Generic exposure hits GSK prospects
Competition from generic drugs as three of its top-selling products lose patent protection affected GSK's 2003 full year results and will continue to have a significant impact in 2004.
Competition from generic drugs as three of its top-selling products lose patent protection affected GSK's 2003 full year results and will continue to have a significant impact in 2004.
Generic versions of the company's antibiotic Augmentin were available during the whole of 2003, causing sales to fall by 29% to £825m, while a generic equivalent of the antidepressant Paxil was launched in the US in September and had taken a 52% of prescriptions for the drug by January 2004.
That month also saw the start of limited generic competition in the US to another antidepressant, Wellbutrin. But uptake of the new once-daily formulation, Wellbutrin XL has been strong. Generic competition will continue to affect GSK for the first three quarters of the current year, after which a return to growth is expected, according to ceo Jean-Pierre Garnier.
Excluding exceptional items, pre-tax profits for the full year were 8% higher at £6.72bn (£6.52bn), while earnings per share advanced 10% to 82.1p (78.3p). Sales increased 5% cent to £21.4bn, partly due to strong sales of the asthma drug Advair. But fourth quarter earning plummeted by 24% as a result of Paxil coming off patent and the weakness of the dollar. The period also included £223m in legal costs, largely to settle the Relafen patent dispute, and a £178m charge related to cost-saving programmes.
Total pharmaceutical turnover grew by 5% in 2003 to just over £18bn - if sales of Augmentin and Paxil are excluded, turnover rose by 9%. US turnover was up 5% to £9.4bn- 13% excluding Augmentin and Paxil.
European turnover was up 2% to £5.1bn. Performance here continues to be negatively affected by government reforms on healthcare spending. Full year turnover in the International region increased by 8% to £3.7bn, with strong growth in Japan (+8%), Latin America (+14%) and the Asia Pacific region (+7%), where turnover exceeded £1bn for the first time.
Expenditure on r&d in 2003 increased by 4% at constant exchange rates to £2.77bn, and is likely to rise at a faster rate in 2004, according to Garnier, as more products move into Phase III. The company claims to have more than 20 potential blockbusters in its current pipeline, including a promising new type of protease inhibitor to treat HIV currently in Phase II.