Glaxo Profit Slides On Mixed Bag

GlaxoSmithKline PLC saw first-quarter profits slide 30% on Wednesday, a week after it announced a series of multibillion-dollar asset swaps with Novartis AG to bolster its consumer health and vaccines businesses.

Sales at the U.K. drug maker fell 14% to GBP5.61 billion, from GBP6.47 billion in the same quarter of the previous year. Sales were dented by currency movements against a strengthening pound, wholesalers and retailers destocking Glaxo's asthma drugs after stocking up the previous quarter, and the exclusion of Glaxo's best-selling drug--the asthma treatment Advair--from U.S. prescribing lists in January.

Profit attributable to shareholders fell 30% to GBP668 million in the first quarter, from GBP961 million in the same quarter of the previous year. Profits were boosted in the same quarter of 2013 by one-off royalty payments, and have been dented by asset disposals.

Core earnings per share--a measure which excludes legal costs, asset impairments, profits on asset disposals and restructuring costs--fell to 21 pence from 26.9 pence in the same quarter of the previous year, in line with analyst expectations.

The deals signed with Novartis last week, worth more than $20 billion in total, will see Glaxo sell its high-margin cancer drug business to its Swiss rival and bulk up its own businesses in consumer health and vaccines, both lower-margin businesses but with more reliable cash-flows.

Write to Hester Plumridge at [e-mail]

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