Shares in GlaxoSmithKline (GSK) lifted more than three per cent after the firm announced a rise in profits and sales, but it cautioned the market about a looming threat to its Advair drug.
GSK's revenue rose eight per cent to £30.2bn in 2017, while pre-tax profit increased to £3.5bn from £1.9bn the previous year.
Sales grew across the company's three businesses, with revenue from pharmaceuticals rising seven per cent to £17.3bn, vaccines up 12 per cent to £5.2bn and consumer healthcare two per cent higher at £7.8bn.
GSK also said it continues to expect a dividend of 80p for 2018, calming investor fears that it could be reduced.
The firm's shares were up more than 3.5 per cent at 1,286.4p at the time of writing.
Why it's interesting
Looking ahead, GSK said there was uncertainty surrounding growth in adjusted earnings per share because of a possible generic version of its Advair inhaler hitting the US market.
Without a generic competitor, earnings are expected to rise between four and seven per cent in 2018, but a mid-year generic launch, which Moody's said was "increasingly likely", would cause Advair's earnings to be flat to down three per cent. Advair is GSK's best selling product.
Chief executive Emma Walmsley struck a positive note, however, saying sales momentum from new and recent launches and improvements in operating performance mean GSK is "increasingly confident" in its ability to deliver mid to high-single-digit growth in adjusted earnings per share between 2016 and 2020.
GSK is working to build up its drug pipeline, and in 2017 it announced three key approvals in shingles, respiratory and HIV drugs.
What GSK said
Walmsley said: "Improving our pharmaceuticals business remains our main priority and we are strengthening our pipeline with a focus on priority assets in two current therapy areas, respiratory and HIV, and two potential areas, oncology and immuno-inflammation. We will provide a further update to investors at Q2 on our plans for R&D.
"Cash generation also continues to be a key focus with free cash flow for the year improving to £3.4bn. We met our commitment to pay a total dividend of 80p for 2017 and continue to expect to pay 80p for 2018."