Shares in GlaxoSmithKline PLC (LON:GSK, NYSE:GSK) headed sharply lower on Wednesday afternoon, despite the UK’s biggest drugmaker topping estimates with its third quarter numbers.
In the three months to the end of September, sales grew 4% to £7.84bn (Q3 2016: £7.54bn), largely as a result of higher demand for new products such as its Tivicay HIV pills and Relvar lung treatment.
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The failure of generic companies to gain US approval so far for copies of Glaxo’s lung inhaler Advair - which once provided almost one-fifth of its revenues – also helped.
Adjusted earnings per share (EPS) for the period came in at 32.5p. Analysts had forecast EPS of 31.8p on revenues of £7.88bn.
There was some disappointment in vaccines though, with sales in that division flat, but the overall results keep GSK on track to deliver the full-year financial targets set by new boss Emma Walmsley earlier this year.
At constant exchange rates – GSK’s preferred measure – earnings this year are expected to grow by 3% and 5%, the company said in a statement on Wednesday.
Walmsley will be particularly pleased that her promise to improve drug research productivity by focusing on areas like HIV and respiratory medicines seems to be paying off.
That renewed focus is part of her plans to develop some multi-billion blockbuster drugs, which GSK has failed to do in recent years.
READ: GlaxoSmithKline gets 'positive opinion' from EMA panel for three-in-one inhaled COPD treatment
Nearer term though, GSK is focusing on the launch of a trio of new products. A shingles vaccine and a three-in-one lung drug have already been given the green light from the authorities, while the third – a HIV treatment – could get the thumbs up later this year.
The FTSE 100 group will pay out a quarterly dividend of 19p and said it still expects to return 80p a share to shareholders this year.
“Performance in the quarter showed continued progress with sales growth and improved operating margins,” said Walmsley in the results statement.
“This was driven by targeted cost savings and restructuring and integration benefits, which particularly benefited Vaccines and Consumer Healthcare, and also supported investment in our new products and R&D pipeline.”
Shares were down 5.4% to £14.31 on Wednesday afternoon, giving up the gains made in recent weeks. Shares in New York shed over 6% to US$38.04.
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