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LONDON (Alliance News) - Drugs giant GlaxoSmithKline PLC Wednesday reported higher fourth quarter profits as revenues increased and it cut costs, and it confirmed that it expects to launch late stage clinical trials on ten new drugs over the next two years.
The performance was driven by strong sales of vaccines and pharmaceuticals, while sales of consumer healthcare products was flat. Currency fluctuations also weighed on its reported results for the year.
The company reported a pretax profit of GBP2.55 billion for the three months to end-December, up from GBP1.73 billion a year earlier, as revenues rose to GBP6.91 billion, from GBP6.80 billion. Its earnings per share rose to 51.3 pence, from 17.5 pence.
Profit and revenue growth accelerated for Glaxo in the final quarter. Pretax profit for the whole of 2013 increased to GBP6.65 billion, from GBP6.60 billion in 2012, as revenues rose to GBP26.51 billion, from GBP26.43 billion. Earnings per share rose to 112.5 pence, from 91.6 pence.
The results for both the fourth quarter and full year were in line with analysts' forecasts.
Its 2012 results were restated to take account of a change in accounting rules governing employee benefits.
Glaxo said it expects its core earnings per share to grow between 4% and 8% in 2014 at constant currency rates and for revenues to grow 2% at constant exchange rates and excluding divestments it made in 2013.
It said it expects data from late-stage trials on six potential new drugs and vaccines over 2014 and 2015, while 10 new drugs will be advanced into the late-stage trial phase.
Chief Executive Officer Andrew Witty told journalists that the new treatments include a long-acting HIV drug which would only require patients to take a dose once a month or once every three months, another treatment for Malaria, a pre-eclampsia treatment and a triple combined drug therapy.
"The conversion of our advanced pipeline to approved products represents the next key step in our strategy to deliver sustainable organic growth and value to shareholders. The products we are currently launching will strengthen our existing businesses in Respiratory, Vaccines and support new growth in HIV and Oncology," Witty said in the earnings report.
Witty told journalists that Glaxo plans to file for approval for its Malaria vaccine this year, and that the vaccine could be available for use as early as late 2015. Witty noted that the vaccine "doesn't cover 100% of the risk", but that he believes it was the first vaccine available for Malaria.
In recent years, Glaxo, like many of the pharmaceutical industry's giants, has been selling assets and re-focusing its operations on a smaller number of businesses. Its three main divisions are now pharmaceuticals, vaccines and consumer healthcare, and within pharmaceuticals Glaxo's focus is on areas including respiratory diseases, cancer, and diseases of the central nervous system.
It said it delivered cost savings of about GBP400 million in 2013 and expects to deliver a similar amount in 2014.
The fourth quarter pharmaceutical revenue growth of 5% was driven by 7% growth in sales of respiratory drugs and 10% growth in anti-virals, both at constant exchange rates. Sales at Viiv Healthcare, which now controls Glaxo's HIV drug portfolio, were up 15% in the quarter.
Its consumer healthcare unit reported flat revenues in the quarter, while vaccine revenues rose 12%.
Sales of respiratory drugs grew 4% to GBP7.52 billion for the whole of 2013, seeing growth of 7% in the US, 4% in Emerging Markets and Asia Pacific and 9% in Japan, but declines of 3% in Europe.
In the US, respiratory drugs sales were boosted by growth in asthma treatments Advair and Flovent. Glaxo noted that asthma inhaler Breo Ellipta, which it launched in the fourth quarter of 2013, had already reached GBP5 million in sales.
Witty told journalists that generic competition to Advair in the US was still some years away. The US Food and Drug Administration last September cleared the way for rivals to bring generic rivals to the market faster, saying that long human tests wouldn't be required to show that the drugs worked in the same way as Advair.
In Europe, respiratory drug sales were down 3% due to increased competition, with sales of asthma treatment Serevent and Flovent down 17% and 7%, respectively.
Sales of anti-virals declined 6% for 2013 as a whole, reflecting declines in Hepatitis B treatments Zeffix and Hepsera in China, partly offset by tender shipments of flu treatment Relenza in Japan.
Witty told journalists that while Glaxo's Chinese business had begun to stabilise, the timing of the conclusion of investigations into its selling practices in the country was in the hands of the Chinese authorities.
The company is being probed by Chinese authorities following allegations that senior Glaxo executives had been involved in payments of up to USD500 million to doctors and hospital executives over the past six years. The allegations have led to the arrest of four Glaxo managers, with several more under house arrest.
Glaxo said again that it was too early to estimate the financial impact of the investigations.
The UK's largest pharmaceuticals company said that it had informed the US Department of Justice, The US Securities and Exchange Commission and the UK Serious Fraud Office about the investigation, although Witty declined to comment on the potential of an investigation by the Serious Fraud Office.
Currency moves weighed on the company's results. While full-year revenues were up 1% at constant currencies, they were flat when currency moves were taken into account. Core EPS was up 4% at constant currencies, but flat at actual exchange rates.
It said sterling's rise against a number of currencies, particularly the Japanese yen, weighed, partially offset by the pound weakening against the euro and US dollar.
Glaxo noted that if exchange rates held at their January levels for the rest of the year then the estimated adverse impact on 2014 sterling turnover would be around 5%, and the estimated adverse impact on 2014 core earnings per share would be around 6%.
It added that it is targeting share repurchases of between GBP1 billion and GBP2 billion in 2014 as it returns some of the cash from recent asset sales to its shareholders.
During 2013, Glaxo repurchased 92.4 million shares at a cost of GBP1.50 billion.
It raised its fourth quarterly dividend to 23 pence a share, from 22 pence last year, bringing the total for 2013 to 78 pence, from 74 pence in 2012.
Glaxo shares were up 2.2% at 1,588.50 pence Wednesday, the third-biggest rise on the FTSE 100.
By Steve McGrath and Hana Stewart-Smith; stevemcgrath@alliancenews.com; hanassmith@alliancenews.com; @stevemcgrath1; @HanaSSAllNews
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