GlaxoSmithKline says profit and sales will rise this year as the company awaits regulators’ approval of six drugs.

But in the meantime, the drug giant which operates its North American headquarters in RTP, plans to speed up cost-cutting.

Early Wednesday, GSK (NYSE: GSK) reported a sharp drop in fourth-quarter profit on the back of problems in Europe.

In response, GSK Chief Executive Officer Andrew Witty disclosed the company would accelerate a cost-cutting program with an emphasis on reducing expenses in Europe.

Through 2016, GSK plans to cut costs by $1.57 billion with associated charges of another $2.3 billion, Witty said in discussing quarterly earnings.

“Today, we are announcing an expansion of our new major change program, the first phase of which was announced in the second quarter last year. In total we expect the program to deliver annual cost savings of at least £1 billion ($1.57 billion) by 2016 with associated total charges of £1.5 billion ($2.3 billion),” Witty said.

“This includes a series of technological advances and opportunities to eliminate complexities, which we believe can continue to transform our long-term cost competitiveness in both manufacturing and R&D. Through this we are seeking to simplify our supply chain processes, shorten cycle times, lower inventory levels and reduce our carbon footprint. We believe these approaches can firmly position GSK at the forefront of our industry.

“In addition, given the sustained shift we have witnessed in the European reimbursement and pricing environment, we plan to initiate further restructuring of our European pharmaceuticals business to reduce costs, improve efficiencies and reallocate resources to support identified growth opportunities in these markets.”

Profits Plunge

The company says it made a net profit of 839 million pounds ($1.31 billion) in the final three months of 2012, down nearly 35 percent on the previous year.

Over the year it made a profit of 4.74 billion pounds against 2011’s 5.46 billion pounds.

GSK blamed the tough European environment for a 3 percent drop in sales 2012 and said the impact of discounted prices dented growth by around 6 percentage points.

To counter its difficulties, it said it would step up its cost-cutting program, particularly in Europe, to deliver savings of at least 1 billion pounds in 2016.

Earnings per share excluding some items will gain 3 percent to 4 percent at constant exchange rates, Glaxo said today in a statement. Sales will increase about 1 percent.

Glaxo is counting on the regulatory decisions to help revive the stock price after a drop last year that ran counter to a gain in the Bloomberg Europe Pharmaceutical Index of 18 companies.

The London-based company has filed for approval of the lung drugs Anoro and Breo, dolutegravir for HIV, dabrafenib and trametinib for skin cancer, and albiglutide for Type 2 diabetes.

“Disappointment could give way to some more positive news, with approval of new drugs,” Mark Purcell, an analyst at Barclays Plc, said in a report before Glaxo published earnings. “Increasing activity in the pipeline augurs well for long-term sustainability and opportunity to return the business to a more robust growth footing.”

The U.S. Food and Drug Administration will probably make a decision on dabrafenib and trametinib this quarter, followed by Breo in May, according to Deutsche Bank AG analysts.

Glaxo shares declined in 2012 as the company missed profit and revenue estimates in each of the first three quarters of the year.

Earnings Rose

Earnings excluding some items rose 1 percent to 2.29 billion pounds ($3.6 billion), or 32.6 pence a share, in the quarter from a year earlier. Analysts predicted 30.9 pence, the average estimate from 13 analysts surveyed by Bloomberg.

Sales dropped 3 percent to 6.8 billion pounds, compared with the average analyst estimate of 6.83 billion pounds.

The company said it expects to repurchase between 1 billion pounds and 2 billion pounds in stock this year.

Glaxo also plans to cut costs by at least 1 billion pounds a year by 2016 and expects related charges of about 1.5 billion pounds.

The drugmaker is seeking to capture more growth in emerging markets. The company increased its stake in an Indian consumer- health subsidiary to 73 percent from 43 percent, and also is buying shares in its Nigerian unit.

Glaxo is looking mostly at acquisitions of early-stage compounds and technologies, rather than focusing on spending billions of dollars to buy experimental medicines in late stages of testing, Patrick Vallance, the drugmaker’s head of pharmaceuticals research and development, said in an interview last month.

The U.K. company was the second-most active dealmaker among drugmakers last year, behind AstraZeneca Plc, executing 14 in- licensing agreements, according to an analysis by Bloomberg Industries.

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