On Wednesday, GlaxoSmithKline ($GSK) announced results for its first full quarter after closing its blockbuster asset swap with Novartis ($NVS). And so far, things look "unremarkable."
That's the way Bernstein analyst Tim Anderson characterized the showing, at least, with revenue rising 6% to £5.89 billion ($9.19 billion) for the quarter. Vaccines and consumer health, the company's new post-deal focuses, did their part to power the climb, though the company's HIV unit, ViiV, was the "solitary outperformer," Anderson wrote in a note to investors.
And while Glaxo's key areas may have chipped in on the company's top line, they took a toll on the bottom. While core operating profit fell 4% to £1.35 billion--topping analysts' £1.34 billion expectations by a hair--net profit plunged 77% to £149 million compared with the year-ago period.
|GlaxoSmithKline CEO Andrew Witty|
Glaxo's management was upbeat about the quarter, though, with CEO Andrew Witty dubbing the performance "encouraging" and reiterating his confidence the company could turn earnings around next year. Last quarter, GSK laid out its prediction for a "significant recovery" in 2016, with core EPS percentage growth reaching double digits.
Witty, though, may not necessarily be on hand to see that happen, depending on how things go between now and then. If the company's new strategy--which involves significantly ramping up volume of its lower-margin OTC and vaccine offerings--doesn't show some promise, his job could be on the line, industry-watchers have said.
Meanwhile, the company is hoping its pharma business--particularly its new respiratory launches--can step up to help OTC and vaccines fill the revenue gap as giant Advair wanes. CFO Simon Dingemans said Breo, in particular, was building steadily, helped by a May FDA nod for the treatment in asthma.
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