British drugmaker GlaxoSmithKline (GSK.US) raised its earnings forecast for the year after strong sales of medicines for HIV, cancer and lung disease boosted its first-half performance.
GlaxoSmithKline expects underlying earnings per share to rise 10-12 per cent, above its previous forecast range of 10 per cent, marking the second consecutive upgrade of its guidance.
Under the leadership of chief executive Emma Walmsley, GlaxoSmithKline has streamlined its business mix, divested its consumer business to support vaccine development. Last year, GlaxoSmithKline launched a vaccine against respiratory syncytial virus in the US and gained a larger share of the market than its rival AstraZeneca. However, the sustained growth of the vaccine has been hampered by US advice that the vaccine should not be used in younger populations.
GlaxoSmithKline said sales of its Shingrix vaccine for shingles fell 4 per cent in the second quarter from a year ago, partly due to changes in US pharmacy reimbursement and challenges in engaging some potential users. Sales of the vaccine were 18 per cent below analysts’ average forecast.
Sales of Trelegy, GlaxoSmithKline’s medicine for some chronic lung diseases, have far exceeded expectations. New HIV drugs have also boosted the outlook. These drugs could change the way patients treat and prevent HIV, with patients needing to inject only every few months rather than taking pills every day.
The Zantac litigation has weighed heavily on GlaxoSmithKline’s share price. The company and other producers are being sued by people who used Zantac, alleging that the active ingredient ranetidine can degrade in certain conditions to form a potential carcinogen called NDMA. The companies deny the claims.