GlaxoSmithKline‘s (GSK) first-quarter earnings were lower than expected due to competition from generic drugs in the US, disappointing research-and-development results and other unforeseen expenses.
The world’s biggest drug company experienced a 22 per cent decline in sales in the US to £2.3bn (£1.5bn), but it did report growth of 18 per cent in Asia and seven per cent in Europe.
Andrew Witty, chief executive officer of GSK, said sales in the US are vital to the business’ global success and the company is working on a strategy to compete with growing generic competition.
He said: ‘We are aggressively re-engineering our US operations to make sure we have the right resource in the right areas and an overall lower level of infrastructure costs.’
Witty added that the company has launched 10 new products in the last two years and six more are being reviewed by regulators. He highlighted one GSK product, Cervarix, a vaccine against certain types of human papillomavirus (HPV) that cause about 70 per cent of cervical cancers. The vaccine still lacks the US’s Food and Drug Administration (FDA) approval but it has already been chosen by the UK government for its national programme of vaccination for teenage girls.
Witty said GSK has the right structure to capitalise on new product opportunities in the US market.
He added: ‘I am confident that we are making progress to adapt our US business model, and that we will deliver long-term success in this market.
‘I am equally confident that, in the short term, with generic exposure reducing significantly and several new product launches to come, we can expect a significant improvement to the performance of this business during the second half of 2009.’