BackProduct launches will be critical to GSK Pharma’s future plans
Product launches will be critical to GSK Pharma’s future plans
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GSK’s sales rose by 19% to Rs547 crore over the year-ago period, ahead of the drug market growth of 14-15%. Its growth was mainly due to higher volumes and a richer product mix, with price playing a negligible role, according to the company. Sales of vaccines rose by around 48% during the quarter. The parent company’s hunger for growth in emerging markets has made GSK a more aggressive player.
The drug maker is driving growth through new offerings, with five new products slated for a 2010 launch, after having launched eight products between 2008 and 2009. It’s backing them up with a higher number of staff in the field. After hiring 200 people in 2009, it plans to add 250 more in 2010.
GSK’s ability to sustain this better-than-expected sales growth in the future depends on a few factors. Once new products acquire a certain sales level, growth rates could taper. A concerted sales push with the help of an expanded field force could make a difference. Its ability to launch new products in 2010 as per plan will also be a critical factor.
The company is, however, taking a conservative approach and believes that it could match the pharmaceutical market growth.
Operating profit margin rose by about 1 percentage point to 37.6%. The company is cautious on this front, too, anticipating higher hiring and promotions may lead to lower margins, and believes a 33-35% range is sustainable in the long run.
Though operating profits grew by 22%, growth in net profit before exceptional items was higher at 28%, primarily due to dividend income received from a subsidiary.
In 2010, GSK’s hiring and product promotion plans could cause some volatility in quarterly numbers. But in the longer run, it appears to have stepped up into a phase of higher growth.
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