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GlaxoSmithKline lifts full-year guidance as profits double in second quarter

GSK was forced to cut its forecasts earlier this ear after a generic rival to Advair came to market, but an “improved operational performance” in the second quarter means things won’t be as bad as first feared

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GSK expects to maintain the dividend at 80p this year

GlaxoSmithKline PLC (LON:GSK) second-quarter results were met with a shrug of the shoulders from the market, despite the pharma giant lifting its full-year expectations.

Back in February, the FTSE 100 company blamed the launch of a generic competitor to its blockbuster inhaler, Advair, as it said this year’s profits would fall by at least £437mln, and possibly as much as £787mln.

READ: GSK names former AstraZeneca finance boss as new chairman

But GSK now thinks a £437mln decline in adjusted operating profits is the worst possible outcome, while the impact could be nearer to £262mln.

The drugmaker, which earlier this morning unveiled Jonathan Symonds as its new chairman, said the improved guidance was a result of “an improved operating performance” in the second quarter.

Sales rose 7% to £7.81bn (Q2 18: £7.31bn) in the three months ended 30 June, while adjusted operating profit almost doubled to £1.48bn (Q2 18: £0.78bn).

Vaccines star again

The vaccines business was once again the star performer, with sales soaring by more than a quarter to £1.59bn (Q2 18: £1.25bn) as demand for Shingrix continued to rise.

Sales of the Shingles jab soared by 150% to £386mln (Q2 18: £167mln), while sales of HIV drugs, including Tivicay and Triumeq, climbed by 4% to £1.21bn (Q2 18: £1.19bn).

Growth was much slower in the pharmaceuticals division, with sales edging 2% higher year-on-year to £4.31bn (Q2 18: £4.23bn) as Advair revenues plunged by a third to £412mln (Q2 18: £590mln).

Sales in the consumer healthcare business, which is in the process of merging with Pfizer, rose 5% to £1.92bn (Q2 18: £1.83bn).

Pfizer merger to complete ‘shortly’

“GSK delivered continued good operating performance in Q2 despite the loss of exclusivity of Advair,” said chief executive Emma Walmsley.

“We are increasing our expectations for the year and have updated our guidance for 2019.”

She added: “We remain focused on strengthening our R&D pipeline and the execution of new product launches.

“Positive clinical data received so far this year offer significant new opportunities for products in Oncology, HIV and Respiratory and we expect more important readouts in the second half of the year.”

As for the consumer healthcare merger with Pfizer, Walmsley said that should complete “shortly”.

Shares were up 0.5% to 1,668p on Wednesday afternoon.

Quick facts: GlaxoSmithKline PLC

Price: 1629.8 GBX

LSE:GSK
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Market Cap: £817.17 m
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