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LONDON (Alliance News) - GlaxoSmithKline PLC Wednesday posted lower pretax profit and revenue in the third quarter as it continued to feel the impact of ongoing investigations in China and vaccine shipments in emerging markets fell.
The drugs giant said pretax profit in the three months to end-September was GBP1.40 billion, down from GBP1.49 billion a year earlier, while revenues dipped to GBP6.51 billion from GBP6.53 billiion in the previous year.
Sales of pharmaceuticals and vaccines were flat, with a 1% decline in pharmaceuticals offset by a 3% increase in vaccine sales as strong performances in the US and Europe were able to offset lower sales in emerging markets, Asia Pacific and Japan.
Core operating profit, the company's preferred measure of profitability as it excludes items like restructuring costs and acquisitions and disposals, rose 11%, driven by strong cost control and reductions in research and development expenditure.
Despite significant declines in sales from the company's Chinese business and lower vaccine shipments in emerging markets, Glaxo said that it had seen overall sales growth in the third quarter at constant exchange rates.
Pharmaceutical and vaccine sales in China were down 61%, with hepatitis treatments Zeffix down 73% and Hespera down 76%. Ongoing investigations into bribery in the business in China have disrupted operations. The company said it was continuing to co-operate with authorities, but it was too early to quantify the long-term impact of this issue. Legal charges in the quarter were GBP73 million.
Excluding China's falling sales, pharmaceutical and vaccine turnover grew 2% in emerging markets and Asia Pacific, with a 7% rise in Latin America and 26% in Russia offsetting 15% declines in India. Sales in India fell due to the impact of price reductions and wholesaler negotiations.
Vaccine sales in Japan declined 75%, due to HPV vaccines no longer being recommended positively, leading to falling sales of its Cevarix vaccine. Despite this, pharmaceuticals sales increased 7% due to strong sales of epilepsy drug Lamictal and prostatic hyperplasia treatment Avodart.
In the US pharmaceuticals and vaccines sales grew 2%, but the rise was limited by wholesaler and retailer de-stocking. Kidney cancer treatment Votrient sales grew 38%, and sales of thrombocytopenia treatment Promacta grew 27%.
Sales in the company's European pharmaceuticals and vaccines business were up 5% despite the challenging commercial environment, Glaxo said, as measures taken to restructure and focus the business had begun to show benefits. Sales of Votrient also boosted performance in Europe, growing the company's oncology and emesis segment by 32%.
Lupus treatment Benlysta saw sales of GBP42 million, mostly arising in the US, following the acquisition of Human Genome Sciences in the third quarter of 2012.
Consumer healthcare revenues increased 4% to GBP1.3 billion. In the US, strong performance from Sensodyne was partially offset by decreases in Smoking control sales. In Europe solid performances from nutrition and total wellness products boosted growth. However, growth in India, Japan and Asia was offset by the impact of new shelving requirements in China for cold relief drug Contac which caused sales of the product to drop 43%. Sales of pain relief gel Fenbid also dropped 40% in China.
Core earnings per share were 28.9 pence. The company proposed a dividend of 19 pence, up from 18 pence in the previous year.
GlaxoSmithKline reaffirmed its full year guidance for 2013, expecting core EPS growth between 3% to 4%, with sales growth around 1%.
Shares in the pharmaceutical giant were trading down 1.3% at 1,580.50 pence.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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