Despite a slump in product sales, drugmaker GlaxoSmithKline said on April 27 that net profit rose 14% to £1.525 billion (US$ $2.5 billion) in the first quarter.
Savings from a major cost-cutting program and asset disposals helped to offset a 10% drop in sales to £6.585 billion in the three months to March 31, compared with the first quarter of 2010, GSK said.
GSK's latest results come after it had booked a net loss of £690 million in the final quarter of 2010 on huge legal charges largely linked to Avandia. The pharmaceutical giant announced at the start of the year that it would take a U.S. legal hit of £2.2 billion linked to the drug. The EU decided to pull Avandia owing to concerns over its active substance rosiglitazone. It decided also to halt the sale of Glaxo's other diabetes drugs, Avandamet and Avaglim, since they too contained rosiglitazone.
Meanwhile sales of GSK's herpes treatment Valtrex have been hit by generic competition. "Reported (first quarter) sales were down 10%, reflecting a £1 billion reduction in sales of pandemic products, Avandia and Valtrex versus a year ago," chief executive Andrew Witty said. "This impact is set to decline going forward and we expect underlying sales growth to translate into sustainable reported growth in 2012."
Shrugging off the sales slump, Witty said that the first quarter was "positive on many fronts, with good progress made in delivery of our strategy to improve long-term financial performance." He added: "Increased confidence in the operating performance of the business and resulting cash generation is allowing us to accelerate returns to shareholders."
GSK raised its dividend by 7% to 16 pence a share and said it expected share repurchases this year to be at the top end of its forecast range of £1-2 billion.
Copyright Agence France-Presse, 2011