Another year of progress
GlaxoSmithKline continues to follow through on management’s three strategic priorities in order to increase growth, reduce risk, and improve the company’s long-term financial performance.
by Andrew Humphreys email@example.com
GlaxoSmithKline is in the fifth year of a strategy to fundamentally reshape the company by delivering sustainable sales growth, increase financial returns to shareholders, and improve research and development productivity. To accomplish that, management has concentrated GSK’s business around the delivery of three strategic priorities: grow a diversified global business, deliver more products of value, and simplify the operating model.
GSK leaders say the benefits of this strategy were evident during 2012, with strong performances in the company’s emerging markets, and other growth businesses offsetting much of the effect of the significantly worsening outlook in Europe. According to management, the company’s R&D organization delivered unparalleled output with six key new products filed for approval. Also, there is growing evidence that GSK can replenish the late-stage pipeline on a sustainable basis, which is a very significant element of GSK’s longer-term prospects.
The ultimate aim of GSK’s strategy is to deliver sustainable earnings per share growth and improved shareholder returns. The company produced flat core EPS of 112.7p ($1.79), but returned £6.3 billion ($10 billion) to shareholders through dividends and buybacks during 2012. GlaxoSmithKline has returned to shareholders nearly £25 billion ($39.6 billion) from the time CEO Sir Andrew Witty joined the board at the beginning of 2008 through year-end 2012.
GSK operates via three primary business areas: Pharmaceuticals, Vaccines, and Consumer Healthcare. The corporate objective is to deliver sustainable growth across this portfolio. For 2012, the Pharmaceuticals group accounted for revenue of £18.62 billion ($29.51 billion) and 68 percent of GSK’s total turnover. Consumer Healthcare 2012 sales reached £5.11 billion ($8.1 billion), representing 19 percent of GSK’s turnover. The Vaccines segment produced 2012 revenue of £3.33 billion ($5.27 billion) and 13 percent of total turnover.
The Pharmaceuticals segment represents a broad portfolio of medicines for treating serious and chronic diseases. GSK’s leading therapy areas based on 2012 product sales are respiratory, cardiovascular and urogenital, central nervous system, HIV, and anti-bacterials. The Consumer Healthcare group represents brands in four main areas: Total wellness, Oral care, Nutrition, and Skin health. The company’s Vaccines business is one of the largest worldwide, producing pediatric and adult vaccines against a range of infectious diseases. GlaxoSmithKline during 2012 distributed nearly 900 million doses to 170 countries, of which more than 80 percent were supplied to developing countries.
Although GSK’s reported sales for 2012 were down 1 percent at constant exchange rates, sales were flat when adjusted for the disposal of the company’s noncore Consumer Healthcare brands. This result reflects continued strong performance from the company’s ‘growth’ businesses, helping to offset pressure in Western markets. Overall sales in emerging markets accounted for 26 percent of the group’s business and increased 10 percent during 2012. Consumer Healthcare rose 5 percent with the exclusion of divested OTC products. GlaxoSmithKline has been reshaping its U.S. business to reflect changing market dynamics and to prepare for the introduction of multiple new medicines. Management continues “to view the United States and Japan very positively, as markets that reward and are willing to pay for healthcare innovation.”
During the past year, GSK made strong advances in R&D as potential new medicines progressed across multiple disease areas such as respiratory, oncology, diabetes and HIV. As of early 2013, GSK had six key new products under regulatory review and Phase III data were anticipated on 14 assets during 2013 and 2014. During the next three years starting in 2013, the company has the potential to launch about 15 new medicines and vaccines worldwide. Management is confident that GSK can sustain this level of productivity and deliver the long-term goal of improving returns on R&D investment to about 14 percent.
GSK continues to make changes to simplify its operating model. The Operational Excellence program has produced yearly savings of £2.5 billion ($4 billion) and remains on track to hit the goal of £2.8 billion ($4.4 billion) of annual savings by 2014. GSK announced in February 2013 a new major change program that is anticipated to produce incremental yearly cost savings of at least £1 billion ($1.6 billion) by 2016. This program consists of a series of technological advances and opportunities to eliminate complexity, which GSK leaders believe can transform long-term cost competitiveness in manufacturing and R&D. According to executives, the program will help simplify GSK’s supply-chain processes, shorten cycle times, lower inventory levels, and reduce carbon footprint.
