February 18, 1999
Business and Finance - Europe
Glaxo's Results Meet Expectations,
As New Treatments Fuel Growth
Dow Jones Newswires
LONDON -- British heavyweight pharmaceutical Glaxo Wellcome said Thursday that its 1998 pretax profit slipped just 1% to 2.67 billion pounds ($4.37 billion) from 2.69 billion pounds a year earlier.
The company said a greater decline was prevented by robust growth among the company's new treatments and explosive gains for its therapeutic respiratory drugs. The results were at the top end of market projections, which had ranged from 2.47 billion pounds to 2.69 billion pounds and far healthier than the 20% tumble Glaxo reported for the first half of last year, convinced investors that the United Kingdom-based drug maker's post-Zantac earnings void is history.
Observers had expected 1998 pretax earnings to fall about 5% as the company winced under the 1997 patent expiration of anti-ulcer drug Zantac, once the cornerstone of Glaxo's earnings. Sure enough, Zantac sales plunged 42% as generic competitors decimated its market share.
But Glaxo filled that gap with double-digit sales growth in seven products and its HIV and migraine portfolios. To cap that, it boasted 24% sales growth in its biggest therapeutic area, respiratory drugs, almost five times the growth rate of the global respiratory market. The surge firmly establishes Glaxo as the world leader in respiratory drugs, analysts suggested.
The asthma drugs Flixotide and Serevent led the charge with sales approaching 500 million pounds each, with the hay-fever drug Flixonase selling 273 million pounds and the smoking-cessation drug Zyban reaching 100 million pounds in sales in its first full year on the market.
"It is testimony to the depth and vitality of our portfolio of medicines, particularly in the disease areas of respiratory, antivirals and the central nervous system, that we have been able to absorb the largest single patent expiry our industry has ever seen," Chairman Richard Sykes said.
The company also said it remained committed to its double-digit underlying growth targets for 1999 sales and earnings. Glaxo shares, already trading at all-time high valuations, were up 30 pence, or 1.5%, at 2,023 pence by midmorning on the London Stock Exchange.
Respiratory sales were 2.2 billion pounds, about 27% of the group's total 1998 sales of 7.98 billion pounds. Of the group total, non-Zantac sales now make up 91% of the group's total sales. Excluding Zantac, total sales were up 13% at constant exchange rates.
"With Zantac now 9% of sales world-wide and just 6% in the important U.S. market, we can look to the future from a position of strength," Chief Executive Robert Ingram said.
The company said the introduction of five major drugs this year will further bolster this new strength. Those drugs are Ziagen and Agenerase for HIV; Seretide for asthma, which has been approved in Europe; Zeffix for hepatitis B, which recently was approved in China, and Relenza for influenza, which was last week approved in Sweden and recommended for approval in Australia.
In Glaxo's second-largest therapeutic area, antivirals, sales were down 2% at constant exchange rates. After stripping out declining sales of Zovirax, the herpes blockbuster which also lost patent protection in 1997, however, sales were up 15% at constant exchange rates, driven by the company's anti-HIV drugs.
Among those, Combivir posted sales of 267 million pounds on the back of successful launches in European markets. Epivir is still Glaxo's biggest selling anti-HIV drug, although sales were affected by patients switching to Combivir.
In central-nervous-system, or CNS, drugs, Glaxo's third-largest portfolio, sales were up 32% at constant exchange rates to 1.2 billion pounds, driven by a strong U.S. performance and a 12% underlying gain in sales of the migraine portfolio to 732 million pounds. Glaxo said that was particularly pleasing in light of the launch of three drugs from competitors during the year.
Other CNS drugs which performed well included Wellbutrin for depression, with doubled sales to more than 300 million pounds, and Lamictal for epilepsy, with a 37% sales gain to 177 million pounds.
Earnings per share fell to 51.1 pence from 52 pence and the dividend was increased to 36 pence from 35 pence.
wsj.com |
