Sir Richard Sykes, chief executive, admitted that Zantac, which accounts for 43 per cent of its pounds 2.8bn of sales, will suffer competition from cheap copies of Tagamet, a rival drug, when the latter's patent expires in May.
But he insisted the effect would not be dramatic. 'In a market which is becoming more and more cost-conscious, you would expect cheap versions will make an impact on branded drugs,' he said.
'But we don't think it will be a major impact, as it isn't just a question of price.'
He also played down concern that Zantac sales - 60 per cent of which are in the US - would be hit because of a recommendation by the National Institutes of Health that ulcer patients with H pylori bacteria should be treated with antibiotics as well as ulcer drugs.
The argument is that this may cure the underlying cause of the disease, eliminating the need for continuing Zantac treatment.
Sir Richard pointed out that fewer than 30 per cent of Zantac sales were to H pylori sufferers. Moreover, since no treatments had yet been approved by the Federal Drug Administration, such a move was not yet a practical possibility.
Nevertheless a strong underlying growth in sales in the six months to December was driven primarily by products other than Zantac.
The headline sales growth, flattered by exchange rates, was 22 per cent to pounds 2.8bn. At constant exchange rates, underlying sales growth was still double the industry average at 13 per cent.
For the first time in many years there was no contribution from price rises. The improvement was driven by volume increases - although around two percentage points were attributable to the consolidation of Glaxo India.
Sales of Zantac grew by only 16 per cent, or 5 per cent on an underlying basis, but there was an impressive performance by new drugs. Zofran, the cancer product, saw underlying sales rise 17 per cent to pounds 207m and Imigran, the new migraine drug, pushed sales up more than 200 per cent to around pounds 113m.
This strong performance meant sales of new products - those launched since 1990 - grew by more than 53 per cent and now make up more than 14 per cent of total sales.
All this growth helped to fuel pre-tax profits, which rose an impressive 22 per cent to pounds 1bn, or 15 per cent on an underlying basis.
Geographically, a poor performance in Europe as healthcare reforms hit hard meant the US market provided a growing share of sales. North America now accounts for more than 47 per cent of sales, with Europe about 35 per cent.
Underlying turnover in Germany and Italy on a constant exchange rate basis dropped by 11 and 3 per cent respectively following prescription reforms.
In the UK sales were up by only 2 per cent, partly as a result of parallel imports of Zantac. Glaxo estimates about 35 per cent of Zantac sold in Britain comes from France or Spain, where it costs about 15 per cent less.
Sir Richard acknowledged that the American market was a problem. Cost pressures and the decision of Merck, the world's biggest drug company, to merge with Medco, the largest US drug purchaser, had changed the dynamics of the market place, he said.
Glaxo, which is known to have been exploring alliances with other companies, was close to formulating its response, Sir Richard said, though he refused to give details.
The profits performance and generous dividend increase of 29 per cent to 9p helped to push the share price up by 22p to close at more than 697p.
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