After making a big bet on the field, GlaxoSmithKline ($GSK) continues to post gains in vaccines. In second-quarter results released Wednesday, the British pharma reported that its vax group notched the highest growth of the company’s three major units as it neared £1 billion for the quarter.
GSK vaccines grew 11% in the second quarter, besting pharmaceutical growth of 2% and consumer healthcare growth of 7%. In total, the unit reeled in £960 million ($1.26 billion) in Q2 and £1.84 billion ($2.47 billion) in the first half.
To get there, GSK’s vaccines needed standout performances in Europe and internationally to offset a U.S. decline of 2%. In an earnings statement, GSK attributed a portion of the U.S. slip to “adverse movement in the CDC stockpile.” In Europe, GSK’s vaccines grew 11% thanks to Bexsero boosts in private markets, among other factors. Elsewhere around the world, the pharma enjoyed a 20% increase in vax sales.
The results follow first-quarter growth of 23% on a reported basis and 14% on a pro forma basis for vaccines, boosted during the period by former Novartis ($NVS) shots Menveo and Bexsero. And the upward trend is exactly what GSK execs want to see following the company’s massive asset swap with Novartis in which it traded away its oncology assets for the Swiss pharma’s vaccines stall.
With more than a year of integration behind it, GSK said “costs for these major restructuring programmes are expected to reduce significantly in 2017 with only residual charges thereafter.” Vaccines pitched in £270 worth of profit in the second quarter, good for a 28.1% core operating margin.
That's a far cry from those figures shortly after the deal's close last year, when GSK's vax group achieved £161 million in profit at a 12.1% operating margin. At the time, CEO Andrew Witty said the unit was impacted by a "higher than anticipated cost base" from the Novartis deal.
- here's the release