Glaxo Profits Reflect Strong Sterling

Generic-drug competition played a key role in flat earnings and slipping sales during the first quarter for GlaxoSmithKline(GSK Quote).

The British drug giant said Wednesday that first-quarter operating profit was flat vs. the year-ago quarter; net earnings per share rose 2%; and revenue declined 4% when measured in British pounds sterling.

However, when measured in constant exchange rates, GlaxoSmithKline said operating profit rose 11%, net earnings per share gained 14% and revenue gained 4%. The weak U.S. dollar had a significant impact. One British pound was worth $1.96 during the quarter, up from $1.75 in the year-ago quarter; the pound also advanced vs. the Japanese yen and the euro.

Translated into U.S. dollars, GlaxoSmithKline reported a first-quarter operating profit of $4.25 billion, net earnings per share of 53 cents and revenue of $10.96 billion.

The constant-exchange rate data are "very encouraging" and show that the company "will continue to deliver strong earnings performance," said CEO Jean-Pierre Garnier. He reiterated a full-year earnings-per-share forecast of 8% to 10% growth in constant exchange rates.

Among major products, sales of the Advair asthma medication rose 11% to $1.64 billion vs. the year-ago quarter when measured in constant exchange rates. The herpes drug Valtrex gained 22% to $439 million, while the combined sales of several HIV/AIDS drugs slipped 3% to $704 million.