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GlaxoSmithKline drug sales off to weak start in first quarter

GlaxoSmithKline posted a 10 percent fall in quarterly sales on Wednesday, highlighting some of the industry pressures behind last week's decision to trade more than $20 billion of assets with Swiss rival Novartis.

Reported sales in the first quarter, which were impacted by the strength of sterling, totaled 5.61 billion pounds ($9.45 billion), generating "core" earnings per share down 20 percent at 21.0 pence.

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Analysts, on average, had forecast sales of 5.84 billion pounds and core EPS, which excludes certain items, of 20.7 pence, according to Thomson Reuters.

The logo of GlaxoSmithKline Plc sits on a sign outside the pharmaceutical company's headquarters in London, U.K.
Matthew Lloyd | Bloomberg | Getty Images
The logo of GlaxoSmithKline Plc sits on a sign outside the pharmaceutical company's headquarters in London, U.K.

GSK said it still expected sales to grow over the year in constant exchange rate terms, after a 2 percent decline on this basis in the first quarter, but it is no longer giving a specific figure. Previously it had predicted 2 percent growth.

The company reiterated its target of increasing 2014 EPS by between 4 and 8 percent.

The first three months of 2014 were difficult for Britain's biggest drugmaker due to slow sales of its top-selling lung drug Advair, following reduced U.S. reimbursement coverage, and slow take-up of new lung drug Breo.

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Sales in China were also down on a year ago, following a damaging bribery scandal that broke last July.

The global drugs industry is having to contend with increasing pressure on healthcare spending, prompting a wave of restructuring as companies seek to focus on areas of strength and exit those where they lack the scale to compete.

GSK Chief Executive Andrew Witty aims to do that via a deal with Novartis to sell its cancer drugs and buy most of the Swiss group's vaccines, with the two firms also creating an $11 billion-a-year consumer health business.

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The revamp means GSK in future will get 70 percent of sales from its franchises in respiratory medicines, HIV, vaccines and non-prescription consumer health.

By Reuters

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