New Drugs Help GSK Offset Generic Competition

GlaxoSmithKline's headwinds should prevail through 2011 and we expect the firm to post slightly declining revenue through the remainder of the year

Damien Conover, CFA 28 July, 2011 | 5:56PM
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On Tuesday, GlaxoSmithKline (GSK) reported second-quarter results that were in line with our expectations. We do not anticipate significantly changing our fair value estimate. On a constant currency basis, sales declined 2% compared to the prior year. Reported results were skewed by the absence of strong H1N1 vaccine sales that boosted 2010 results, a decline in Avandia sales since the firm stopped promoting the product amid health concerns, and the generic competition to Valtrex.

GlaxoSmithKline's headwinds should prevail through 2011 and we expect the firm to post slightly declining revenue through the remainder of the year. We think the firm can regain its growth trajectory in 2012 aided by growth in recently approved drugs including Benlysta for lupus and Potiga for epilepsy.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
GlaxoSmithKline PLC1,387.60 GBX-0.03Rating

About Author

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

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