Excluding a major restructuring begun in 2007, which was aimed at turning GSK into a more balanced business less vulnerable to generic pressures, and the loss of sales of pandemic flu products, diabetes drug Avandia and herpes treatment Valtrex, GSK had underlying sales growth of 4%.
Chief executive Andrew Witty said GSK’s record in 2011 demonstrated that the company was succeeding in its aims. It saw good performances across all of the business, with emerging markets, the consumer business and the US business returning to strength.
He added in an interview with communication agency MerchantCantos that GSK feels optimistic.
‘We feel like we are moving into a new era for the company and we now need to focus on absolute disciplined execution to make sure that we take advantage of all of the opportunities that we’ve worked so hard to try and create for ourselves,’ he said.
2011 sales growth on an underlying basis was broadly based: pharmaceuticals were up 2%; vaccines increased by 11%; and consumer healthcare products rose by 5%.
The underlying pharmaceuticals growth came from new products, partly offset by generic competition to older products in the US and Europe and the increased impact of European austerity measures. The full year incremental impact on sales of European price cuts and US Healthcare Reform was approximately £315m.
The growth in underlying vaccines sales was mainly owing to strong performances from cancer drug Cervarix, paediatric vaccine Synflorix and gastroenteritis vaccine Rotarix. In consumer healthcare, strong growth in oral and nutritional healthcare was partly offset by flat over-the-counter sales.
Group sales outside the US and Europe accounted for 38% of turnover with underlying sales growth of 14%.
Underlying growth in emerging markets was 15%, in Asia Pacific 10% and in Japan 28%. According to Witty, Japan has been a ‘great growth story’ for GSK. For 2011, 48% of the sales in the region came from products younger than five years old.
We now need to focus on absolute disciplined execution to make sure that we take advantage of all of the opportunities that we’ve worked so hard to try and create for ourselves
A key element of GSK’s global strategy has been to improve r&d returns and productivity and Witty expects further delivery from the firm’s r&d organisation in 2012.
In 2011, GSK gained three new product approvals for lupus treatment Benlysta, Trobalt for treating partial onset seizures and restless legs treatment Horizant.
Since 2008, the firm has had 16 new drugs and vaccines approved in the US, 11 of which were new molecular entities, which is more than any of GSK’s competitors.
Last year was also an important year for pipeline visibility with data announced for nine late-stage medicines. The firm now has four medicines and vaccines ready to file during 2012: Promacta for hepatitis C, Relovair for COPD, influenza quadrivalent vaccine, and its MEK inhibitor, a new potential treatment for melanoma, which has achieved its primary end point in Phase III.
GSK plans to deliver up to 30 new products into late-stage development over the next three years.
‘This increase in productivity would mean that GSK is moving towards sustainable replenishment of its late-stage pipeline, with no increase in cost,’ said Witty.
GSK intends to remain focused on managing its cost base and improving financial efficiency and has identified further annual savings of approximately £300m. This will bring the total annual savings to £2.8bn by 2014 for additional costs of £350m.