RESEARCH TRIANGLE PARK – Drug giant GlaxoSmithKline reported earnings and revenues that topped analysts’ expectations on Wednesday but the company is cautious about 2018.

Here’s what CEO Emma Walmsley had to say about the financials for 2017 and looking ahead:

“In 2017 GSK delivered encouraging results from across the company with sales growth in each of our three global businesses, an improved Group operating margin, Adjusted EPS growth of 4% (CER) and stronger free cash flow.

“We are focused on competing effectively across our current portfolio and delivering three new launches which bring significant benefits to patients: Trelegy Ellipta which provides three medicines in a single inhaler to treat COPD; Juluca, the first 2-drug regimen, once-daily, single pill for HIV, helping to reduce the amount of medicines needed, and Shingrix, our new vaccine which represents a new standard for the prevention of shingles.

“Improving our Pharmaceuticals business remains our main priority and we are strengthening our pipeline with a focus on priority assets in two current therapy areas, Respiratory and HIV, and two potential areas, Oncology and Immuno-inflammation. We will provide a further update to investors at Q2 on our plans for R&D.

“We continue to make changes across GSK to drive improvements in performance and we have made several new appointments to key leadership positions.

“Looking ahead, in 2018 we could see a potential generic version of Advair in the US and our 2018 guidance reflects this. With the sales momentum we anticipate from new and recent launches and focused improvements in operating performance we are increasingly confident in our ability to deliver mid to high single digit growth in Adjusted EPS CAGR (2016-2020 at 2015 CER).

“Cash generation also continues to be a key focus with free cash flow for the year improving to £3.4 billion. We met our commitment to pay a total dividend of 80p for 2017 and continue to expect to pay 80p for 2018.

“Finally, I would like to thank all our customers, suppliers and employees for their support and hard work in 2017 and look forward to working with them in 2018 and beyond to deliver our strategic priorities and improved performance for GSK.”

Investor reaction

GSK shares rose after it said it was sticking to a generous dividend and that its blockbuster asthma medicine, Advair, was weathering competition from generic versions, The Associated Press reported.

Shares rose almost 4 percent after the company said sales increased about 1 percent in the fourth quarter from a year earlier to 7.6 billion pounds. The company also cheered investors by keeping the dividend unchanged at 80 pence a share.

The company nonetheless posted a fourth-quarter loss of 546 million pounds ($758 million) from a profit of 257 million pounds a year earlier. The company said the impact of U.S. tax changes reduced earnings by 1.63 billion pounds.

Walmsley said that improving the pharmaceuticals business remains GSK’s “main priority,” and that it was strengthening two current therapy areas, respiratory and HIV, and two potential areas, oncology and immuno-inflammation.

The company is bracing, meanwhile, for competition in the coming year in the respiratory and HIV businesses. The company says it can see a potential for a generic version of its blockbuster asthma drug, Advair.

Like many pharma companies, GSK is trying to continue to deliver growth as older treatments lose patent protection and new generic products eat away at profit margins.

But Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said GSK has benefited from the fact that the company’s rivals have so far struggled to get a generic version of Advair past U.S. regulators.

“GSK is seeing sales of its respiratory blockbuster hold up better than expected. However, the looming increase in competition remains a ticking time bomb under the group,” he said. “Advair accounts for 10 percent of group sales — if a generic makes it to market early next year, it will blow a hole in the GSK income statement.”

GSK employs several thousand people across the Triangle region.