GSK revenues surge yet generic drugs pose big threat

GlaxoSmithKline says new products helped first-quarter sales rise 17 percent from the year before but warned that competition from generic drugs may weigh on earnings later this year.

London-based GSK said Wednesday that its sales jumped to 7.38 billion pounds ($9.47 billion) from 6.23 billion pounds, ahead of analysts’ expectations for a rise to 7.3 billion pounds.

And net income more than tripled to 1.05 billion pounds.

However, GSK warned that adjusted earnings per share may be flat or decline this year if rivals introduce a generic competitor for GSK’s Advair respiratory treatment. Like many pharma companies, GSK is struggling to deliver growth as older treatments lose patent protection and new generic products eat away at profit margins.

The results were the first under new CEO Emma Walmsley.

“This is a positive start for the year with sales growth in all three of our businesses and an improvement in the Group’s operating margin,” she said in a statement.

“Our clear focus is on commercial execution and preparation for near-term launches in Respiratory, HIV and Vaccines. We will be reviewing these and other priorities for the business with shareholders alongside our Q2 results on 26 July.”

In a video, GSK CFO Simon Dingemans discusses Q1 2017 results.

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