Drug giant posts strong profit rise

GSK pharmaceutical sales grew by 13%

GlaxoSmithKline, Europe's biggest pharmaceuticals firm, has reported another healthy rise in profits.

Pre-tax profits for the third quarter rose 17% to £1.35bn, in line with expectations.

The company also announced plans for a £4bn share buyback programme.

"GlaxoSmithKline had a strong third quarter, delivering sustained growth across all regions," said chief executive Jean-Pierre Garnier.

"We are on track to deliver our earnings per share growth target of around 13% for the year."

Mr Garnier admitted that the company had seen a dip in sales immediately following last month's terrorist attacks.

"We have seen a slowdown just following September 11 in the US - in other words, people were extremely shocked and stayed away from visiting their physicians."

But he said business was now getting back to normal.

New drugs

Mr Garnier said he was particularly pleased with the "excellent" performance of GSK's new asthma drug, Seretide/Advair.

Garnier: 'Sustained growth across all regions'

The speed at which it has been taken up in the United States makes it "the most successfully launched asthma product in the past decade."

The company said pharmaceutical sales were up 13% overall.

Income from new products grew 59% to more than £1bn, accounting for 24% of total sales.

Pipeline problems

It was not all good news. GSK also announced it had discontinued an experimental diabetes drug, which had reached the final stage of testing.

Some analysts say the firm needs more new drugs to come through to avoid a slowdown in coming years.

"The operating business is doing fine but it is the pipeline, once again, that seems to be giving problems," said David Beadle, pharmaceuticals analyst at UBS Warburg.

But other analysts shrugged off such worries, concentrating on its current trading performance.

"In the very near term there are not very many chinks in the company's armour," said Jeremy Batstone at NatWest Stockbrokers.

By mid-afternoon trade in London GSK's shares were down 36p at £18.70.

Merger progress

GSK said it expects to save about £400m this year as a result of the merger which created the company.

It said it incurred costs of £659m during the quarter as part of the restructuring programme currently underway.

But it said it gained £960m of "business performance earnings" during the same period, and after tax this produced £374m for the quarter.

Glaxo Wellcome and SmithKline Beecham merged to form GSK in December last year.