GlaxoSmithKline ($GSK) CEO Andrew Witty is expecting 2013 to be a much better year for the drugmaker. Couldn't get much worse than 2012.
GSK ended the year as the worst stock performer among the top 10 in Big Pharma, Bloomberg points out. Its stock price was off more than 9% in a year when pharma stocks beat stock indices. The Bloomberg Europe Pharmaceutical Index, for example, was up 11%. The U.K. company had to cut revenue estimates last year and failed to hit its earnings projections in the last three quarters.
So why will this year be better? Executives have said repeatedly they are counting on approval of new drugs this year. It has 5 already pending before the FDA and another to be submitted. It has 14 drugs in late-stage development that should post pivotal data in the next two years. Patrick Vallance, head of R&D for Glaxo, told Bloomberg that for the first time in two decades, GSK could be in for a period of significant growth. He, however, struck a pretty cautious tone. "If all 6 things failed and we didn't get them we would be in a bad situation; I don't think that's going to happen."
GSK upended its R&D efforts more than three years ago, trying smaller business units in hopes of getting more out of the $6.3 billion it has been investing in R&D each year. It has a couple of blockbuster opportunities. There is darapladib, a heart drug it picked up in its $3 billion buyout of Human Genome Sciences, as well as the cancer therapeutic vaccine MAGE-A3. But GSK has a number of efforts with more modest expectations as well.
While the company is talking up the future, analysts and investors have yet to be convinced. "Glaxo will seal its fate in 2013," Natixis Securities analyst Philippe Lanone told Bloomberg. "If the new products fail to make it, the company will be in big trouble."
- read the Bloomberg story
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