GlaxoSmithKline share price declines as sales marginally miss expectations

GlaxoSmithKline PLC (LON:GSK) reported a third quarter rise in both sales and pre-tax profit.

The British pharmaceutical company saw sales rise 4% for the quarter to £7.84 billion, alongside a 3% rise in adjusted earnings per share (EPS) to 32.5p. Sales just missed the expectations of analysts polled by Thomson Reuters, who forecast £7.88 billion. EPS however beat expectations of 31.8p.

Sales figures were improved due to a sharp increase in new product sales which were £1.7 billion for the quarter. This is a 44% increase on last year and mainly driven by strong performance of new HIV and respiratory drugs as well as a meningitis vaccine.

Emma Walmsley, CEO of GSK, said “Performance in the quarter showed continued progress with sales growth and improved operating margins. This was driven by targeted cost savings and restructuring and integration benefits, which particularly benefited Vaccines and Consumer Healthcare, and also supported investment in our new products and R&D pipeline”.

The firm also confirmed that they are on course to meet their full-year earnings guidance.

Concerning the future health of GSK it is crucial that the R&D pipeline continues to produce new products. Walmsley addressed this, confirming the company has “secured major approvals for Trelegy Ellipta in COPD and Shingrix, our shingles vaccine”. It is also expected a new HIV drug will be approved in the US.

Earlier in the year it was announced that a number of development programmes where to be culled. It was however also confirmed that this would not result in a smaller R&D budget.

Moving forward, the company plans to invest more heavily in four key areas: respiratory, HIV and infectious diseases, cancer and immuno-inflammation conditions.

It was also noted that during the third quarter Sterling had weakened against the US dollar and the Euro. This has helped improve their financial standings as it will inflate overseas income.

The company have further announce a 19p dividend for the quarter and have again said to expect an 80p for the 2017.

GlaxoSmithKline’s share price has seen a significant decline by 5.5% to 1,429p.