London: GlaxoSmithKline, the world’s second-biggest drugmaker, beat expectations with its second-quarter earnings on Wednesday and said momentum in the second half would pick up on the back of flu vaccine sales.
Glaxo said growing sales of new products and its portfolio of flu products should help drive its improving performance into the second half of the year as the heavy impact of generic competition to its formerly patented drugs begins to abate.
Shares in Glaxo, which had been down 1% ahead of the earnings statement, recovered to stand flat by 1156 GMT. The DJ Stoxx European health care index was up 0.5%.
WestLB analyst Simon Mather said that at first glance the results were broadly in line with what he expected, but he pointed out that there were lower-than-expected restructuring costs and there was more of a boost from currency effects than he had first thought.
Healthcare companies have proven relatively resilient to the recession as it is typically one of the last areas where consumers cut spending.
Glaxo’s figures follow upbeat results from US rivals Merck & Co, Schering Plough and Eli Lilly. The world’s biggest drugmaker Pfizer’s earnings also just beat forecasts.
But pharmaceuticals shares have begun to underperform as cyclical sectors benefit from the first signs of a possible recovery.
Roche, Bristol-Myers Squibb and Wyeth are all due to report on Thursday.
Glaxo has gained substantially from the pound’s decline because it sells the vast majority of its products abroad.
However, it still faces heavy generic competition for key drugs, having lost patent protection on a raft of central nervous system medicines including Lamictal, Imitrex, Wellbutrin XL and Paxil CR.
Pretax, pre-restructuring profit in the second quarter was £2.25 billion ($3.7 billion), equivalent to earnings per share before major restructuring charges of 31 pence, up 14%, on sales up 15% at 6.747 billion.
Analysts had forecast Glaxo EPS of 29.8 pence and sales of just under £6.7 billion, according to a Reuters poll.
The company said it had received H1N1 vaccine contracts for 195 million doses and that it was in talks with over 50 governments of both developing and developed countries in relation to swine flu vaccine. It said some of the talks were at a “very advanced” stage.
“I therefore expect further significant orders,” chief executive Andrew Witty said in a statement. “Shipments are expected in the second half of 2009 and early 2010”.