Total group revenue for full-year 2012 was broadly in line with GSK’s 2011 performance – down 1 percent to £26.43 billion ($41.9 billion) – with a 2 percent decrease in Pharmaceuticals and Vaccines turnover partly offset by flat reported revenue in Consumer Healthcare. Pharmaceuticals turnover fell 2 percent, mainly as a result of the increased pressure from austerity measures in Europe. Vaccines worldwide revenue dropped off 2 percent, reflecting the effect of lower Cervarix sales in Japan to £132 million ($209 million) after the completion of the 2011 HPV vaccination catch-up program. Excluding Cervarix, global Vaccines revenue improved 4 percent over full-year 2011. Reported Consumer Healthcare turnover was flat at £5.11 billion ($8.1 billion), but excluding the non-core OTC brands divested during the first six months of 2012, Consumer Healthcare turnover rose 5 percent.
U.S. Pharmaceuticals and Vaccines revenue for 2012 went down 2 percent globally versus the previous calendar term. Excluding the effect of Avandia, Pharmaceuticals and Vaccines sales were flat. Pharmaceuticals revenue decreased 2 percent versus 2011. Sales declines for Avandia and certain older products, including Arixtra and Valtrex, were partly offset by an encouraging performance from new products – particularly in Oncology, which advanced 18 percent – a £65 million ($103 million) sales contribution from Benlysta and improved Respiratory sales, which rose 1 percent. Revenue additionally benefited from the net effect of the incremental revenue from the conclusion of the Vesicare joint-promotion deal in first-quarter 2012. Vaccines sales for 2012 were flat year-over-year as sales growth for Infanrix, Pediarix and Boostrix was offset by lower flu vaccines sales and adverse comparisons for Hepatitis vaccines and Rotarix, which benefited from significant CDC stockpile purchases during 2011.
Europe Pharmaceuticals and Vaccines revenue in 2012 decreased 7 percent, primarily because of the impact of continuing government austerity measures including price cuts, parallel trade and generic substitution. This drop-off stemmed from adverse pricing effects of 6 percent and a 1 percent volume decline. Pharmaceuticals sales fell 8 percent and Vaccines sales decreased 4 percent. Despite a slight reduction in the rate of decline in fourth-quarter 2012, the underlying economic environment continued to be challenging according to GSK.
For 2012, EMAP Pharmaceuticals and Vaccines turnover improved 10 percent as strong growth in Latin America (up 11 percent to £1.26 billion/$1.99 billion), China (up 17 percent to £759 million/$1.2 billion) and India (up 10 percent to £304 million/$482 million) was partly offset by the effect of mandatory price reductions in certain markets, including Turkey and Korea. Pharmaceuticals revenue advanced 8 percent, with improved momentum after a slow first quarter, as strong growth in Respiratory combined with solid performances in certain established brands and the newer Oncology portfolio. GSK managers say the
Vaccines business generated a strong performance but with expected uneven delivery across the four quarters of 2012, reflecting the phasing of tender sales and a particular concentration towards the end of the year.
Japan Pharmaceuticals and Vaccines turnover dropped off 6 percent versus 2011, reflecting an adverse comparison with strong Cervarix sales during that year despite a material contribution from the third phase of the program benefiting first-quarter 2012. The catch-up program has been completed. Excluding Cervarix, Japan Pharmaceuticals and Vaccines turnover for 2012 improved 5 percent compared to the prior year. Pharmaceuticals revenue climbed up 3 percent with strong growth from the recently launched products Lamictal, Avodart and Volibris, partly offset by the effect of the mandatory biennial price cuts – which impacted growth by four percentage points – and increasing generic competition to Paxil. The Respiratory portfolio advanced 6 percent, led by a strong performance from Xyzal, offsetting declines in Flixonase and Zyrtec. Adoair sales rose 6 percent to £309 million ($490 million). For the Vaccines segment during 2012, Rotarix, which was launched in Japan in fourth-quarter 2011, produced sales of £44 million ($70 million).
Revenue in 2012 for the worldwide specialist HIV company ViiV Healthcare decreased 10 percent to £1.37 billion ($2.18 billion). The sales decline mainly reflected U.S. generic competition to Combivir and Epivir offsetting growth generated by Epzicom and Selzentry. In late October 2012, GlaxoSmithKline acquired the 50 percent share of the Shionogi-ViiV Healthcare joint venture previously held by Shionogi. The acquired assets included the investigational medicine dolutegravir and early-stage integrase inhibitor compounds. ViiV was founded by GSK and Pfizer during 2009.
