Glaxosmithkline yesterday reported a 5% increase in fourth-quarter earnings but forecast that earnings growth would dip this year, despite the introduction of several products, as competition from generic drugs intensifies.
Glaxosmithkline yesterday reported a 5% increase in fourth-quarter earnings but forecast that earnings growth would dip this year, despite the introduction of several products, as competition from generic drugs intensifies.
The world's second-largest pharmaceutical company said net profit for the three months ended on December 31 came to £1.18bn, up from £1.12bn a year ago. Quarterly revenue rose marginally to £5.96bn from £5.91bn. This missed analysts' estimates of £6.11bn.
For the full year, net profit rose 15% to £5.39bn. Revenue jumped 7% to £23.23bn.
Jean-Pierre Garnier, Glaxo's chief executive, said the company has a healthy pipeline, with 10 new products added to its late-stage development plans in the past year.
"We now have over 30 significant product opportunities in phase III development or registration, including five major new products planned for launch this year," he said. "For all these reasons, we look to the future with confidence."
Glaxo plans to introduce breast cancer drug Tykerb, cervical cancer vaccine Cervarix, rhinitis drug Allermist, heart disease drug Corex CR and migraine treatment Trexima during the year.
The company also ann- ounced that it has received approval from the US Food & Drug Administration for Alli, its over-the-counter weight-loss drug.
Alli, known clinically as Orlistat, is a lower-dose version of Xenical, a prescription weight-loss medicine sold by Swiss drugmaker Roche.
It will be the first FDA-approved weight loss product available without a prescription. Glaxo hopes to have it in stores across the US by summer.
However, 2007 is expected to be a difficult one for Glaxo, as nausea treatment Zofran and antidepressant Wellbutrin XL face generic competition, while asthma inhaler Advair and diabetes drug Avandia will have to fend off the launch of newer competing products.
The company said it expects earnings-per-share growth of 8% to 10% this year at constant exchange rates. That compares to 2006 EPS growth at constant exchange rates of 19% to 95.5p from 82.6p in 2005.
Shares in the drugmaker rose 22p to 1422p on the London Stock Exchange. City analysts said GlaxoSmithKline is generally performing better than some of its peers.
Earlier this month, AstraZeneca, the UK's second- largest drugmaker, said it will eliminate 3000 jobs, or about 4.6% of the workforce, to reduce costs and counter competition from copycat versions of its best-selling blood pressure medicine.
The cuts will come in the next three years and result in charges of about $500m, London-based AstraZeneca said last week. The company said fourth-quarter profit jumped 17%.
In January, Pfizer, the world's largest drugmaker, said it would eliminate 10% of its workforce. It said that fourth-quarter profit excluding certain costs, while beating analysts' estimates, fell by 12%.
Pfizer announced yesterday that it is shutting one of its plants in the Republic of Ireland and plans to lay off about 545 employees, nearly a quarter of its Irish workforce. The drug firm is one of the biggest foreign employers in Ireland.
