir Andrew Witty’s retirement.
“We are focused on competing effectively across our current portfolio and delivering three new launches which bring significant benefits to patients: Trelegy Ellipta which provides three medicines in a single inhaler to treat chronic obstructive pulmonary disease (COPD); Juluca, the first 2-drug regimen, once-daily, single pill for HIV, helping to reduce the amount of medicines needed, and Shingrix, our new vaccine which represents a new standard for the prevention of shingles.
“Looking ahead, in 2018 we could see a potential generic version of Advair in the US and our guidance reflects this. With the sales momentum we anticipate from new and recent launches and focused improvements in operating performance we are increasingly confident in our ability to deliver mid to high single-digit growth in adjusted EPS compound annual growth rate.”
In the absence of a generic competitor in 2018, GSK’s adjusted EPS is forecast to grow by 4% to 7% on an adjusted basis. However, should it arrive mid-year the figure is more likely to be between zero and 3%.
GSK declared an unchanged fourth quarter dividend of 23 pence per share, giving a total payout of 80p for 2017, unchanged from 2016. For 2018, the company expects to declare a dividend of 80p.
The shares rose on the results and were 11p higher at 1,254p in early afternoon trade.