GlaxoSmithKline, the world's No 2 pharmaceuticals firm, announced disappointing first-quarter results yesterday, with profits down on the same period last year, as sales of Avandia continued to fall. However, most analysts were relieved that the figures were not worse and predicted a "period of stability".
GSK shares have fallen 26 per cent since the start of the year, mostly on the back of a profits warning the group issued in February. Pre-tax profits for the first three months to March fell to £1.87bn from £2.14bn last year. Underlying profits were down 9 per cent to £2.05bn.
Much of the blame lies with lower sales of the company's once blockbuster diabetes treatment Avandia. The safety of the drug was questioned in the New England Medical Journal last May, which led to a collapse of sales in the US. Despite the headline numbers, analysts cautiously welcomed yesterday's numbers, saying they were in line with expectations but that the real test would come when like-for-like sales of Avandia are known. Sales of Avandia fell 56 per cent compared with the first quarter last year.
"Avandia was a black swan event and the damage is done," said Peter Cartwright, an analyst at Evolution. "They have pretty much stabilised now and most of the numbers out today are as we expected, or slightly better."
Julian Heslop, the group's chief finance officer, said that sales of Avandia had stabilised in the US in the last four to six weeks and pointed to the company's performance in vaccines and consumer healthcare as highlights. The vaccine arm of the business grew by 10 per cent to £436m, while the consumer healthcare division was up 8 per cent to £893m.
A number of the group's patents end this year, but Jeremy Batstone-Carr of analysts Charles Stanley said the company has 157 products in the pipeline.
GSK shares were up 18p to 1,120p yesterday.