- Continued growth from GlaxoSmithKline's leading HIV drugs and the British pharma's vaccines business helped drive a 6% growth in annual group sales and 3% rise in pharmaceutical sales, the company reported Wednesday.
- But sales of Glaxo's main breadwinner, the asthma treatment Advair (fluticasone/salmeterol), fell 20% in the fourth quarter and 15% for the year overall at constant exchange rates. Inbound generic competition from Teva will damage sales further, potentially dragging down earnings as well.
- If Teva's copy doesn't launch this year, Glaxo forecasts core earnings per share growth of between 5% and 7% (with Advair sales falling 15%-20%). But if a generic launches in mid year, Advair sales could fall by nearly half and bring core EPS down to a range of flat to slight decline in percentage terms.
Advair has been a strong asset for GlaxoSmithKline, raking in billions for the company. However, its sales have been declining, and generic competition could sharply accelerate that negative impact.
Teva's AirDuo RespiClick was approved for asthma in January this year, with a launch planned for some point during 2017. While it won't be directly substitutable for Advair in all indications — as it doesn't have the chronic obstructive pulmonary disease (COPD) approval — it could still make a big impact on Glaxo's sales.
If a generic copy enters mid-year, U.S. Advair sales are predicted to decline to around £1 billion ($1.36 billion) in 2017.
"Clearly, this year we face some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US, and this is reflected in the guidance we have issued today," Witty said in a press statement.
"This event is something we have anticipated and prepared for, and whilst there will be an inevitable financial impact to absorb, we fully expect to maintain leadership in this therapy area given our new product portfolio and the innovation we have in our pipeline."
Teva isn't the only company muscling into the Advair space. Mylan has submitted an ANDA for its generic version of Advair, with a GDUFA of March 28, 2017, and has already launched a version in the U.K. as Sirdupla, in June 2015.
This will be CEO Andrew Witty's last annual earnings call; Emma Walmsley, the first woman to head up a big pharma, will take over as Glaxo CEO on Apr. 1.