Glaxo Sees Slower Profit Growth

This year's earnings per share will likely rise 8% to 10%.
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GlaxoSmithKline

(GSK) - Get Report

said Thursday that this year's profit growth will be about half that of the gain between 2005 and 2006.

The British drug giant -- the second biggest seller of prescription drugs in the U.S. -- forecast 2007 earnings per share growth of 8% to 10% when measured in constant exchange rates. Last year's earnings per share climbed 19% over 2005, bolstered by a fourth-quarter EPS gain of 22%.

Revenue for 2006 and for the fourth quarter grew 9% using constant exchange rates. The company didn't offer a sales prediction for 2007.

"Sales growth is coming from an ever-widening portfolio of fast-growing products," said Jean-Pierre Garnier, the company's chief executive. "We also have very healthy momentum in our pipeline. We look to the future with confidence."

For the three months ended Dec. 31, the company earned $2.4 billion, or 41 cents a share, on revenue of $11.54 billion. For the full year, it earned $10.2 billion, or $1.75 a share, on revenue of $43 billion.

Like its competitors, GlaxoSmithKline must find new revenue sources to offset drugs whose patents have expired or will soon expire. The company is counting on what it calls five major new products to aid sales growth in the near future.

Next month, it should hear from the Food and Drug Administration on its breast cancer treatment Tykerb. Garnier said he expects the drug to have a U.S. launch during the first half of 2007 and to go on sale in Europe during the second half.

Also in the second half of 2007, the company expects to start selling Cervarix in European and other foreign markets. Cervarix is a vaccine for the human papillomavirus, a cause of cervical cancer.

Merck's

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vaccine Gardasil is already available in the U.S., and GlaxoSmithKline plans to seek FDA approval in April.

The company is hoping for a second-half U.S. launch for the migraine drug Trexima, which was developed by

Pozen

(POZN)

. The FDA granted conditional approval in June, and Pozen recently filed its response to questions raised by the FDA.

During the first quarter, GlaxoSmithKline anticipates pharmacies will begin selling Coreg CR, a once-a-day version of the company's Coreg, a pill for patients with high blood pressure or weakened hearts. It also forecasts a first-half U.S. launch for the allergy drug Allermist.

The nonprescription weight-loss drug Alli

was approved by the Food and Drug Administration Wednesday, and it will be available in the summer.

Alli is the first over-the-counter weight-loss drug approved by the FDA. It contains orlistat, the same ingredient -- at half strength -- found in the prescription obesity treatment Xenical from

Roche

. The Swiss company, which licenses orlistat to GlaxoSmithKline, will continue to market Xenical.

Alli is one of 10 new products GlaxoSmithKline expects to market from its consumer products division, which contributed $6.2 billion in revenue last year and grew by 6% over 2005.