The figuresThe British pharmaceutical giant's core operating profit for the second quarter fell four per cent to £1.35bn.
Why it's interestingSince GSK's deal with Novartis, where it traded its oncology franchise for the Swiss company's vaccines business, the multinational has become a lower margin company. Under the deal, the company will sell high-demand vaccines with low margins against high margin, but low demand, cancer drugs. Aforementioned vaccines have been the main driver of its sales, it said. Still, GSK has missed earnings expectations in three of the four previous quarters, and while the company has been up against stiffer competition for Advair – a respiratory drug and one of its key revenue earners – it said it expects a "significant recovery" in core earnings per share next year.
What GSK saidSir Andrew Witty, chief executive, said:
Our integration and restructuring plans are on track and we remain confident that we can achieve our targets for this year and return the Group to earnings growth in 2016.
Importantly the growth of our new pharmaceutical products is now more than offsetting sales declines of Advair. We will be showcasing further product innovation at our event for investors in November at which we expect to review new data and prospects for advanced and early-stage development projects in HIV, Oncology, Vaccines, Cardiovascular, Immuno-inflammation and Respiratory diseases
Despite higher competition and lower margins, GSK has beaten forecasts and says it is on track to grow earnings per share.