GSK saw a reduction in operating profit, group turnover and sales in Q2 after the company was hit by huge losses to the controversial Avandia diabetes franchise.
Sales of the drug slumped by 82% to £26 million following its suspension in Europe and restrictions in the US resulting in a 7% fall in operating profit and a 2% drop in group turnover.
Despite the losses Chief Executive Andrew Witty says the “outlook is very positive” for GSK and it is “well on track in the delivery of our strategy”.
The company’s operating profit, before major restructuring, fell to £2.27 billon, while group turnover reached £6.72bn. Pharmaceutical and vaccine sales were also down slightly by 3% to £5.44bn as a number of other products saw a reduction in revenue.
Valtrex (valaciclovir) saw sales fall by almost half (48%) to £86 million following generic competition, with vaccine sales also down 15% to £787 million.
However, sales were up 2% for Advair/Seretide (salmeterol and fluticasone) to £1.27 billion, by nearly a quarter (24%) for Avodart (dutasteride) to £188m, and by 14% for Lovaza (omega-3-acid ethyl esters) to £145 million.
Andrew Witty said that despite the losses on Avandia and Valtrex pharma sales benefited by performances in emerging markets and Japan. He said that the 1% decline in turnover in Europe was a good performance “given price reductions enacted by governments” which impacted sales growth by 6%.
He added that GSK’s restructuring programme is “near competition” and that savings delivery was approximately £300 higher than originally forecast. Going forward he said the company would press for further savings through improvements in support functions, supply chain and procurement efficiency.