GlaxoSmithKline’s second-quarter earnings slipped, but not as much as analysts had feared, encouraging investors and sending the pharmaceutical giant’s stock up 2.2 percent on Wednesday.
In its first earnings report since completing a $20 billion asset swap with Novartis, GSK said Wednesday its global sales were up 6 percent, to $9 billion, but core operating profit slipped by 4 percent to $2.1 billion.
The British drug maker employs about 4,200 people in the Triangle, down from about 5,000 a year ago, having largely eliminated its research and development functions here. GSK has 3,369 employees at its North American headquarters in Research Triangle Park and 850 at its drug manufacturing facility in Zebulon.
The company reaffirmed its financial guidance for the rest of the year and outlook for 2016, but said its per share earnings will decline this year as Advair sales decline.
GSK is in the midst of a corporate restructuring as it tries to reverse several years of declining revenue and is weaning itself from its dependence on Advair, the blockbuster asthma drug. The company’s best seller, Advair accounted for about 20 percent GSK’s sales last year; Advair generated $1.5 billion in worldwide sales for GSK in the second quarter of 2015, down from $1.8 billion during the same three-month period a year ago.
One of the big unknowns in GSK’s future is the potential for a competitor to come up with a generic form of Advair; the treatment lost its U.S. patent protection in 2010 but is still patented for its Diskus apparatus through 2016.
GSK CEO Andrew Witty told analysts on a conference call that he didn’t know when or if a generic will come on the market. One of the challenges for a generic version would be replicating the Diskus technology for inhaling the medication.
“The burden of proof sits with the generic company to make this happen,” Witty said. “We have run our numbers for the next five years, through 2020 and, just for the sake of the analysis, we have run that with an assumption that a generic arrives in that period.
“We have given guidance, inclusive of the assumption of a generic Advair coming into the business,” Witty said. “Of course, if we don’t get generic Advair, it will be much better.”
To prepare for a generic, GSK is rolling out a series of asthma inhalers and respiratory treatments, which Witty called “a critical element of the new portfolio.” The company is also shoring up its vaccines business unit through the Novartis deal and says it has more than 40 new drugs – pharmaceuticals and vaccines – in the pipeline.
GSK’s strategy also involves corporate decisions to minimize the likelihood of ethics controversies.
“The company is the first and only company in the world to have committed to stopping all payments to doctors, outside of research,” Witty said. “We are the first company to stop payments of bonuses to [sales] representatives, and those things have been very well received inside China as well as elsewhere.”
GSK shares closed Wednesday $42.63, up 92 cents. The stock is flat for the year.