Consumer Healthcare revenue for 2012, discounting sales of the non-core OTC brands that were divested during first-half 2012, grew 5 percent with relatively consistent performance over the four quarters. This performance reflected continued growth in Oral care, Nutrition and Wellness, partly offset by a small decrease in Skin health. U.S. sales improved 2 percent over 2011 and Europe sales were flat, each impacted by continuing economic pressures and the drag from alli per GSK managers. The Rest of World markets, especially India, the Middle East and China, continued to make a strong contribution and rose 12 percent. The 2012 turnover for Consumer Healthcare was flat, coming in at £5.11 billion ($8.1 billion).
For the first six months of 2013, GSK’s total group turnover was flat at £13.09 billion ($20.75 billion). Excluding the impact of disposals, mainly the conclusion of the Vesicare U.S. joint-promotion deal during first-quarter 2012 and the non-core OTC brands divested in first-half 2012, turnover rose 2 percent year-over-year. Pharmaceuticals and Vaccines turnover decreased 1 percent, but improved 1 percent excluding disposals. Pharmaceuticals turnover was flat – but excluding disposals, advanced 3 percent – as continued growth in EMAP and Japan and an improved U.S. performance were partially offset by the joint impact of continuing austerity pressures and generic competition in Europe as well as lower sales in ViiV Healthcare. Global Vaccines turnover dropped off 5 percent, reflecting the adverse comparison with strong Cervarix sales in Japan in first-half 2012 that benefited from the final stage of the HPV catch-up vaccination program. Excluding Cervarix in Japan, Vaccines sales rose 1 percent, reflecting the strong U.S. growth of Infanrix and Pediarix – which benefited from a competitor supply issue – and better performance in Europe partly offset by the net negative impacts of tender phasing elsewhere. Consumer Healthcare turnover improved 1 percent to £2.66 billion ($4.12 billion), though excluding the non-core OTC brands divested during the first six months of 2012, turnover increased 6 percent.
In the United States, total Pharmaceuticals and Vaccines turnover for first-half 2013 declined 1 percent, as Pharmaceuticals fell 2 percent and Vaccines increased 7 percent. Pharmaceuticals turnover was significantly affected by the loss of sales of Vesicare following the conclusion of the co-promotion pact in first-quarter 2012. Excluding Vesicare, U.S. Pharmaceuticals turnover advanced 4 percent. Sales of Respiratory products jumped up 8 percent to £1.85 billion ($2.93 billion), with strong growth generated by Advair, Flovent and Ventolin. Oncology products – spurred by strong performances from Votrient and Promacta – performed well, rising 17 percent to £179 million ($285 million). These gains were partially offset by the effect of generic competition to Lamictal, dropping 21 percent to £129 million ($205 million), and Dermatology sales, falling 35 percent to £79 million ($125 million). The 7 percent growth in Vaccines sales mainly was due to the 19 percent increase in Infanrix and Pediarix sales to £110 million ($174 million).
In Europe, Pharmaceuticals and Vaccines revenue in the first six months of 2013 amounted to £2.562 billion ($4.06 billion), dropping 2 percent primarily because of price reductions. Pharmaceutical sales declined 3 percent from the first-half 2012 performance to £2.06 billion ($3.27 billion). Oncology products, especially Votrient, performed well as did Avodart, but that growth was offset by lower sales for various older products. Seretide sales fell 1 percent to £746 million ($1.18 billion), primarily spurred by price reductions. First-half 2013 Vaccines sales rose 5 percent, largely due to an improved tender performance and some beneficial tender phasing in the second quarter.
EMAP Pharmaceuticals and Vaccines revenue rose 5 percent to £2.32 billion ($3.68 billion), with particular contributions from Middle East/Africa and China. Pharmaceuticals sales improved 7 percent versus first-half 2012, led by Augmentin, up 18 percent to £202 million ($320 million), and Seretide, up 11 percent to £223 million ($354 million). Augmentin benefited partially from a favorable comparison versus the first six months of 2012, which was adversely affected by supply interruptions. Vaccines sales decreased 5 percent to £472 million ($748 million), largely reflecting the phasing of tender deliveries, especially of Synflorix.
Japan Pharmaceuticals and Vaccines revenue decline 6 percent versus 1H 2012 to £830 million ($1.32 billion), as 4 percent growth in Pharmaceuticals sales was more than offset by the 80 percent decrease in Vaccines sales. Strong growth in Respiratory products and for Avodart, Lamictal and Relenza was partly offset by generic erosion of Paxil sales. Vaccines sales were affected by the adverse comparison of
Cervarix with first-half 2012, which benefited from the final stages of the HPV vaccination program, and continued competitive pressures.
ViiV revenue for the first six months of 2013 went down 5 percent to £657 million ($1.04 billion) as growth generated by Epzicom and Selzentry was more than offset by the impact of continued competition to older products.
