Glaxo's Net Income Falls 22%
By ELENA BERTON
OCTOBER 22, 2008, 9:00 A.M. ET
LONDON -- Drug maker GlaxoSmithKline PLC Wednesday reported a lower third-quarter profit amid restructuring charges, while revenue rose 7% with a boost from vaccine sales and the weaker British pound.
The company said its net income declined 22% to £1.03 billion. On a pretax basis before restructuring costs, earnings were £1.87 billion, off slightly from the comparable result in last year's third quarter but above analysts' expectations of £1.72 billion.
Sales in the period rose 7% to £5.88 billion despite increased competition from generic versions of some Glaxo drugs and slumping sales of diabetes drug Avandia. The weakening of the sterling against the euro and the dollar during the quarter meant favorable exchange-rate effects on Glaxo's overseas sales.
Europe's largest pharmaceutical company by prescription drug sales maintained its cautious full-year guidance, predicting a mid-single digit decline in earnings in 2008.
"Our performance is in line with our expectations and I am pleased with how we have so far responded to what is undoubtedly a challenging year for GlaxoSmithKline," Chief Executive Andrew Witty said in a statement.
Speaking to reporters during a conference call, Mr. Witty said the ongoing turmoil in financial markets has created opportunities for acquisitions, especially in the biotech sector where companies have been affected by a funding crunch.
Still, he reiterated that Glaxo would continue to prefer small-to-medium acquisitions over large deals. "We are going to remain extremely choosy about what we buy," he said.
In July, Glaxo pushed back beyond July 2009 the completion of a £12 billion share buy-back program to free up funds for eventual investment deals. "We do not currently expect to make significant share repurchases in 2009," the Brentford, England, company said Wednesday.
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