GlaxoSmithKline third quarter profit up 11 percent

LONDON - GlaxoSmithKline PLC, the world's second largest drug maker by revenue, forecast a big boost from its swine flu vaccines before the end of the year as it reported an 11 percent rise in third quarter earnings on Wednesday.

London-based Glaxo posted net profit of 1.44 billion pounds ($2.35 billion) for the three months to Sept. 30, compared to 1.29 billion pounds a year earlier, helped by strong sales of its flu drug Relenza and gains in its consumer healthcare division.

Revenue rose 15 percent to 6.76 billion pounds, underpinned by surging sales in emerging markets.

Total sales lifted 3 percent, marking the first growth in two years, as the company made progress in breaking its reliance on the "white pill western market" by diversifying its business across geographical and product markets.

"This is the quarter that shows a build in momentum at GlaxoSmithKline," said Chief Executive Andrew Witty.

Glaxo's shares, however, dropped 0.9 percent to 1,245 pence after the overall earnings for the quarter just missed consensus forecasts of around 1.47 billion pounds.

The company, which has been hit by rising competition from generic versions of its previously patented drugs, is expected to receive an earnings windfall from products dashed out in response to the H1N1 flu virus.

Witty said that a market consensus forecast that Glaxo will make around 1 billion pounds in sales of H1N1 vaccines in the fourth quarter "is pretty accurate."

"In the fourth quarter, I expect further improvement including significant sales generated from our influenza products," Witty told reporters on a conference call immediately after the results were released.

Glaxo has reported orders for 440 million doses of its H1N1 vaccine Pandemrix, which began shipments last month.

Witty said that more orders had been taken since that update, without providing details. The company has also donated 50 million doses to the World Health Organisation.

"We continue to have government express an interest and signing contracts with us and we anticipate that will continue for some time to come, although the lion's share is probably passed," he said.

Sales of Relenza reached 182 million pounds over the quarter.

Relenza is competing with Roche Holding AG's Tamiflu, sales of which grew more than eight-fold in the third quarter to 994 million francs. The Swiss company expects full-year sales of the drug to reach 2.7 billion francs.

The demand for the influenza drugs comes as Glaxo repositions itself in the pharmaceutical sector, moving to replace falling sales of older drugs facing generic competition through acquisitions and other diversifying deals to boost its businesses in emerging markets and consumer healthcare.

Glaxo, which also sells the Ribena range of soft drinks, reported solid earnings in its other divisions, with consumer healthcare sales up 8 percent, against estimated global market growth of just 1.5 percent. Sales in emerging markets jumped 25 percent.

Witty added that he was happy with progress in the company's U.S. market where management has been overhauled to cope with the rise in generic competition. The coming year would remain "challenging" in that market, he said.

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