GlaxoSmithKline lifts full-year guidance

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING

GlaxoSmithKline PLC (GSK.LN) raised its full-year guidance on Wednesday and laid out a new research-and-development program.

The U.K. pharmaceutical company now sees adjusted earnings per share rising between 7% to 10% in 2018 if no generic competitor to its Advair respiratory drug is introduced in the U.S. This compares with 4% to 7% previously.

In the event that a competitor does emerge in October, GSK now guides for an increase of 4% to 7% in adjusted EPS whereas its previous forecast was for flat or falling adjusted EPS.

The company said second-quarter profit before tax was 614 million pounds ($805.6 million) compared with a loss of GBP178 million. Turnover fell to GPB7.31 billion from GBP7.32 billion, but beat analysts’ expectations of GBP7.21 billion based on a FactSet consensus forecast.

Adjusted operating profit, which strips out exceptional items, increased 1% to GBP2.10 billion, exceeding analysts’ expectations of GBP2.01 billion according to FactSet.

GSK said it is taking a new direction in research, giving the company’s first update since the appointment of Hal Barron as chief scientific officer and president of R&D in November. The company said it will focus on science related to the immune system, as well as genetics and investments in advanced technologies.

As part of the new direction, GSK said it signed a four-year collaboration agreement with genetic testing company 23andMe Inc. 23M known for its direct-to-consumer test kits.

GSK said it is initiating a restructuring program aimed at delivering annual cost savings of GBP400 million by 2021.

The company declared an interim dividend of 19 pence, and said it continues to expect a full-year dividend of 80 pence.

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