Thursday, April 26, 2012

GSK ‘hit by government austerity measures’ - Management

Published on Thursday 26 April 2012 00:00

Drugmaker GlaxoSmith-Kline, which last week had its $2.6 billion (£1.6bn) takeover offer rebuffed by US group Human Genome Sciences, yesterday said challenging conditions and reduced government spending across Europe held it back in the first quarter.

The group said turnover for the first three months of the year rose 1 per cent to £6.6bn, with core operating profits rising by the same margin to £2.1bn.

GSK chief executive Sir Andrew Witty said: “European markets remained challenging and, despite good progress on new launches in a number of therapeutic areas, particularly cardiovascular/urogenital and oncology, government austerity measures left pharmaceuticals and vaccines sales down 6 per cent.”

The group’s plans to acquire Human Genome Sciences “is entirely consistent with our strategy to deliver sustainable growth, enhance R&D returns, simplify our business model and improve returns to shareholders”, he added.

However, Human Genome said the offer undervalues the company and it would explore other options, which could include a potential sale of the company.

GSK offered $13 per share, which is an 81 per cent premium to Human Genome’s closing price on Wednesday.

Buying the firm would give GSK full ownership of lupus drug Benlysta, as well as an experimental diabetes drug and heart medicine called Darapladib that some analysts think, if successful, could rake in annual sales of £6.2bn.

James Dawson, an analyst at Charles Stanley, said existing investors were being rewarded with a 6 per cent increase in GSK’s interim dividend to 17p.


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