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Profits at GSK boosted by sales of shingles vaccine

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FILE PHOTO: The GlaxoSmithKline (GSK) logo is seen on top of GSK Asia House in Singapore, March 21, 2018. Picture taken March 21, 2018. REUTERS/Loriene Perera
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By Ankur Banerjee and Paul Sandle

(Reuters) - GlaxoSmithKline Plc forecast 2019 earnings above market expectations as sales of its new shingles vaccine boosted quarterly results, soothing concerns that Britain's largest drugmaker was running out of blockbuster products.

Chief executive Emma Walmsley has been streamlining operations and spinning off or selling units, including the company's consumer health division, in order to focus on expanding GSK's drug pipeline and developing vaccines.

Sales of Shingrix, the company's shingles vaccine launched in 2017, more than doubled in the fourth quarter of 2018 to 221 million pounds, but sales of asthma treatment Advair, which has fueled much of the company's respiratory drugs franchise, fell 20 percent.

Advair faces fresh competition from Mylan NV's generic, which won approval from U.S. regulators last month.

On Wednesday, GSK cautioned that full-year earnings for 2019 would decline between 5 percent and 9 percent because of the competition from Mylan, as well as the impact of its $5.1 billion Tesaro acquisition which was completed last month.

However, analysts pointed out that the 2019 earnings forecast was better than feared, with brokerage Jefferies saying it should be well received given widespread concern of up to a double-digit decline.

As it seeks to offset patent expiries on some of its key drugs, GSK on Tuesday agreed to pay up to 3.7 billion euros to Germany's Merck KGaA for the rights to a next-generation immunotherapy. The move underscores the growing appetite among drugmakers to delve deeper into innovative cancer treatments.

"The Merck alliance is a perfect example of the kind of thing that we shall continue to look for," Walmsley said in a media call.

City Index analysts said investors are aware that such outlays are necessary with pipelines maturing at alarming rates.

GSK's shares reversed earlier losses to trade 1.1 percent higher at 1,539 pence by 1514 GMT.

(Graphic: GSK outperforms some European rivals link: https://tmsnrt.rs/2I3Csd4).

GSK, which is heavily dependant on international markets, said that there was "considerable uncertainty" related to the UK's impending exit from the European Union and warned that leaving the bloc without a exit deal would be a bad outcome.

The company reported adjusted earnings per share of 31.2 pence on sales of about 8.20 billion pounds in the three months to Dec. 31.

Analysts had expected earnings of 27.7 pence and sales of 7.95 billion pounds, according to a company-provided consensus consensus of 11 analysts.

(Reporting by Ankur Banerjee and Pushkala Aripaka in Bengaluru and Paul Sandle in London; Editing by Bernard Orr and Kirsten Donovan)