British drug maker GlaxoSmithKline, one of the Triangle’s largest employers, got a second-quarter boost from the post-Brexit decline of the British pound. The company also saw sales gains in its new drug portfolio developed to replace expiring blockbuster medications.
GSK posted a $222 million operating loss, but core results showed an operating profit of $2.4 billion, on global revenue of $9.2 billion. Changing currency exchange rates between the British pound and U.S. dollar boosted sales by 7 percent and added 26 percent value to GSK’s core earnings.
The company also reached an important milestone: For the first time, sales growth in new respiratory drugs exceeded sales declines of Advair, long GSK’s best-selling medication. Advair and many of the new asthma drugs are manufactured and packaged at GSK’s Zebulon facility, where the company employs about 800 employees and contractors.
Since U.K. citizens voted this year to leave the European Union, the British pound has plunged to its lowest point in three decades.
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GSK employs about 2,600 at its North American headquarters at Research Triangle Park. The company’s Triangle workforce is down by about a half since a restructuring last year shifted most R&D work out of North Carolina.
GSK’s shares closed at $45.12 on Wednesday, up 96 cents. A weaker pound helps GSK’s earnings because most of the company’s costs are incurred in the United Kingdom but most of its sales are made in the United States.
Global sales for Advair were nearly $1.3 billion in the quarter, and it’s still the company’s best seller by a wide margin. GSK’s next best-selling drug in the second quarter was Triumeq, an HIV drug made in Zebulon, that accounted for $577 million in sales.
Meanwhile, new product sales doubled to about $1.4 billion in the second quarter. New drugs now account for 23 percent of GSK’s total pharmaceutical sales, CEO Andrew Witty told analysts.
Advair’s U.S. patent expired in 2010 but the Diskus inhaler apparatus is protected through 2016. A generic version of the drug is widely expected next year, and GSK has been preparing a new generation of asthma inhalers so that it is not financially crippled if a cheaper generic version of Advair hits the market.
Quintiles exceeds expectations
Driven by double-digit growth in its main product development services business, Quintiles reported better-than-expected second-quarter results.
The Durham pharmaceutical services company also boosted its earnings-per-share guidance for the full year. But it dialed back its 2016 revenue projection in the face of disappointing results from its commercial sales segment.
Quintiles announced in May that it was merging with healthcare information giant IMS Health Holdings in an all-stock deal valued at $23 billion.
The combined company, Quintiles IMS Holdings, will have dual headquarters in Durham and Danbury, Conn., and will be led by Ari Bousbib, the chairman and CEO of IMS. Quintiles CEO Tom Pike will be vice chairman and Dennis Gillings, Quintiles’ founder, will be lead director on a board that will consist of six directors named by each company.
That deal, which is expected to be consummated in the fourth quarter, has gotten mixed reviews from analysts but investors seem to have warmed up to it. Quintiles shares closed Wednesday at $75, down 45 cents from the previous day; its shares closed at $69.10 the day before the merger was unveiled.
Quintiles’ service revenue rose 8.6 percent to $1.17 billion; revenue rose 7.9 percent after adjusting for currency fluctuations.
Adjusted net income rose 14 percent to $112.5 million, or 93 cents per share. Analysts polled by Bloomberg News had been projecting 90 cents per share.
Net new business signed up during the quarter, a leading indicator of future revenue, rose 24.4 percent.
Quintiles’ product development business, which Pike described during a conference call with analysts as the company’s crown jewel, posted a 13.2 percent increase in revenue. It accounted for 76 percent of total revenue. But the commercial sales business’s revenue fell by 3.8 percent. Pike said commercial sales is a “lumpy” business that was affected by contract cancellations.
“As indicated in our guidance, you should not expect a full turnaround in commercial (sales) this year,” Pike said.
Quintiles said Wednesday it expects revenue for the year to rise between 6 and 7 percent this year, down from growth ranging from 7 to 8.5 percent that it previously projected. But it raised its guidance for earnings per share to $3.78 to $3.88, up from a range of $3.70 to $3.85 previously.
IMS Health also reported second quarter results that exceeded analysts’ expectations Wednesday. Revenue rose 8.1 percent to $802 million. Net income totaled $24 million, down from $47 million a year ago; the company said the decline was principally the result of higher restructuring charges.