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Performance of GlaxoSmithKline in 2016

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GlaxoSmithKline’s revenues

GlaxoSmithKline’s (GSK) revenues increased 17% to ~27.9 billion pounds in 2016, compared to ~23.9 billion pounds. At constant exchange rates, the revenue growth was 6%, followed by a positive impact of foreign exchange rates.

The above chart shows the revenue trends for GSK over the last eight quarters. There are various factors affecting these revenues, which we’ll discuss in this series.

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2016 performance

GlaxoSmithKline’s top line increased 17% to ~27.9 billion pounds for 2016, driven by an operational increase of 6% and a favorable currency impact of ~11%. The increase in revenues was mainly driven by the new pharmaceutical and vaccines products added to its portfolio. The positive impact of foreign exchange was due to the weakening of the pound sterling against all major currencies for developed countries.

Geographically, the US markets contributed nearly 36.6% of total revenues at 10.2 billion pounds for 2016, which is 10% growth at constant exchange rates compared to 2015. The European markets contributed nearly 26.8% of total revenues at 7.5 billion pounds for 2016, an increase of 6% at constant exchange rates compared to 2015.

The contribution from international markets was nearly 36.6% of total revenues at ~10.2 billion pounds for 2016, a 1% increase in revenues at constant exchange rates, compared to 2015. The increase in revenues across all geographical areas is due to the strong performance of new pharmaceutical products, including HIV products and vaccines.

To divest company-specific risk, investors can consider the iShares MSCI ACWI Ex-US ETF (ACWX), which holds ~0.5% of its investments in GlaxoSmithKline, 1.3% in Novartis (NVS), 0.6% in Novo Nordisk (NVO), and 0.5% in AstraZeneca (AZN).

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