GlaxoSmithKline bolsters profits by nearly a fifth
Drugmaker GlaxoSmithKline has bolstered profits by nearly a fifth in a sign that efforts to turn around the business are bearing fruit.
Britain's biggest drugs company booked a better-than-expected rise in core operating profit, up 19% to £1.56 billion for the first quarter, as sales stepped up 11% to £6.23 billion.
The uplift was underpinned by a strong performance from new product sales, rising 20% quarter on quarter to £821 million, driven in part by HIV drugs Tivicay and Triumeq.
In total, HIV drug sales climbed 57% to £729 million in the first quarter, helping to offset declines in its respiratory drugs business, which slipped 2% to £1.42 billion over the period.
The UK-based giant said total pharmaceutical sales were up 5% to £3.59 billion in the first quarter, while vaccines climbed 14% to £882 million and consumer healthcare picked up 4% to £1.76 billion.
The update comes after it saw full-year core operating profit slump 13% to £5.73 billion in February after a series of asset swaps with Swiss rival Novartis.
The company is also on the hunt for a new chief executive after Sir Andrew Witty announced he will retire on March 31 2017, ending more than three decades with the business.
He said the first quarter performance underscored the "momentum" the firm was making thanks to rising sales of new products and "effective cost control".
He added: "The improvement in our sales performance, together with the effective management of our cost base, also helped deliver better operating leverage and an improvement in the margins of all three businesses.
"This puts us on the right track to achieve the expectations we set out last year, although inevitably, we expect some quarter-to-quarter volatility in reported progress, particularly in our margins, given the dynamics of our businesses."
Sir Andrew has faced investor pressure to overhaul the drugs firm by splitting it into four different companies.
He revealed his intent to retire in March, saying it was important to give the board enough time to appoint his successor.
But during the first-quarter update, he said the board now expected to choose a new chief executive "around the turn of the year".
Shares in the company were up more than 2%.
The firm reported a first quarter pre-tax profit of £560 million, down 95% from £9.92 billion last year when it was boosted by the sale of its oncology business to Novartis
Maxim Jacobs, analyst at Edison Investment Research, said: "GSK reported surprisingly strong results on both the top and bottom line, driven mainly by strong vaccine sales as well as cost cutting. However, US and EU pharmaceutical sales were weak due to generic competition so GSK is not out of the woods yet."