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Analyzing GlaxoSmithKline’s Global Pharmaceuticals Business

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Sep. 1 2017, Updated 8:07 a.m. ET

Global pharmaceuticals

GlaxoSmithKline’s (GSK) global pharmaceuticals business is a part of the Pharmaceuticals segment. The global pharmaceuticals business includes immuno-inflammation products, respiratory products, and established products. The global pharmaceuticals business reported revenues of 3.24 billion pounds during 2Q17.

The above chart shows the revenues for some of the key products in the global pharmaceuticals business.

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2Q17 performance

The performance of each franchise for global pharmaceuticals is as follows:

The immuno-inflammation franchise, represented by the drug Benlysta, reported revenues of 93 million pounds during 2Q17—9% revenue growth at constant exchange rates.

The respiratory franchise reported revenues of 1.80 billion pounds during 2Q17—4% revenue growth at constant exchange rates. The increased revenues were driven by strong sales of the drugs Anoro Ellipta, Arnuity Ellipta, Incruse Ellipta, Nucala, and Relvar/Breo Ellipta. The revenue growth was substantially offset by lower sales of Avamys/Veramyst, Flovent, and Seretide/Advair, due to generic competition.

The established pharmaceuticals business reported revenues of 1.45 billion pounds during 2Q17—a 7% fall in revenues at constant exchange rates. The lower revenues were mainly due to the impact of the recent divestments of the Romanian distribution business during 4Q16. There was also the divestment of the thrombosis and anesthesia business to Aspen (AZPN) during 1Q17. Overall, divestments impacted the revenues for established pharmaceuticals nearly 4%. The revenues were also impacted by a 19% fall in Avodart sales to 160 million pounds during 2Q17, mainly due to the loss of exclusivity in US markets.

Other products from the established pharmaceuticals franchise include dermatology products and Augmentin. The dermatology products reported 17% revenue growth at constant exchange rates during 2Q17. The growth was driven by increased sales due to improvements in the supply to emerging markets. Augmentin reported revenues of 141 million pounds during 2Q17, including a 1% fall in its revenues at constant exchange rates. The fall was offset by the positive impact of foreign exchange rates during 2Q17.

To divest company-specific risks, investors can consider ETFs like the BLDRS Developed Markets 100 ADR ETF (ADRD), which holds 2.4% of its total assets in GlaxoSmithKline. ADRD also holds 5.5% in Novartis AG (NVS), 2.8% in Sanofi (SNY), and 0.4% in Teva Pharmaceuticals (TEVA).

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