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LONDON (Alliance News) - GlaxoSmithKline PLC on Wednesday posted a rise in first half profit due to strong performance of its new shingles drug.
In the first half ended June 30, the pharmaceutical company's pretax profit was GBP1.72 billion, up 25% from GBP1.37 billion the year before.
The result was weighted toward the first quarter, with the second quarter contributing GBP614 million to profit. This was nonetheless an improved performance over the 2017 second quarter when it recorded a GBP178 million loss.
The company's turnover reduced in the first half to GBP14.53 billion from GBP14.70 billion. The company's second quarter contributed GBP7.31 billion to first half turnover.
Glaxo declared a 19 pence per share dividend for the second quarter and said that it continues to expect full dividend dividend to total 80p per share.
Moving forward, Glaxo upgraded its full year expectations following the successful launch of its shingles vaccine Shingrix, as well as increased earnings from its recent buyout of Novartis International AG's stake in a joint venture.
The healthcare company expects 2018 adjusted earnings per share growth of between 7% and 10% at a constant exchange rate provided a generic competitor to the company's asthma drug Advair is not introduced in the US.
If a generic to Advair is introduced, then Glaxo expects annual adjusted earnings per share growth of between 4% and 7%.
"We are today upgrading our guidance for constant exchange rate growth in adjusted earnings per share for 2018. This reflects increased sales expectations for Shingrix, the positive effect of the completed consumer healthcare buyout as well as the delay of a potential generic version of Advair in the US...We remain increasingly confident in our ability to deliver mid to high single digit growth in adjusted earnings per share," Glaxo Chief Executive Emma Walmsley said.
Glaxo spent GBP925 million on research and development in the second quarter, bringing its half-year expenditure to GBP1.83 billion versus GBP2.22 billion the year prior.
The company announced a new restructuring programme which aims to deliver GBP400 million in annual cost savings by 2024. The restructuring is expected to cost GBP1.7 billion, comprised of a GBP800 million cash cost and a GBP900 million non-cash cost.
The savings made by the programme are intended to fund Glaxo's research & development costs. This is particularly significant as Glaxo signed an exclusive four-year research & development agreement with genetic testing company 23andMe Inc.
The aim of the agreement is to use 23andMe's genetic database, which is the largest in the world, to help develop new medicines. All activities will initially be co-funded but both companies have the option to reduce their funding share. Glaxo has already made a USD300 million equity investment in 23andMe.
Shares in Glaxo were trading 1.2% higher at 1,576.00p each on Wednesday afternoon, the second best performer in the FTSE100 Index.
