Will Shingrix be GlaxoSmithKline plc's next blockbuster?

London-listed pharmaceutical giant GlaxoSmithKline(LSE: GSK) announced today that it has submitted a Biologics License Application (BLA) for its candidate shingles vaccine, Shingrix, to the United States Food and Drug Administration (FDA), seeking approval for use in the prevention of herpes zoster (shingles) in people aged 50 years or over.

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It's thought that sales of the potential new treatment could be as much as $1bn a year, making it one of the firm's new-generation blockbusters. If Shingrix takes off it will send a clear signal that GlaxoSmithKline is emerging from its patent-cliff induced torpor of recent years to fly on the uplift of its maturing drug development pipeline.

Emerging assets

Although Shingrix is not currently approved for use anywhere in the world, the company says that in addition to the US, regulatory submissions in the European Union and Canada are on track for 2016 and planned for Japan in 2017.

The new vaccine is one of more than 40 assets the firm revealed to investors at a research and development event in November 2015. The potential shingles treatment is part of the company's vaccines portfolio, which consists of six core areas of scientific research and development that the firm is working on, any one of which is capable of producing multiple future big-selling products capable of re-energising the firm's growth prospects.

GlaxoSmithKline is well-known for its consistent cash-generating qualities. The firm has much in common with other consumer goods firms, such as detergent and food manufacturers, tobacco suppliers and alcoholic drinks producers. Customers tend to repeat-purchase such firms' products on a regular basis and that tends to make cash flows into their businesses steady and predictable.

Returning to growth?

Steady cash flow enables reliable dividends, and in the dark days of GlaxoSmithKline's period of falling earnings during recent years astute investors such as Neil Woodford kept faith with the firm's shares. A rise in the share price from around 1,000p during 2009 to 1,650p today vindicates those investors who did decide to hold through the company's troubles.

Instead of falling earnings-per-share figures, City analysts following the firm now predict rising earnings, with an uplift of 29% this year and 8% during 2017. I reckon we could see further growth in earnings in the years to follow as GlaxoSmithKline delivers more from its drug development pipeline. I know that Neil Woodford looks for a steady dividend that is capable of growing, but I think there is evidence that GlaxoSmithKline's growth prospects are coming back to life, which introduces the tantalising prospect of further capital growth for investors too.

GlaxoSmithKline's shares change hands on a forward price-to-earnings ratio of just over 15.5 for 2017. While waiting for growth to lift the shares, investors will collect a dividend payout yielding a forward 4.8%, covered 1.3 times by anticipated earnings. The valuation seems undemanding if the firm is set to return to consistent growth, but even if growth proves elusive, I reckon the defensive nature of the firm's business is likely to keep the shares solid in the years ahead.

Quality shining through

The underlying quality of GlaxoSmithKline's business kept Neil Woodford holding on through the firm's troubled period and it also ensured the company's inclusion on the Motley Fool's top investment report called 5 Shares To Retire On.

Strong cash flow supported by defensive businesses can lead to consistent growth in share prices and dividend payments. GlaxoSmithKline enjoys such qualities, which is why the Fool's analysts believe it's one to buy and hold for the long term along with the other four leaders identified in the report.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.