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How Did GSK’s Other Global Pharmaceuticals Franchises Perform?

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Other franchises in global pharmaceuticals segment

As discussed earlier, the global pharmaceuticals business of GlaxoSmithKline (GSK) includes various products like respiratory, cardiovascular, metabolic and urology, immuno-inflammation, and established products. We discussed the respiratory, cardiovascular, metabolic, and urology franchise in the previous article.

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Immuno-inflammation franchise

The revenues for the immuno-inflammation franchise increased by 3% at constant exchange rates to 65 million pounds in 1Q16. The growth was mainly driven by the new drug Benlysta, the revenues for which increased by 22% to 65 million pounds during 1Q16. Over 90% of revenues for Benlysta come from US markets.

Established products franchise

Various products in the established products franchise are losing their market share to generic competition. The franchise reported a revenue fall of 8% at constant exchange rates to 610 million pounds during 1Q16.

The US market sales declined by 1% at constant exchange rates, mainly due to a 57% decline in Lovaza sales. For European markets, the sales declined by 6% due to increased generic competition as well as constraints in the supply chain. International markets reported a decline of 12% at constant exchange rates, following lower sales of Seroxat/Paxil and Zeffix.

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Other products

The other pharmaceuticals franchise includes a few key products like Augmentin, dermatology products, and rare disease products. The revenues for this franchise declined 22% at constant exchange rates during 1Q16, following lower dermatology sales due to supply constraints and rare disease products due to generic competition from Mepron in the US markets. The decline was partially offset by strong performance of Augmentin and Volibris in the US markets.

Investors can consider the SPDR S&P International Healthcare Sector ETF (IRY), which holds 5.4% of its investments in GlaxoSmithKline while it holds 5.5% in Sanofi (SNY), 4.3% in AstraZeneca (AZN), and 3.3% in Teva Pharmaceuticals (TEVA) for exposure to the industry. Investors can also consider the Vanguard FTSE All-World Ex-US Index Fund (VEU), which holds ~6% of its total investments in GlaxoSmithKline.

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