Glaxo expects 2013 earnings growth as drugs await approval
Published 07/02/2013 | 04:00
THE UK's largest drugmaker GlaxoSmithKline, said sales and profit will rise this year as the company awaits regulators' approval of six drugs.
Sales will increase about 1pc, and earnings per share excluding some items will gain 3pc to 4pc at constant exchange rates, the London-based company said yesterday. On that basis, fourth-quarter profit beat analysts' estimates.
Glaxo is counting on the regulatory decisions to help revive the stock price after a drop last year that ran counter to a gain in the Bloomberg Europe Pharmaceutical Index of 18 companies. The company also plans to reduce costs by at least £1bn a year by 2016 after pricing pressure in Europe increased last year.
"Today's results emphasise that Glaxo is in pressing need of new drug momentum," Mark Clark, an analyst at Deutsche Bank in London, said in a note to investors. "2013, however, promises a number of regulatory decisions which could impact forecasts."
Glaxo has filed for approval of the lung drugs Anoro and Breo, dolutegravir for HIV, dabrafenib and trametinib for skin cancer, and albiglutide for Type 2 diabetes. The US Food and Drug Administration will probably make a decision on dabrafenib and trametinib this quarter, followed by Breo in May, according to Deutsche Bank analysts.
Glaxo shares declined in 2012 as the company missed profit and revenue estimates in each of the first three quarters of the year.
Earnings excluding some items rose 1pc to £2.29bn, or 32.6p a share, in the fourth quarter from a year earlier. Analysts predicted 30.9p, the average estimate from 13 analysts surveyed by Bloomberg.
Sales dropped 3pc to £6.8bn, compared with the average analyst estimate of £6.83bn. Glaxo rose 0.5pc to 1,449p in London.
The company said it expects to repurchase between £1bn and £2bn in stock this year, compared with repurchases in 2012 that totalled almost £2.5bn. The target may increase later in the year, chief executive officer Andrew Witty said on a conference call with journalists.
Glaxo expects charges of about £1.5bn related to its expanded cost-cutting programme, which will focus on the European business, where sales fell 7pc amid pricing pressure.
The programme will also look at simplifying supply chain processes and building capacity in manufacturing and research, the company said. (Bloomberg)
The drugmaker is seeking to capture more growth in emerging markets. The company increased its stake in an Indian consumer- health subsidiary to 73 percent from 43 percent, and also is buying shares in its Nigerian unit.
Glaxo is looking mostly at acquisitions of early-stage compounds and technologies, rather than focusing on spending billions of dollars to buy experimental medicines in late stages of testing, Patrick Vallance, the drugmaker's head of pharmaceuticals research and development, said in an interview last month.
"In terms of our acquisition search, we have a very low appetite for acquisitions," Witty said. With several products in late-stage testing or in regulatory review, "it's all about the GSK assets at the moment."
The U.K. company was the second-most active dealmaker among drugmakers last year, behind AstraZeneca Plc, executing 14 in- licensing agreements, according to an analysis by Bloomberg Industries.
Glaxo started a review of its Lucozade and Ribena drinks brands, and a sale is one possible option, Witty said. The brands don't fit neatly with either the company's health-care products business or its emerging-markets business, he said.
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