Asthma drug drives GSK profit

October 23, 2001 Posted: 1200 GMT

LONDON (CNN) -- GlaxoSmithKline said on Tuesday third-quarter earnings rose 19 percent on strong demand for new asthma drug Advair.

Solid sales figures earlier this month from Swiss groups Novartis and Roche Holding showed demand for medicines remains robust, despite the economic slowdown. And U.S. giant drugmaker Pfizer (PFE: up $0.67 to $43.00, Research, Estimates) reported improved third-quarter earnings earlier this month and said it is comfortable with future earnings forecasts.

Despite Bayer's forced withdrawal of the cholesterol-lowering drug Baycol, which GSK marketed in the U.S., GSK said it is on track to meet its goal of 13 percent earnings per share growth for the year.

Net income in the three months to September 30 rose to £960 million ($1.4 billion) from £802 million in the same period a year ago. At the pretax level, profit rose 17 percent to £1.35 billion.

Sales rose 13 percent to £4.99 billion, helped by strong sales of drugs to treat asthma and Avandia for diabetes.

Earnings per share rose 20 percent to 15.8 pence. Analysts polled by Reuters predicted third-quarter earnings per share of 15.3 pence to 16.5 pence, on sales of £4.8 billion to £5.1 billion.

"New products continued to help drive growth – the performance of Seretide/Advair, in particular, was excellent," said chief executive Jean-Pierre Garnier.  For 2002, Garnier repeated his prediction of earnings growth in the mid-teens.

To date, Garnier has shown safe hands in cutting costs and delivering earnings growth, following the merger late last year of Glaxo Wellcome and SmithKline Beecham. The merger is expected to save the company £400 million this year.

GSK has a strong cabinet of respiratory medicine but investors are looking for reassurance that the company is addressing a looming gap in new products beyond 2003. GSK said it was discontinuing development of an experimental drug for type 2 diabetes, which had reached the final Phase III stage of testing.

The company said it has 113 projects in clinical developments and would continue "to pursue external collaborations to further enhance its product development pipeline and has initiated six new collaborations, so far, in 2001."

GSK announced in July it had formed a joint venture with Shionogi of Japan to develop several experimental drugs, including new agents to fight HIV and neurological disorders.

Shares in GSK (GSK), which have been traded steadily over the year while the FTSE 100 benchmark index in London has lost 20 percent of its value, slipped 0.8 percent to 1,890 pence in midday London trading.

GSK also announced plans on Tuesday to buy back stock worth £4 billion as and when it sees fit.

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