GlaxoSmithKline warns earnings will take hit from rival asthma drugs

Pharmaceutical giant GlaxoSmithKline has posted rising sales but warned its profitability will take a hit this year due to competition against its asthma drug Advair.

The company said adjusted earnings per share (EPS) will decline by between 5% and 9% in 2019, following the approval of a generic competitor to Advair in the US.

But the estimated decline is less severe than some analysts had feared. Shares in the company were trading flat following the announcement.

It comes as the group reported a 2% increase in turnover to £30.8 billion for last year.

Adjusted operating profits rose 2% – or 6% with currency movements stripped out – to £8.7 billion.

In the fourth quarter, adjusted operating profit beat analyst expectations, rising 8% to just under £2.2 billion.

Sales in the pharmaceuticals division were flat as sales of Advair dropped 21%. Meanwhile vaccine sales were up 14% and consumer healthcare declined by 1%.

Chief executive Emma Walmsley said: “GSK delivered improved operating performance in 2018 with Group sales growth, strong commercial execution of new product launches, especially Shingrix, continued cost discipline and better cash generation.

“It was also a significant year for the Group strategically, with the launch of a new R&D strategy focused on immunology, genetics and new technologies, together with a series of transactions that support our strategy and reshape of the Group’s portfolio.”

The group signed a tie-up in December with US rival Pfizer to merge their consumer healthcare divisions, creating a business with combined sales of £9.8 billion.

It has also agreed to dispose of its Indian consumer healthcare business, which includes Horlicks and a clutch of other drinks brands, in a £3 billion sale to Unilever.

Both deals are set to close this year.