GlaxoSmithKline (GSK), has posted net profit of £8,038 million during the first quarter ended March 2015 as against £719 million in the corresponding period of last year, mainly due to other operating income of £8,712 million. Its sales remained almost stagnant at £5,622 million as compared to £5,613 million. Its R&D expenditure increased to £867 million from £859 million.
Its total pharmaceuticals sales decreased by 7 per cent to £3,523 million during the first quarter of 2015. Its vaccines sales also improved by 10 per cent to £699 million and that of consumer healthcare division moved up by 24 per cent to £1,381 million. The sales of global pharmaceuticals declined by 12 per cent to £3,077 million and that of ViiV Healthcare improved by 42 per cent to £446 million. All three businesses shows the impact of the Novartis transaction. The global pharmaceutical sales decreased due to decline of 9 per cent in respiratory sales and a 20 per cent decline in sales of established products. Sales of oncology products in the first two months, prior to the disposal to Novartis, amounted to £216 million, an 18 reduction compared with the three months of Q1 2014. Its total sales in US declined by 5 per cent to £1,795 million. However its sales in Europe and other international market improved by 5 per cent and 2 per cent to £1,557 million and £2,270 million respectively.
Its pharmaceutical sales in US declined by 23 per cent to £1,019 million. With in respiratory, Advair sales in US were down by 21 per cent to £392 million and Flovent sales declined by 38 per cent to £83 million. Similarly, lower sales in established products was due to Lovaza, which declined by 75 per cent to £28 million following the launch of generic competition in April 2014. Its pharmaceutical sales in Europe declined by 7 per cent to £815 million.
GSK's product portfolio is now well diversified with 10 products generating annual revenues of more than £500 million per year. The transaction has significantly strengthened GSK's position in the US, Russia, Germany and number of emerging markets, including China. GSK has the most comprehensive vaccines portfolio. Within pharmaceuticals, GSK remains confident of maintaining its global leadership in respiratory well into the next decade. Total respiratory sales are expected to return to growth in 2016. By 2020, the group expects total respiratory sales to be at or above the level of sales in 2015.
HIV is the other key therapeutic franchise in the current pharmaceutical portfolio. Having review this very positive outlook, GSK has concluded that retaining its full, existing holding in ViiV Healthcare is in the best interests of the Group and GSK will not now be initiating an IPO of a minority stake.
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