GSK focuses on R&D with tough year ahead
- GlaxoSmithKline plc announced fourth quarter and full-year 2017 earnings on Wednesday morning, with annual sales of £30.2 billion ($42.1 billion), up 3% year over year.
- The British pharma said its 2018 guidance is dependent on whether a generic version of the blockbuster respiratory drug Advair enters the market this year.
- Should no generic come along, GSK expects earnings per share to grow 4% to 7% on a constant exchange basis. But if a generic enters the U.S. market by mid-year, earnings would likely be flat to down 3%.
Correction: A previous version of this article misstated the range GlaxoSmithKline plc forecast for earnings per share in 2018 if a generic copy of Advair entered the market.
CEO Emma Walmsley told analysts on the Feb. 7 earnings call that two of the biggest priorities for the company are strengthening the R&D focus and being more disciplined about cash allocation.
Last year, the company put in place a major overhaul of its pipeline, selling off and discontinuing development of a number of projects.
Walmsley on the call said further updates will be coming in the second quarter with certain programs accelerated and others deprioritized.
The British pharma has already made changes in its R&D leadership. Patrick Vallance is stepping down as head of R&D, and GSK has tapped Hal Barron to be the new chief scientific officer. Barron is a Roche AG alum and most recently held a post at the Google-backed health venture Calico.
"Our job now is to maximize our current portfolio and successfully deliver the other three major opportunities; our vaccine Shringrix for shingles, Nucala for severe asthma, and Trelegy Ellipta for COPD," said Luke Miels, president of global pharmaceuticals.
With potential generic competition to Advair on the horizon, 2018 promises to be a challenging year for the already struggling pharma. Walmsley has already taken major steps to turn around the company, but, as Miels pointed out, GSK is going to need strong performances from at least three new drugs for growth.
Sales of Advair have already started declining, losing 14% in 2017 to bring in just £3.1 billion ($4.4 billion).
While the pharmaceuticals division is the company’s largest and remains the focus, analysts are also interested in the consumer business.
GSK has one of the largest consumer health businesses and media reports have speculated that the British pharma is one of the key bidders for Pfizer Inc.’s consumer division, put on the block last year.
Walmsley, who denied the rumors at the J.P. Morgan Healthcare Conference in January, was less forceful about her denials during the call. But she noted that GSK does not comment on speculation and that it is looking at all market opportunities.
- GlaxoSmithKline plc Earnings release
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