Witty's bet on vaccines pays off in GSK CEO's final full year

witty
During CEO Andrew Witty's final full year, GlaxoSmithKline's vaccines posted a sales increase of 14% in 2016 to £4.6 billion.

After nearly 10 years at the CEO post for GlaxoSmithKline, Andrew Witty is handing over the reins to a company that has been reshaped with a vaccines focus. And during Witty’s final full year at the drugmaker, that business segment outgrew each of GSK’s other units.

GSK’s vaccines grew (PDF) 14% to £4.6 billion, or $5.73 billion, in 2016 sales, besting pharma’s growth rate of 3% and consumer health’s increase of 9% on the year. Still, vaccines made up just 16% of the company’s overall sales, compared to 58% for pharmaceuticals and 26% for consumer healthcare.

In making the massive Novartis asset swap, Witty navigated GSK away from costly cancer drugs and toward low price, high volume vaccines and consumer healthcare products.

Meningococcal group B vaccine Bexsero, picked up from Novartis, continued its ascent as it more than doubled sales from 2015 to reel in £390 million, or $486 million, on the year. The company will continue spending to boost its manufacturing capacity for the shot, CFO Simon Dingemans said on the Q4 conference call.

“But this is a long cycle process and supply is likely to remain tight for some time,” Dingemans said.

Also posting solid increases were flu shots Fluarix and FluLaval, which together jumped 38% on the year to £414 million, or $517 million. Dingemans said the company had a “very successful” flu season, coming in ahead of expectations and creating a “tough comparator for 2017.” Pneumococcal shot Synflorix grew sales 19% to £504 million, or $629 million, in 2016.

Posting the biggest percentage decrease on the year was HPV shot Cervarix, which fell 14% to £81 million. GSK pulled the vaccine from the U.S. market in August.

Despite the unit’s growth figure for the year, sales were flat in the fourth quarter with revenues of £1.13 billion. Sales in the U.S. and Europe grew in the period, but international sales dragged.

There’s reason to believe GSK can keep up its vaccines momentum, as it filed its first Shingrix applications last year. Market-watchers have predicted the shot could climb to $1 billion in sales by 2021 as it would fight to steal share from Merck’s Zostavax and drive uptake.

The company expects a regulatory action on the shot in the U.S. and Europe in the fourth quarter this year, making 2018 the first year it’ll see “meaningful contribution” from the shingles vaccine, Dingemans said on the call.