Consumer Healthcare turnover, excluding the non-core OTC brands divested during first-half 2012, rose 6 percent, with growth in all four categories. Growth in the United States and Europe primarily stemmed from Sensodyne and re-stocking of alli, which was out of supply for most of first-half 2012. In the Rest of World markets, strong growth in India, the Middle East and Latin America was partially offset by a decrease in sales in China. Reported Consumer Healthcare revenue advanced 1 percent to £2.66 billion ($4.12 billion).
Advair/Seretide remains GlaxoSmithKline’s best-selling drug and one of the industry’s top revenue generators. The asthma and COPD treatment consists of the synthetic trifluorinated corticosteroid fluticasone propionate and the beta 2 adrenergic agonist salmeterol.
Worldwide sales of Advair/Seretide in 2012 rose 1 percent at constant exchange rates compared to 2011, totaling £5.05 billion ($8 billion). Advair’s 2012 U.S. sales amounted to £2.53 billion ($4.02 billion), up 1 percent compared with 2 percent estimated underlying growth for the year (5 percent volume decline more than offset by a 7 percent positive impact of price and mix). Seretide sales in Europe fell 4 percent versus the 2011 result to £1.45 billion ($2.29 billion), as price cuts more than offset volume growth of 2 percent. In EMAP, Seretide sales for 2012 increased 12 percent to £417 million ($661 million), with strong growth in China and Latin America offsetting the effect of some price reductions (mainly in Turkey).
In first-half 2013, Advair benefited from overall prescription volume growth in the U.S. controller market (LABA, ICS and anti-cholinergic products). On a global scale, Advair/Seretide sales for 1H 2013 improved 5 percent year-over-year to £2.67 billion ($4.23 billion). For that period, Advair U.S. sales rose 8 percent and Seretide European sales declined 1 percent to £746 million ($1.18 billion) versus the drug’s 1H 2012 results. In EMAP, Seretide grew 11 percent to £223 million ($354 million) in first-half 2013, with strong growth produced in China, Turkey and Brazil. Advair sales in Japan rose 6 percent to £133 million ($211 million).
The U.S. patent for compositions containing the combination of active ingredients in Advair/Seretide expired in 2010. GSK says the outlook for the timing and impact of entry of ‘follow-on’ competition is uncertain. As of early 2013, the company had not been notified of any acceptance by FDA of an application for a ‘follow-on’ product that refers to Advair/Seretide and contains the same main chemicals.
GSK’s third best seller also comes from the respiratory portfolio, the asthma and COPD medicine Flovent/Flixotide (fluticasone propionate). Sales for 2012 dropped 4 percent to £779 million ($1.23 billion). Flovent U.S. sales dropped off 1 percent from 2011 to £448 million ($710 million) versus estimated underlying growth of 3 percent (4 percent volume increase partly offset by a 1 percent negative impact of price and mix).
During second-quarter 2013, Flovent benefited from overall Rx volume growth of 2 percent in the controller market. For first-half 2013, Flovent/Flixotide global sales rose 6 percent to £415 million ($658 million).
Ventolin (salbutamol), another one of GSK’s respiratory products, continues to grow. The drug’s 2012 worldwide sales advanced 6 percent over 2011 to £631 million ($1 billion). In the United States, Ventolin rose 14 percent to £277 million ($439 million); estimated underlying growth was 11 percent, spurred mostly by volume. The drug’s 2012 EMAP sales climbed up 10 percent to £171 million ($271 million). During the year, GSK introduced in Indonesia a new, lower-cost pack of four Ventolin rotacaps with a low-cost inhaler. This pack is being rolled out across other EMAP markets. Global sales growth for first-half 2013 improved 5 percent to £322 million ($510 million), fueled by a 13 percent increase in the United States.
The No. 2 sales generator for GSK is the 5-alpha reductase inhibitor Avodart/Avolve (dutasteride) for benign prostatic hyperplasia. Worldwide 2012 sales for the Avodart franchise advanced 7 percent to £790 million ($1.25 billion). The growth was spurred by strong contributions from the recent market introductions of the combo product Duodart/Jalyn in Europe and of Avodart in Japan. Avodart’s U.S. sales decrease was due partially to the effect of labeling changes implemented in 2011 and the availability of a generic competitor in the same class; the decline was offset in part by Jalyn growth, with combined sales dropping 5 percent.
The Avodart franchise during January-June 2013 improved 11 percent year-over-year to £424 million ($672 million) globally, with 42 percent growth generated by Duodart/Jalyn. Avodart sales during that period increased 4 percent to £321 million ($509 million).
