GlaxoSmithKline Hurt by Generics

Generic competition continues to hurt profit and sales at GlaxoSmithKline (GSK Quote), which saw second-quarter income drop 13% year over year as sales of its blockbuster antidepressants posted double-digit percentage declines.

GlaxoSmithKline, which releases results in British pounds, announced second-quarter net income came in at 1.63 billion pounds, or 20.1 pence, which is equivalent to $3 billion U.S., or 36 cents a share. But slumping sales of Paxil and Wellbutrin lowered results by 13% from the year-ago quarter. (During the quarter, the company said 1 British pound was worth $1.81 U.S., on average.)

The drugmaker said that revenue came in at 5.1 billion pounds, or $9.2 billion, which is down 6% year over year with generic competition eating into sales of both antidepressants. In premarket action, shares of Glaxo rose 69 cents, or 1.7%, to $40.50.

Sales of Glaxo's line of Wellbutrin-related products dropped 7%, driven by a 76% decline in Wellbutrin IR/SR. Sales of its Paxil line fell 41%, driven by a 64% drop in sales of Paxil IR, the oldest version of the drug.

Sales of the asthma treatment Advair were a bright spot, however, rising 22% year over year, as were sales of the diabetes drug Avandia, which rose 59% against an easy year-ago comparison. Also, the company said that line extensions of Paxil and Wellbutrin helped mitigate some of the sales drop-off, as did supply agreements with Watson Pharmaceuticals (WPI Quote) and Par Pharmaceuticals (PRX Quote).

Going forward, Glaxo said that based on constant currency exchange rates, 2004 earnings per share would be at least in line with 2003 earnings, which were $2.67. The company said it expects to return to growth in 2005.