- GlaxoSmithKline plc on Wednesday posted a 2% decline in total revenue for the first quarter, as pricing pressure in respiratory medicine and the impact of a strong pound overshadowed a fast start on the market for the British drugmaker's new shingles vaccine.
- Growth in 2018 for GSK still very much hinges on when a generic version of the company's flagship asthma drug Advair enters the market. Due to tightening pricing and higher competition in the inhaled respiratory space, GSK now expects Advair sales to decline 30% on the year even if no copycat drug arrives.
- Strong sales of Shingrix were a notable bright spot, however. In its first full quarter of sales, the vaccine earned over $150 million and largely unseated Merck & Co.'s rival product from the market.
Faced with a declining top-seller and lackluster R&D performance, CEO Emma Walmsley has sought to re-energize the company and marshal resources behind priority assets. In the near term, GSK's focus will center on Shingrix (zoster vaccine, recombinant), a two-drug HIV pill and a new "three-in-one" respiratory treatment.
The early success of Shingrix helps to strengthen GSK's argument that these new medicines can begin to offset declines elsewhere and eventually drive growth.
Since winning a key government recommendation late last year, Shingrix has quickly overtaken Merck's Zostavax (zoster vaccine live) and now commands a greater than 90% share of the pharmacy market, according to GSK. Pharmacy sales represent about 60% of the overall market.
In the first quarter, most of Shingrix sales represented pharmacy stocking, while about 30% of doses supplied were administered in patient vaccinations, said Luke Miels, head of GSK's pharmaceuticals unit, on an April 25 earnings call.
While that mix of sales will shift over the year, GSK expects the quarterly run rate to stay consistent throughout 2018, implying annual revenues of about $600 million for the vaccine.
Launches of Juluca (dolutegravir/rilpivirine) and Trelegy Ellipta (fluticasone furoate/umeclidinium/vilanterol), GSK's two other priority assets, were still too early to gauge market performance, but company executives remained confident in their chances of competing.
Despite the early positive signs from GSK's new drugs, the British company was held back by pricing pressure in the respiratory arena. Sales of Advair fell more steeply than expected and executives noted higher pricing pressure in the therapeutic category overall.
Sales of respiratory medicines — GSK's largest therapeutic category by revenue in pharma — fell 6% before accounting for currency impact to $2.2 billion.
Miels said the newly launched Trelegy would be more insulated from changes in pricing dynamics than older products. Yet investors appeared concerned, sending American Depository Receipts of GSK down more than 3% in Wednesday morning trading.