Infanrix and Pediarix remain GSK’s top-selling vaccine franchise. Combined worldwide sales in 2012 grew 17 percent to £775 million ($1.23 billion), mainly reflecting strong tender orders in EMAP and U.S. growth, which benefited from a competitor supply shortage. Worldwide sales in first-half 2013 for the two products rose 14 percent to £396 million ($628 million), with growth primarily reflecting stronger tender shipments in Europe and EMAP as well as the continued U.S. competitor supply shortage.
Sales during 2012 of GSK’s hepatitis vaccines dropped 5 percent to £646 million ($1.02 billion) as decreases in mature markets, partly the result of reduced government funding, offset EMAP growth of 21 percent. The decline continued through first-half 2013 as sales decreased 5 percent to £309 million ($490 million), partly due the return of competing vaccines to the U.S. arena in second-half 2012.
Synflorix sales for 2012 grew 17 percent to £385 million ($610 million), largely reflecting continued strong growth in EMAP. On the other hand, the Streptococcus pneumoniae vaccine’s sales declined 8 percent in first-half 2013 to £164 million ($260 million), primarily reflecting the timing of tender shipments.
Rotarix jumped up 21 percent to £360 million ($571 million) for 2012, with strong sales growth throughout EMAP as well as initial launch sales in Japan. U.S. sales decreased 11 percent despite market-share gains, mainly because of the rotavirus vaccine’s strong 2011 performance when sales benefited from a large stockpile purchase from the CDC. The overall sales decline continued in January-June 2013 as Rotarix edged down 1 percent to £167 million ($265 million). First-half 2013 growth in the United States and Europe was offset by adverse tender phasing in EMAP and the effect of increased competition in Japan.
ViiV Healthcare’s 2012 global sales decrease of 10 percent included down market performances in the United States (-22 percent) and Europe (-3 percent), with EMAP up 3 percent. ViiV’s leading HIV franchise is Epzicom/Kivexa (abacavir and lamivudine), as its 2012 sales improved 10 percent to £665 million ($1.05 billion). Selzentry sales advanced 20 percent over the 2011 result, rising to £128 million ($203 million). The 2012 sales performances by Epzicom/Kivexa and Selzentry (maraviroc) were more than offset by a 30 percent decrease in the mature portfolio, mainly due to U.S. generic competition for Combivir and Epivir.
ViiV’s first-half global 2013 sales were down 5 percent to £657 million ($1.04 billion). During that period, U.S. sales decreased 7 percent, Europe declined 3 percent, and EMAP fell 11 percent. Epzicom/Kivexa rose 10 percent to £362 million ($574 million) and Selzentry increased 18 percent to £72 million ($114 million), though this growth was more than offset by decreases in the mature portfolio.
In the CNS category, two former blockbuster brand lines are dealing with generic rivals. The Lamictal (lamotrigine) family of epilepsy and bipolar disorder products generated global 14 percent growth, coming in at £610 million ($967 million) for 2012. That growth did not continue during first-half 2013 though as franchise sales dropped 9 percent to £266 million ($422 million) because of generic competition. U.S. generic competition to Lamictal XR began during first-quarter 2013.
Once a $3-plus-billion annual seller, Paxil/Seroxat sales for 2013 came in at £374 million ($593 million), down 14 percent from its 2011 performance. The antidepressant product’s first-half 2013 sales declined 20 percent year over year to £152 million ($241 million).
The anti-bacterial agent Augmentin generated 2012 sales of £608 million ($964 million), down 1 percent compared to 2011 at constant exchange rates. The drug’s strongest regional performance was in EMAP, as sales grew 8 percent at CER to £367 million ($582 million). Augmentin sales during the first six months of 2013 advanced 8 percent to £325 million ($515 million) as continued strong growth in EMAP was aided partially by the phasing of shipments in first-half 2012 due to some earlier supply interruptions.
Lovaza (omega-3-acid ethyl esters) sales for 2012 increased 5 percent to £607 million ($962 million), mainly reflecting improved pricing. GSK says the lipid-regulating agent continued to hold broadly flat market share in a category that decreased 7 percent versus 2011, as economic pressures have resulted in fewer physician visits and reduced testing for asymptomatic conditions such as very high triglycerides.
Total wellness is the top-selling segment in GSK’s Consumer Healthcare business. Sales in this segment during 2012 amounted to £2.01 billion ($3.18 billion). Total wellness sales decreased 10 percent compared to 2011, but excluding non-core OTC brands that were divested during early 2012, the category generated 2 percent growth despite various supply interruptions. Gastro-intestinal health, including Tums and Eno, paced category growth at 11 percent. Pain Management, including Panadol, produced an 8 percent sales gain spurred by growth in emerging markets.
