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(Reuters) – GlaxoSmithKline forecast 2019 sales of its fast-growing shingles vaccine Shingrix to be “significantly” more than 1 billion pounds ($1.31 billion) on Wednesday as a drop in the British drugmaker’s free cash flow weighed on its shares.
FILE PHOTO: The GlaxoSmithKline (GSK) logo is seen on top of GSK Asia House in Singapore, March 21, 2018. REUTERS/Loriene Perera/File Photo
Shingrix, launched in 2017, is an important source of growth for Chief Executive Emma Walmsley, as she strives to improve GSK’s commercial performance after streamlining its operations and spinning off or selling units.
“Shingrix has delivered another fantastic performance in the quarter,” Walmsley said on a media call.
The strength in its vaccines unit, whose sales rose 20 percent in the quarter to the end of March, comes at a time when some of GSK’s major drugs face generic competition.
Walmsley, who took over as CEO of GSK in 2017, has been looking to re-energize the drugmaker’s pharmaceutical business, its biggest unit, buying U.S. cancer specialist Tesaro for $5.1 billion and giving it a presence in the oncology market.
“They are really refocusing into oncology and that’s going to take some time – to make that transition – so I think its going to be a difficult time for the pharma business,” said John Rountree, a partner at Novasecta Ltd, a biopharma consulting firm, adding that the vaccine business is growing.
Shares in GSK fell 1 percent to 1,557.8 pence at 1429 GMT, underperforming the FTSE 100, after the drugmaker revealed a 50 percent drop in free cash flow to 165 million pounds in the quarter, partly due to the impact of generic competition for its asthma treatment, Advair.
“GSK has again struggled to turn profits into cash,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
Net debt at GSK, which reiterated its 2019 forecast of a decline in adjusted earnings of 5 to 9 percent, hit 27.1 billion pounds at the end of the quarter from 21.6 billion at the end of 2018, as the drugmaker completed its purchase of Tesaro.
“Investors should probably give GSK the benefit of the doubt, at least for now,” Hyett said.
SHINGRIX SHOT
Sales of Shingrix, which treats shingles, a viral infection of the skin that causes painful rashes, were 357 million pounds in the quarter, up 61.5 percent from the fourth quarter.
Analysts had expected quarterly sales of 249 million pounds and are forecasting 2019 sales of 1.17 billion pounds.
Shingrix sales were largely driven by the United States, which benefited from market growth in new patient populations covered by immunisation recommendations as well as growth in Canada and the drug’s recent launch in Germany.
(For an interactive graphic on Shingrix sales, click here here)
Sales of Advair, however, fell 15 percent to 486 million pounds, due to competition from a generic version.
GSK’s turnover rose to 7.66 billion pounds ($10 billion) in the quarter, from 7.22 billion pounds a year earlier, and above a company-provided consensus here of analysts’ forecasts of 7.56 billion pounds.
Adjusted operating profit was 30.1 pence per share in the quarter, versus expectations of 26.1 pence per share.
($1 = 0.7653 pounds)
Reporting by Pushkala Aripaka, Noor Zainab Hussain and Ankur Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty, Patrick Graham and Alexander Smith
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