With Advair copies looming, GSK keeps focus on new drugs
- GlaxoSmithKline plc on Wednesday said stronger sales of its HIV medicines and new respiratory drugs helped drive a 2% year-over-year bump in third quarter pharmaceutical revenue.
- On a call with analysts, company CEO Emma Walmsley reiterated GSK's focus on upcoming launches for the newly approved three-in-one inhaler Trelegy and the shingles vaccine Shingrix, although she cautioned both products will take time to build prescription coverage.
- Spared for now from generic competition to its flagship Advair franchise, the British drugmaker said it remained on track to meet its target of 3% to 5% earnings growth for the year. Overall company sales during the third quarter were up 3% at constant currencies to £7.8 billion ($10.1 billion).
GlaxoSmithKline has flagged Trelegy and Shingrix, along with an under-review two-drug HIV regimen, as crucial for future growth.
Success with each will reinforce the company's core focus on respiratory, HIV and vaccines — in line with a major overhaul to R&D laid out by Walmsley in July that seeks to reenergize the drugmaker's research productivity.
Together, those drugs will add to a core of other relatively new products that GSK expects will deliver £6 billion in revenue a year by 2018.
Still, the company will soon feel the pain of generic competition to its top-selling respiratory drug Advair (fluticasone furoate/salmeterol). Rejections this year by the Food and Drug Administration of two copycat versions from Mylan N.V. and Hikma Pharmaceuticals gave GSK some breathing room. But Walmsley said generic entry next year is "probable."
Even without cheap rivals on the market, Advair sales fell by 15% in the third quarter and the company expects a similar drop for its annual numbers. When generics do arrive, the decline in sales could be closer to 50%.
GSK has expected generic competition to Advair for years and has prepared for the impact entry will have on its financial health. Still, a major hit to revenues and operating margins would put a crunch on the company just as its looking to put more resources behind new product launches.
At the same time, GSK said it is facing a challenging commercial environment, particularly in the inhaled respiratory market, due to pricing pressures that are expected to continue through 2018.
All of these factors could make 2018 a trying year. On the other side of the Advair cliff, though, Trelegy and Shingrix — as well as a potential new HIV combo — give GSK clear market opportunities it hopes to capitalize on.
Investors appeared more concerned with the nearer-term pain, though, driving shares in the drugmaker down by more than 5% in Wednesday morning trading.
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