The Smoking reduction/cessation and Respiratory health categories generated 4 percent growth. Sales of alli plummeted 72 percent due to the supply interruption not resolved until late third-quarter 2012.
For first-half 2013, Total wellness sales (excluding the non-core OTC brands divested in 2012) advanced 4 percent year-over-year. Strong growth was generated by alli in the United States and Europe, mainly because of being out of stock for most of first-half 2012. A severe cold and flu season during early 2013 helped fuel growth of several respiratory brands including Coldrex, Beechams and Panadol Cold and Flu. This growth was partially offset by a 45 percent reduction in Contac sales because of new shelving requirements in China, combined with lower sales of Fenbid in China, down 25 percent compared to January-June 2012.
Oral care sales for 2012 advance 8 percent to £1.8 billion ($2.85 billion). Sensodyne Sensitivity & Acid Erosion was the best-performing brand, with sales increasing 15 percent to £706 million ($1.12 billion). Strong results from Denture care products helped to offset a 2 percent decrease in Aquafresh sales. For first-half 2013, strong growth in Oral care sales was paced by the growth of Sensodyne Sensitivity & Acid Erosion, up 14 percent, and denture care brands, up 9 percent versus January-June 2012.
Nutrition sales grew 8 percent versus 2011 to £1.05 billion ($1.75 billion). Family nutrition (Horlicks) improved 14 percent based on strong growth in India. The Maxinutrition adult nutrition business generated 21 percent sales growth in 2012. Strong emerging market growth of Lucozade offset decreases in Europe. Nutrition sales during the first six months of 2013 rose 6 percent as strong growth in Rest of World markets, led by Horlicks in India, more than offset a 2 percent decrease in Europe.
Skin health 2012 sales fell 1 percent to £255 million ($404 million). Strong Bactroban growth in China and solid results in Lip care (including Abreva) were offset by decreased sales of Hinds in Mexico. First-half 2013 Skin health sales went up 9 percent, led by Abreva U.S. growth.
In the pipeline/recent drug approvals
GlaxoSmithKline managers say their business is sustained via research and development investment. For 2012, the company spent £3.47 billion ($6.29 billion) before non-core items and £4.01 billion ($6.36 billion) total to develop new medicines, vaccines and innovative consumer products. During the year, GSK submitted for marketing approval six key medicines. R&D expenditure declined 5 percent in first-half 2013, amounting to £1.7 billion ($2.7 billion) before non-core items and £1.95 billion ($3.1 billion) total.
The company has dedicated research programs for diseases that affect the developing world. GSK is one of a few healthcare players researching new vaccines and medicines for each of the World Health Organization’s priority diseases: HIV/AIDS, malaria and tuberculosis.
Management has changed GSK’s R&D organization so that it is better able to sustain a pipeline of products that offer valuable improvements in treatment for patients and healthcare providers. The company has increased the externalization of its research, allowing GSK to access new fields of science and to share the risk of development with its partners. The processes to make decisions earlier also have been changed, so that only those medicines that are significantly differentiated from existing therapies are advanced. GlaxoSmithKline says it has broken up the traditional hierarchical R&D business model and created smaller, more agile groups of scientists who are accountable for their projects. According to the company, all of this has been underpinned with a concentration on improving the R&D rates of return and being more rigorous in how GSK allocates investment across Pharmaceuticals, Vaccines and Consumer Healthcare research and development.
GlaxoSmithKline’s R&D Late-Stage Pipeline Review revealed on Dec. 3, 2012, these 14 projects as expected to deliver Phase III data during 2013 and 2014: Votrient (ovarian), MAGE-A3 (melanoma and NSCLC), Tykerb (breast, head/neck and gastric cancers), darapladib (atherosclerosis – event driven), Arzerra (first line and relapsed CLL), drisapersen (DMD), dabrafenib + trametinib combination use (metastatic melanoma), fluticasone furoate (asthma), mepolizumab (severe asthma), Benlysta subcutaneous (SLE), vercirnon (Crohn’s disease), migalastat (Fabry’s disease), Herpes Zoster vaccine (data are event driven and now expected in 2015) and dolutegravir-Trii (HIV). In addition to those pipeline assets, various products have been filed for regulatory approval during 2012 and 2013.
