Can Glaxo Withstand Generic Competition?

Despite Glaxo's fourth-quarter sales decline, we believe the firm's diverse operations should help mitigate the Valtrex and Advair patient losses

Damien Conover, CFA 7 February, 2011 | 6:23PM

GlaxoSmithKline (GSK) recently reported a 13% fall in its fourth quarter sales due to increased competition from generic drug producers and low H1N1 vaccine sales. You can find the relevant analyst note here and read our latest equity analysis of the firm below.

Fair Value Estimate: 1462p | Uncertainty Rating: Medium | Economic Moat: Wide

Thesis (Last Updated 11/11/10)
As one of the word's largest pharmaceutical companies, GlaxoSmithKline (GSK) has used its vast resources to create the next generation of medicines. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic moat, in our opinion. Glaxo's diverse operating platform should more than offset patent expirations for respiratory drug Advair and antiviral drug Valtrex.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
GlaxoSmithKline PLC1,671.80 GBX-0.70

About Author

Damien Conover, CFA  is an equity analyst and associate director at Morningstar.

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