UK drug manufacturer GlaxoSmithKline has reported a 23% fall in pre-tax profit for the second quarter to £986m from £1.29bn. For the half-year, pre-tax profit dropped 30% from £2.7bn to £1.9bn.
Turnover dipped by 13% to £5.6bn. Half-year turnover was down 12% to £11.2bn.
GSK blamed increased competition in the US respiratory market and generic competition to cholesterol drug Lovaza, which lost its patent protection in 2012. A strong performance in emerging markets (+1%) was partially offset by falls in Japan (–7%) and the US (–10%). Sales in Europe were flat.
The company said the transition of its respiratory portfolio was underway. With declining sales in blockbuster inhaler Advair, new sales growth is expected to come from GSK's new inhalers Breo, Anoro and Incruse. Other new products such as HIV treatment Tivicay and type II diabetes drug Tanzeum are also expected to bring in sales.
Pipeline opportunity also remains substantial with over 40 NMEs in late-stage development, the company said.
Synchronisation of new product delivery with managing the impact of competition elsewhere in the portfolio is challenging
Chief Executive Andrew Witty said the company had made 'significant strategic progress' during the first half of the year, having announced a three-part transaction with Novartis and launching multiple new products in the company's core therapeutic areas of respiratory and HIV, but added that 'synchronisation of new product delivery with managing the impact of competition elsewhere in the portfolio is challenging'.
Witty said the Novartis deal would give the company an opportunity to reshape the group by 'strengthening GSK's existing leadership position in vaccines and build up what will be one of the world's leaders in consumer healthcare'.
Once the deal with Novartis is completed, Witty predicts that vaccines and consumer healthcare will represent about 50% of the Group.
GSK said maintaining support for the portfolio of new product launches is the key to the long-term health of the company.
The poor results added to GSK's much publicised troubles in China, where it has been accused of paying as much as £320m in bribes to doctors and healthcare officials to boost sales.
The company has said it has 'zero tolerance for unethical or illegal behaviour' and expects its staff to uphold its 'high standards'.
Looking ahead, Witty remains confident in GSK’s medium and long-term growth prospects and in the company's strategy to generate sustainable sales growth.
