Advair, which has raked in more than £100bn for Glaxo since it launched in 1998, lost its final patent protection six years ago, but it has proven to be a difficult drug – and delivery system – for its rivals to copy.
That is until last week, when Dutch pharma giant Mylan Inc had its version finally approved by US regulators.
With a cheaper alternative now on the market, GSK will have to slash its prices in order to remain competitive, which it estimates will dent this year’s adjusted operating profit by at least £437mln, and possibly as much as £787mln.
Without any competition for Advair to deal with in the second half of 2018, as analysts had expected, GSK posted a bumper set of full-year results.
2018 sales and profits climb
Excluding currency fluctuations, group sales rose 5% to £30.82bn in the 12 months ended 31 December. Adjusted operating profit climbed 6% to £8.75bn, reflecting a bump in margins.
Continuing recent trends, Advair sales dropped by 21% although the inhaler still chipped in with revenue of £2.42bn last year.
GSK’s portfolio of HIV treatments were the star performers, with Triumeq, Tivicay and co bringing in £4.72bn – up 11% year-on-year.
The FTSE 100 firm’s recently-launched Shingrix vaccine also did well, with sales more than doubling to £784mln as it takes a stranglehold on the market.
Glaxo declared a 23p dividend for the final quarter of 2018, taking its total for the year to 80p. Despite the likely drop off in earnings, it expects to maintain that this year.
Re-building drug pipeline
“GSK delivered improved operating performance in 2018 with Group sales growth, strong commercial execution of new product launches, especially Shingrix, continued cost discipline and better cash generation,” said chief executive Emma Walmsley.
“We are making good progress against our priority to rebuild our Pharmaceuticals pipeline, particularly in oncology.
“Since July, we have doubled the number of oncology assets in clinical development to 16. During 2019, we expect to receive pivotal data on three new cancer medicines, all of which have the potential to be launched in the next two years.”
She added: “We are also focused on completing the transactions to divest our Consumer Healthcare nutrition business to Unilever; and the formation of our new joint venture with Pfizer that will create a new, world leading Consumer Healthcare company.”
GSK shares were broadly flat in early afternoon trading at 1,526.8p, although they had been slightly lower prior to the results release.