Glaxo earnings up as it defends bid for partner

City A.M. Reporter
DRUGMAKER GlaxoSmithKline (GSK) said yesterday its $2.6bn (£1.6bn) bid for long-time partner Human Genome Sciences was “full and fair” and it was the only obvious owner for the US biotechnology firm.

After releasing disappointing first-quarter results, Britain’s biggest drugmaker insisted its $13 a share offer was generous and chief executive Andrew Witty played down the possibility of increasing the price.

“We absolutely believe that we are the compelling owner for this business,” he said on a conference call.

“We have the rights and the operational control for the three main assets and we believe this is the right time to maximise value for both sets of shareholders.”

GSK is emerging from a trough caused by patent expiries, but it struggled to grow in the first quarter, when revenue increased just one per cent – less than expected – due to pressures on its business from government price cuts in Europe and some emerging markets, combined with tough year-ago comparisons.

Investors were disappointed by the results, which were flattered by the sale of US rights to a bladder drug that added some £170m to turnover.

Witty reiterated that GSK was well on track to return to sales growth over the whole of 2012, after a difficult few years, with gradually improving margins.

Quarterly sales were £6.64bn, generating core earnings per share (EPS) up five per cent at 27.3p.