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Excluding restructuring charges relating to the new Operational Excellence program, which commenced in October 2007, and significant acquisitions, the company's second quarter net profit rose to GBP1.44 billion or 27.2 pence a share from GBP1.35 billion or 24 pence a share in the year-ago period. The restructuring charges included GBP187 million related to the new operational excellence program and acquisition of Reliant Pharmaceuticals.
Including charges, Glaxo's net profit for the quarter was GBP1.30 billion, down 3.5% over the year-ago period. On a per share basis, the company's net profit , including charges was 24.6 pence a share for the second quarter of fiscal 2008, compared to 24 pence a share in the same period last year.
The company's sales for the quarter climbed to GBP5.87 billion from GBP5.67 billion in the same period last year.
Glaxo operates under divisions - Pharmaceuticals and Consumer Healthcare.
Pharmaceuticals' sales for the quarter dropped 2% to GBP4.92 billion. In the United States, turnover fell 8% to GBP2.1 billion, impacted by increased generic competition and a reduction in Avandia sales. Excluding these products U.S. sales grew 13%. In Europe, sales were up 4% to GBP1.6 billion, with improving sales growth from vaccines and newer products. Sales in Emerging Markets were up 15% to GBP563 million and in Asia Pacific sales were flat at GBP464 million.
On a constant exchange rate, the company's total sales from respiratory products for the quarter increased 4% to GBP1.38 billion. Total sales of Seretide/Advair, for asthma and COPD, were up 6% to GBP 964 million, with US sales improving 2% to GBP473 million.
Glaxo noted that the use of Advair for treatment of COPD continues to grow, and in April the company received FDA approval for the expanded use of Advair for reduction of exacerbations in COPD. Advair is the only currently available treatment approved for this use.
The total sales from anti-virals for the quarter dropped 5% to GBP751 million, with the U.S. posting a 2% drop and Europe recording a 12% decline.
Vaccine sales grew 34% to GBP577 million, driven by strong US sales of hepatitis vaccines, which grew 43% to GBP66 million. The company's recently introduced prepandemic flu vaccine accounted for GBP34 million of vaccine sales.
During the quarter, sales of anticonvulsant drug Lamictal grew 18% to GBP323 million and sales of herpes medication Valtrex grew 19% to GBP277 million.
Sales of Lovaza, a medicine for lowering very high triglycerides, which was acquired by Glaxo in 2007, were GBP67 million for the quarter.
Global Avandia sales declined 46% in the quarter to GBP194 million, with the largest decline in the US market with sales down 54% to GBP104 million.
Due to an introduction of a generic version of the 150mg dose of Wellbutrin, the drug sales dropped 27% to GBP97 million. Sales of Zofran also dropped 49% to GBP31 million, due to the impact of generic competition.
Sales of Requip for Parkinson's disease/Restless Legs Syndrome declined 37% to GBP58 million, hurt by introduction of generic version of the drug in the USA in May. The company received FDA approval for Requip XL, a once a day treatment for Parkinson's disease, in June and is expected to launch the product this month.
Glaxo said that sales of its heart drug Coreg IR declined 97% to GBP5 million, due to generic competition in the USA. Sales of Coreg CR, which was launched last year, were GBP39 million.
Glaxo's operating profit for the quarter increased to GBP2.12 billion, up 10% from GBP1.92 billion in the year-ago quarter.
Sales of Overall Consumer Healthcare segment, which includes Over the Counter medicines, Oral Healthcare and Nutritional Healthcare, declined 1% to GBP951 million, with US sales down 25%, hurt by lower reported sales of weight loss drug alli and continued competition to the company's smoking control franchise. Excluding sales of alli and smoking cessation products, the second quarter Consumer Healthcare sales grew 7%.
For the first half of fiscal 2008, the company's net profit , excluding charges decreased to GBP2.84 billion from GBP2.88 billion in the same period last year. On a per share basis, the company's net profit, excluding charges for the recent six-month period increased to 52.5 pence a share from 50.4 pence a share last year.
Including charges, the company's net profit for the first half of fiscal 2008 was GBP2.64 billion or 48.7 pence a share.
Total sales for the recent six-month period rose to GBP11.56 billion from GBP11.26 billion in the same period last year.
A new restructuring program announced in October of 2007 is expected to deliver annual pre-tax savings of GBP700 million by 2010. The company expects to realize about GBP350 million of savings in 2008 and GBP550 million of savings in 2009.
During the quarter, the company declared a second interim dividend of 13 pence per share, making 26 pence for the half year.
On June 5, the company acquired Sirtris Pharmaceuticals Inc., a pharmaceutical company based in the USA for GBP376 million.
Thus far in 2008, the company received 12 approvals including Entereg, Kinrix, Rotarix, Treximet, and Prepandrix, Tyverb for advanced breast cancer.
In June, Glaxo won a significant tender for use of Cervarix in the UK's national immunization program to protect against cervical cancer.
The company said it plans to vary the pace of its remaining GBP6.5 billion share repurchases according to the investment opportunities available. Glaxo said it now anticipates the full GBP12 billion program to be completed after the previously anticipated end date of July 2009. The company has plans to repurchase around GBP1 billion of shares in the last five months of this year.
GSK is up 1.09% trading at $49.08 on a volume o 705,496 shares. On the LSE, the stock is up 0.41% trading at 1,229 pence a share on a volume of 19.85 million shares.
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