GlaxoSmithKline plc (LON:GSK) expects to make further progress this year, but warned over the possible impact of generic competition to its Advair asthma drug stateside.
Core earnings per share (EPS) for the fourth quarter clocked in at 26.1p, up 11% on a year-on-year on a constant exchange rates (CER) basis, which was at the bottom end of the company’s guidance range.
Shares dipped from 1,562p to 1,518p on the results before rallying to 1,544.5p.
For the current year, in the event of no generic competition to Advair in the US, Glaxo has advised investors to expect 2017 core EPS growth to be 5-7% on a CER basis.
In the event of a mid-year introduction of a substitutable generic competitor to Advair in the US, investors should brace themselves for a £1bn or so dent in sales, which would wipe out EPS growth or even send the company ex-growth.
As its blockbuster drugs go off patent one by one, so Glaxo is pinning its hopes on the next generation of drug candidates.
New product sales in the fourth quarter of 2016 shot up 71% (CER) year-on-year, driven by treatments for HIV (Tivicay, Triumeq), respiratory conditions (Relvar/Breo, Anoro, Incruse, Nucala) and by meningitis vaccines (Bexsero, Menveo).
New pharmaceutical products sales represented 24% of full-year pharmaceuticals sales and 27% of fourth quarter sales.
"Our performance reflects the investments we have made to build new scale and sustainability in the group and to develop new products,” claimed Sir Andrew Witty, chief executive officer of Glaxo.
“We expect the sales momentum of our new products to continue and, with regulatory decisions on other major product opportunities also expected this year, like Shingrix and Closed Triple, we remain confident in the financial outlook we have previously set out for investors,” he added.
"Clearly, this year we face some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US, and this is reflected in the guidance we have issued today. This event is something we have anticipated and prepared for, and whilst there will be an inevitable financial impact to absorb, we fully expect to maintain leadership in this therapy area given our new product portfolio and the innovation we have in our pipeline,” said Witty, in what was his last trading update before standing down as chief executive.
"The next 24 months will be significant for GSK's pipeline and it marks the start of another intense period of R&D activity for the company, as we expect important data read-outs on around 20-30 assets in HIV, respiratory, immuno-inflammation, oncology and vaccines,” Witty declared.