GlaxoSmithKline, one of the Triangle’s largest employers, reported a strong first quarter Wednesday, saying the results validate the global drug maker’s cost-cutting strategy and last year’s $20 billion asset swap with Novartis.
Global revenue was up 8 percent, rising to $8.9 billion, for the quarter, while the company’s $1 billion operating profit was GSK’s first increase in quarterly profit since 2013.
The company’s stock rose 76 cents Wednesday to close at $43.47.
The company employs about 2,600 in Research Triangle Park and 800 in Zebulon, where it manufactures asthma inhaler Advair and other products. Last year the London-based company eliminated more than 1,000 jobs in the state as part of worldwide corporate reorganization.
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“It may be worth reflecting that the strong delivery of the business performance has happened in that same quarter of the full implementation for our new ways of working,” said GSK chief executive Andrew Witty in a teleconference. “It really convinces us that the moves we’ve made are both good for our business.”
Witty, who plans to retire next year, noted that first quarter results were achieved despite a 19 percent downturn in revenue for its lead drug, Advair. Global sales for the asthma treatment were below $1.1 billion, the lowest in years.
However, Witty said that new respiratory products offset 70 percent of the revenue decline for Advair. Further erosion of Advair is expected and a cheaper generic competitor could appear on the market as early as next year, Witty noted.
Witty said that revenue gains from newly-introduced medications “just speaks volumes to the pace at which we are replacing our business and beginning to take the pressure off Advair as being the product around which all our fortunes revolve.”
“It is sill important,” Witty said, “ but it’s no longer the central element of the company as it once was.”
Advair’s U.S. patent expired in 2010 but the Diskus apparatus for inhaling is protected through 2016.
As recently as 2014, Advair accounted for 20 percent of GSK’s total sales, whereas the product accounted for about 12 percent of first-quarter revenue. Much of the erosion, Witty said, is due to pricing pressure, not actual sales declines.