Glaxo looks to better year as R&D picks up

Britain’s biggest drugmaker said yesterday it expected 2014 sales to increase by around 2 per cent on an ex-divestment basis at constant exchange rates, after a 1 per cent rise in 2013. Earnings per share (EPS) are forecast to rise by 4 to 8 per cent. The prediction does not take into account the negative impact of a strengthening pound.

Reported sales in the fourth quarter of 2013, which were impacted by the strength of sterling, rose 2 per cent to £6.91bn.

GSK chief executive Andrew Witty has been focusing the company in recent quarters by spinning off non-core assets like the Lucozade and Ribena drinks brands, together with certain older drugs, as he prepares for the roll-out of new medicines.

Last year, GSK topped the industry league table by winning US approval for five new drugs and the group said it planned to launch late-stage clinical trial on around 10 new drugs in the next two years. While there have also been setbacks – a cancer vaccine and an experimental heart drug both failed clinical tests late last year – the company’s overall returns on research and development (R&D) are improving.

GSK, which is the only major drugmaker to report its internal rate of return on R&D investment, said that returns had now reached 13 per cent, up from 12 per cent in 2012 and 11 per cent in 2010.