FDA’s Pulmonary-Allergy Drugs Advisory Committee during September 2013 voted 11-to-2 in favor of marketing clearance of umeclidinium/vilanterol (UMEC/VI, 62.5/25mcg dose). According to the committee, the efficacy and safety data provide substantial evidence to support approval of UMEC/VI for the long-term, once-daily, maintenance bronchodilator treatment of airflow obstruction in patients with chronic obstructive pulmonary disease, including chronic bronchitis and emphysema. The New Drug Application was submitted to FDA during December 2012 and U.S. regulators are expected to render their final approval decision by Dec. 18, 2013. UMEC/VI was filed for regulatory approval in Europe during January 2013 and in Japan during April 2013.
UMEC/VI represents two investigational bronchodilator molecules – the long-acting muscarinic antagonist GSK573719 or umeclidinium bromide (UMEC), and the long-acting beta2 agonist (LABA) vilanterol (VI) – administered using the Ellipta inhaler. The proposed trade name for UMEC/VI is Anoro Ellipta, which is one of several late-stage assets in GlaxoSmithKline’s respiratory development portfolio. The company’s respiratory development portfolio additionally includes VI monotherapy and MABA (GSK961081), developed in collaboration with Theravance, as well as GlaxoSmithKline’s investigational medicines fluticasone furoate (FF) monotherapy, UMEC monotherapy and the anti-IL5 MAb mepolizumab.
GSK in April 2013 submitted separately for U.S. and EU approval of UMEC as monotherapy for chronic obstructive pulmonary disease. Regulatory submissions for UMEC monotherapy were planned for other countries in 2013. The U.S. filing was for the long-term once-daily maintenance bronchodilator treatment of airflow obstruction in patients with COPD, including chronic bronchitis and emphysema.
The investigational MAGE-A3 antigen-specific cancer immunotherapeutic did not meet the first co-primary endpoint in a Phase III melanoma study, as announced by GSK in September 2013. The vaccine did not significantly extend disease-free survival when compared to placebo in the MAGE-A3 positive population. GlaxoSmithKline will continue the DERMA study until the second co-primary endpoint is assessed. That endpoint – DFS in the gene signature positive sub-population – is designed to identify a subset of MAGE-A3 positive patients that may benefit from the treatment.
Regulatory approval was granted by the European Commission for Tafinlar (dabrafenib), per a GSK announcement during early September 2013. The oral targeted treatment is indicated in monotherapy for unresectable melanoma or metastatic melanoma in adult patients with a BRAF V600 mutation. Before taking the drug, patients must have confirmation of a BRAF V600 mutation using a validated test. Dabrafenib is a kinase inhibitor that targets BRAF, a significant component of a biological pathway in the body that regulates the normal growth and death of cells, including skin cells. The availability of a diagnostic test enables the identification of patients with unresectable or metastatic melanoma who have the BRAF V600 mutation, and therefore are eligible to receive this therapy.
Before the EU approval, dabrafenib already was licensed in the United States, Canada and Australia. U.S. marketing approval was granted during May 2013 for Tafinlar as a single-agent oral treatment for unresectable melanoma or metastatic melanoma in adult patients with BRAF V600E mutation. Mekinist (trametinib) additionally was approved by FDA during that month as a single-agent oral treatment for unresectable or metastatic melanoma in adult patients with BRAF V600E or V600K mutations. These mutations must be detected by an FDA-approved test such as the companion diagnostic assay from bioMérieux called THxID-BRAF.
Tafinlar and Mekinist are available for patients with the BRAF V600E mutation, which accounts for 85 percent of all BRAF V600 mutations in metastatic melanoma. Mekinist is additionally approved for patients with the V600K mutation, which constitutes 10 percent of all BRAF V600 mutations in metastatic melanoma. Mekinist was in-licensed by GlaxoSmithKline during 2006. The company has global exclusive rights to develop, manufacture and commercialize Mekinist. Japan Tobacco holds joint-promotion rights in Japan.
Supplemental New Drug Applications to FDA were submitted in July 2013 for dabrafenib with the MEK inhibitor trametinib. Supplemental applications were filed to each of the currently approved NDAs for the use of each drug in combination with the other for treating adult patients with unresectable or metastatic melanoma with a BRAF V600 E or K mutation. European review of the MAA submission for trametinib in combination with dabrafenib is under way as of February 2013.
Another new drug candidate revealed by GSK during third-quarter 2013 that did not meet its primary endpoint in a Phase III study was vercirnon. The investigational CCR9 antagonist is intended for adult patients with moderately to severely active Crohn’s disease. Vercirnon did not achieve the primary endpoint of improvement in clinical response and the key secondary endpoint of clinical remission in SHIELD-1, the first of four Phase III studies. The investigational non-biologic, orally administered CCR9 antagonist was licensed from ChemoCentryx during January 2010. GSK is exploring safety and efficacy results to determine the next steps regarding the clinical-development program.
