Glaxo grows profit despite drop in sales

City A.M. Reporter
GAINS on disposals have cushioned GlaxoSmithKline’s first-quarter profit from a sharp fall in sales of flu products, following last year’s pandemic-linked windfall.

The UK’s biggest drugmaker admitted the first three months of 2011 were tough but highlighted an improving picture in underlying growth as its diversified portfolio adjusts to pressure on prices and competition from generics.

Quarterly sales fell 10 per cent to £6.59bn while earnings per share before major restructuring rose nine per cent to 32.2p.

Analysts expected sales of £6.66bn and earnings per share of 30.4p, according to consensus forecasts.

Exceptional demand for vaccines and anti-flu drug Relenza flattered results a year ago and their absence this year – plus sharply lower revenue from diabetes pill Avandia and herpes drug Valtrex – lopped around £1bn off quarterly sales.

But chief executive Andrew Witty said yesterday the negative drag from these products was set to decline. “We expect underlying sales growth to translate into sustainable reported growth as we exit the year and move into 2012,” he said.

Quarterly profit was shielded by chunky disposal gains on the group’s stake in Quest Diagnostics and the sale of North American rights to coldsore treatment Zovirax, which together added 7.1p to earnings per share.