GlaxoSmithKline reveals earnings boost from Brexit-hit pound
GlaxoSmithKline has revealed a boost to annual earnings from the Brexit-hit pound but warned over a potential hit from looming competition to its blockbuster asthma drug.
The FTSE 100 drugs giant, which makes a significant amount of its earnings overseas, posted a 36% surge in underlying operating profits to £7.8 billion for 2016 thanks to the pound's plunge since the EU referendum.
It said it hopes to make "c ontinued progress" in 2017 but cautioned over "uncertainty" if US regulators allow generic competitors to its asthma drug Advair.
The group said if generic competition to Advair launched in the US in the summer, it could wipe out earnings growth and even leave earnings per share lower.
Outgoing chief executive Sir Andrew Witty said: "Clearly, this year we face some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US."
But the group is hoping its new asthma medicines will help offset the sales blow.
"Whilst there will be an inevitable financial impact to absorb, we fully expect to maintain leadership in this therapy area given our new product portfolio and the innovation we have in our pipeline," said Sir Andrew.
Presenting his last set of results, Sir Andrew unveiled a 17% surge in annual revenues to £27.8 billion and a 21% leap in the fourth quarter.
With the benefit of the weak pound on overseas earnings stripped out, full-year revenues were 6% higher, while operating profits lifted 14%.
The group said, based on current exchange rates, the weak pound would increase turnover by around 6% this year.
Advair lost patent protection in 2010 but generic versions have yet to receive regulatory approval.
The drug has already come under pressure from competition, with sales dropping by 13% to £1.8 billion in the US over 2016, although Glaxo said new respiratory products generated sales of £1.05 billion.
The group said if generic competition is given the all clear to launch mid-year, it could slash annual Advair sales in the US to around £1 billion.
Shares fell as much as 3% at one stage on warnings over Advair.
Sir Andrew will hand over the reins to the group's former consumer healthcare boss, E mma Walmsley, in March.
He said: "This quarter marks the last I will report to shareholders after nearly 10 years as chief executive and more than 30 years as an employee.
"GSK is a very special company that touches people's lives across the world and I feel enormously privileged to have had the opportunity to lead it."