Tivicay (dolutegravir) 50-mg tablet gained U.S. approval in August 2013. The integrase inhibitor is indicated for use in combination with other antiretroviral agents for treating HIV-1 in adults and children aged 12 years and older weighing at least 40 kg (88 pounds). Integrase inhibitors block HIV replication by preventing viral DNA from integrating into the genetic material of human immune cells, or T-cells. This step is essential in the HIV replication cycle and is responsible for establishing chronic infection.
This drug represents the first new treatment delivered by ViiV Healthcare. ViiV announced the filing of an MAA for dolutegravir to the European Medicines Agency on Dec. 17, 2012. Regulatory applications are being evaluated in other markets such as Canada, Australia, and Brazil. Regulatory submissions to support a fixed-dose combo of Tivicay and abacavir/lamivudine is anticipated by year-end 2013.
The U.S. Prescription Drug User Fee Act goal date for albiglutide was extended by three months, as announced by GSK in August 2013. FDA now has until April 15, 2014, to review the Biologics Licence Application for albiglutide as a once-weekly treatment for adult patients with type 2 diabetes. In Europe, the MAA was filed on March 7, 2013. Albiglutide is a GLP-1 receptor agonist designed for once-weekly subcutaneous dosing.
The investigational compound drisapersen was granted Breakthrough Therapy designation by FDA in June 2013 for the potential treatment of patients with Duchenne Muscular Dystrophy (DMD). The Breakthrough Therapy designation, enacted in 2012, is one of several programs created by FDA to expedite the development and review of drugs for serious or life-threatening conditions. Designated with U.S. and EU orphan drug status, drisapersen is being developed as part of an alliance with Prosensa. Drisapersen is an antisense oligonucleotide that induces exon skipping of exon 51.
Breo Ellipta gained FDA clearance in May 2013. The new drug combines the inhaled corticosteroid fluticasone furoate and the long-acting beta2 agonist vilanterol. This is the first once-daily, ICS/LABA combination approved for the long-term, maintenance treatment of airflow obstruction in patients with COPD and for the reduction of chronic obstructive pulmonary disease exacerbations in patients with a history of exacerbations.
A regulatory application for FF/VI was submitted in the European Union during June 2012 under the brand name Relvar Ellipta for treating patients with COPD and asthma. A regulatory filing under the same trade name was submitted in Japan during September 2012. The licence application for use of FF and VI in patients with COPD was withdrawn from the current Japanese New Drug Application (JNDA), as announced by GSK and Theravance in July 2013. Meanwhile, the review of FF/VI for use in patients with asthma continued to advance via the normal Japanese regulatory process as part of this JNDA. The companies were reviewing next steps and potential clinical trials to support the re-filing of FF/VI for treating Japanese patients with COPD.
Marketing authorization was granted for GSK’s quadrivalent (four-strain) influenza vaccine in Germany and the United Kingdom, as announced by the company during April 2013. Following a decentralised procedure, Germany’s Paul Ehrlich Institut became the first national regulatory authority in Europe to grant regulatory approval for the influenza vaccine, followed by the U.K.’s Medicines and Healthcare Products Regulatory Agency. This is the first four-strain influenza vaccine to be cleared in a European country for active immunization of adults and children from 3 years of age for the prevention of influenza disease caused by the two influenza A virus subtypes and the two influenza B virus types contained in the vaccine. The new four-strain vaccine is available as Influsplit Tetra in Germany and Fluarix Tetra in the United Kingdom.
Product sales and financial performance
Product sales sales
Seretide $7,999 $8,023
Avodart $1,252 $1,186
Flixotide $1,235 $1,289
Pediatrix $1,229 $1,094
Kivexa $1,054 $978
Vaccines $1,024 $1,091
Ventolin $1,000 $954
Lamictal $967 $850
Augmentin $964 $1,016
Lovaza $962 $902
Synflorix $610 $555
Seroxat $593 $690
Rotarix $571 $476
All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of
exchange in 2012: £1.5853.
Revenue $41,901 $43,417
Net Income $7,237 $8,340
EPS $1.45 $1.64
R&D $6,290 $6,355
Revenue $20,750 $20,771
Net Income $3,350 $4,242
EPS $0.65 $0.80
R&D $3,096 $3,009
All figures are in millions of dollars except EPS, and were translated using the Federal Reserve Board’s average rate of exchange in 2012: £1.5853.
Posted: October 2013