4Q16 Performance of GlaxoSmithKline’s Business Segments

GlaxoSmithKline’s (GSK) business is divided into the following three segments:

• Pharmaceuticals
• Vaccines
• Consumer Healthcare

The company reported an operational rise of 3.0% in revenues to 7.6 billion pounds for 4Q16. The rise was driven by an increase in revenues across all three segments.

Revenues for GSK’s Pharmaceuticals segment saw a shift in product performance, falling due to lower sales of its key products Seretide and Advair. Sales were partially offset by rising revenues from new products as well as HIV (human immunodeficiency virus) products Triumeq and Tivicay.

GSK’s divestment of its oncology business to Novartis (NVS) will have a negative impact on revenues as well as the profitability of the segment in the coming years. During 4Q16, revenue for the Pharmaceuticals segment rose ~4.0% at constant exchange rates to ~4.6 billion pounds. We’ll be taking a look at the products and therapeutic areas later in the series.

For the Vaccines segment, inorganic growth through the acquisition of meningitis and other vaccines from Novartis’s portfolio in March 2015 has increased the segment’s exposure and revenues. Revenues for the segment remained flat at 1.1 billion pounds in 4Q16.

Revenues for the Consumer Healthcare segment rose ~2.0% in 4Q16 to 1.9 billion pounds. The rise was mainly due to the wellness and skin health franchise.

To divest the risk, you can consider ETFs such as the PowerShares International Dividend Achievers ETF (PID). PID holds 2.4% of its total assets in GlaxoSmithKline, 1.5% in Sanofi (SNY), 1.1% in Novartis (NVS), and 1.1% in Teva Pharmaceutical Industries (TEVA).