British-based drugmaker GlaxoSmithKline (NYSE: GSK) posted a loss of $616 million for the fourth quarter of 2015 – compared with a profit of over $1 for the same period a year earlier- as the company moved to integrate new businesses.

Drugmakers like GSK have been trying to focus on strengths amid competition from generic drugmakers. Those deals included GSK’s sale of its cancer-drug business to Novartis in a swap for the Swiss company’s vaccines business and cash.

CEO Andrew Witty said Wednesday the healthcare market remains challenging, but GSK is focused on its integration and restructuring program. Witty says “progress means the group is well positioned to return to core earnings growth in 2016.”
“Sixteen and a half percent of our pharma business is made up of brand new products,” he said in video posted on the company website. “That gives us the highest level of confidence for the future of those businesses.”

Despite the deal with Novartis, the company has signaled its wish to return to the oncology business. Witty said that research and development have been delivering for the company.

The results come a day after GSK expanded its collaboration with Adaptimmune Therapeutics to boost its position in the oncology market. They will combine forces to drive Adaptimmune engineered T-cell receptor therapy to treat cancer.

GSK also has stepped up its investment activity, agreeing to put millions into a new research fund in the U.K. and joining Johnson & Johnson to back a huge investment fund based in London. (See links with this post for details.)

What Witty had to say about the financials:

“In 2015, we made substantial progress to accelerate new product sales growth, integrate new businesses in Vaccines and Consumer Healthcare and restructure our Global Pharmaceuticals business. This progress means the Group is well positioned to return to core earnings growth in 2016. Group sales grew on a reported (+6% CER) and pro-forma basis (+1% CER) in 2015.

“New product sales were £2 billion in 2015 with Q4 sales of £682 million demonstrating continued positive momentum. We now expect sales of new products to meet our target of £6 billion in annual revenues up to two years earlier than previously stated (2018 vs 2020). 2015 core EPS was 75.7p (-15%), ahead of the financial guidance we set out at our Investor Day in May.

“Total EPS was 174.3p (+>100%) reflecting gains from the recent 3-part transaction, partly offset by restructuring charges and a revaluation of the contingent consideration due to Shionogi relating to the improved outlook of our HIV business.

“For 2016, we continue to expect core EPS percentage growth to reach double-digits on a constant currency basis, although we are also mindful that the macro-economic and healthcare environment will continue to be challenging.

“As a result, we remain focused on improving commercial execution and realizing the benefits of our integration and restructuring program. As we detailed to investors in November 2015, we see significant opportunities for the Group’s new R&D portfolio of ~40 assets, of which approximately 80% have the potential to be first in class. In 2016/2017, development milestones are expected for assets such as: Shingrix, sirukumab, ICS/LABA/LAMA, cabotegravir, daprodustat and our Men ABCWY vaccine.

“We also expect up to 20 Phase ll starts for assets in Immunoinflammation, Oncology, Respiratory and Infectious diseases.

“Today, we have also published our latest estimate for the rate of return in R&D, which has been maintained at 13%. We have confirmed a full year ordinary dividend of 80p and, as previously announced, a special dividend of 20p. The Group continues to expect to pay an ordinary dividend of 80p for 2016 and 2017.”

Read the financials at:

GSK employs several thousand people in the Research Triangle and Zebulon, where it operates a manufacturing plant.