So far this year, GlaxoSmithKline plc’s (GSK - Free Report) shares have outperformed the industry, rising 14.4% compared with a 6.7% increase for the industry.
Meanwhile, estimates for 2018 and 2019 have risen 1.4% and 1.3%, respectively in the past 60 days.
Its strong quarterly results, successful product launches and positive pipeline and regulatory updates have all contributed to the upside.
Glaxo’s total revenues rose 4% at constant exchange rate in the first nine months of 2018 led by sales growth in each of its three global businesses - Pharmaceuticals, Vaccines and Consumer Healthcare segments. While adjusted earnings rose 12%, operating profit rose 7%, supported by aggressive cost savings and operating improvements.
Following an encouraging performance in the first nine months of the year and higher than expected sales of its shingles vaccine, Shingrix, on the third-quarter conference call, Glaxo raised its earnings growth outlook for the full year.
Also, a delay in launch of generic versions of its top-selling product, Advair is benefiting Glaxo’s profits.
Three companies Mylan (MYL - Free Report) , Hikma Pharmaceuticals and Novartis (NVS - Free Report) , which are trying to bring a generic version of Advair in the market, have received a complete response letter (CRL) from the FDA. While Mylan and Hikma got a CRL last year, Novartis received the same this year, delaying the entry of generics in the U.S. market
Successful Product Launches
Glaxo’s new products like Nucala (severe eosinophilic asthma), the inhaled Ellipta portfolio (chronic obstructive pulmonary disorder/COPD and asthma), Tivicay and Triumeq (HIV) and Menveo, Bexsero (meningitis vaccines) are all doing well and represent significant commercial opportunity.
In 2017, Glaxo received approvals for three key new drugs, Shingrix vaccine for shingles, which enjoys preferential recommendation from ACIP; Trelegy Ellipta, which provides three medicines in a single inhaler to treat COPD and Juluca (dolutegravir and rilpivirine), the first two-drug regimen, once-daily, single pill for HIV. All the three products have done well in 2018, particularly Shingrix.
Juluca has been developed by Glaxo HIV-focused company, ViiV Healthcare, in partnership with Johnson & Johnson (JNJ - Free Report) .
In fact, these three products coupled with the buyout of Novartis’ stake in the Consumer Healthcare JV have strengthened Glaxo’s competitive position. In June 2018, Glaxo bought Novartis’ 36.5% stake in their consumer health care joint venture for $13 billion (£9.2 billion).With the acquisition of Novartis’ stake, Glaxo now has 100% ownership of its Consumer Healthcare unit, which includes products such as Sensodyne and Flonase. The deal has strengthened Glaxo’s competitive position in the market and was given a heads up by the investor community.
Pipeline & Regulatory Successes
Glaxo has made significant progress with its late-stage pipeline. We think Glaxo possesses one of the stronger late-stage pipelines in large-cap pharma, particularly in HIV therapeutic area.
HIV is expected to be an important growth driver for Glaxo’s Pharma business going forward. It had some positive developments in its HIV pipeline recently. It is progressing well on its two drug regimens in HIV, making regulatory filings in the United States and Europe to get its HIV drug, Tivicay approved as a two-drug regimen (2DR) in combination with lamivudine on the back of the positive GEMINI study data. Glaxo anticipates U.S. approval in the second quarter of 2019.
Glaxo also announced positive data from both the FLAIR and ATLAS studies this year, evaluating cabotegravir plus rilpivirine in a long-acting, once-monthly HIV formulation. Glaxo believes that this long-acting injectable HIV therapy will provide a highly differentiated treatment option for patients seeking a long-lasting therapy for HIV, freeing them of the burden of daily oral therapy. It believes the positive data from these studies will allow it to file for approval in the first half of 2019.
Meanwhile, key regulatory approvals this year included Juluca in EU and Japan, Shingrix in EU and Japan, an expanded label for Trelegy Ellipta in the United States and EU, which can drive sales of these products.
Glaxo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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