Full-year profits at pharmaceutical giant GlaxoSmithKline (GSK) fell short of analysts’ expectations while it also guided for a fall of between 1% and 4% in next years’ earnings, pushing the shares 3% lower at £17.61.
Adjusted earnings per share (EPS) grew 1% to 123.9p, compared with market expectation of 125p according to Refinitiv data.
The vaccine division was the standout performer, where revenues jumped 19%, aided by the success of the Shingles vaccine, Shingrix more than doubling, while meningitis vaccines also recorded notable growth.
Respiratory revenues were up 15% driven by chronic obstructive pulmonary (COPD) drug Trelegy Ellipta and asthma drug Nucala. Established pharmaceutical sales fell 8% impacted by the loss of exclusivity of Advair.
Pricing pressures, particularly in the respiratory division and high research and development costs including ‘a significant increase in Oncology and investments in promotional product support’ kept a lid on profits.
SPLITTING OUT CONSUMER HEALTHCARE
The company has previously announced joining forces with US firm Pfizer to combine their respective healthcare franchises and today GSK gave an outline of the costs and benefits.
A new programme has been initiated to prepare for the separation into two companies: New GSK, a biopharma company focused on science related to the immune system, and its consumer healthcare arm.
The aim is to deliver £0.7bn of annual cost savings by 2022 with a cash cost of £1.6bn, met by the anticipated divestment proceeds. There will be a one-time cost of between £600m to £700m to prepare for the separation of the consumer healthcare arm.
DIVIDEND MAINTAINED
Separately the company guided for 2020 earnings to decline by between 1% and 4% while maintaining the dividend at 80p per share, while analysts had been expecting 3.5% growth.
The maintained dividend may come as some relief because there was speculation in some quarters it might be cut as the company invests to rebuild its Oncology franchise.
