Pre-tax profits in the three months to 30 June rose 10 per cent to pounds 263m, making the half-year total pounds 532m, a 10 per cent rise.
This was despite unfavourable exchange rates which held the total back by as much as pounds 15m. Earnings per share rose 12 per cent in the half year to 12.9p. SB's shares rose 12p to 412p.
The City was particularly impressed by the underlying pharmaceutical sales growth, which at 14 per cent was twice what the market had expected.
Paul Woodhouse, drugs analyst at Smith New Court, the stockbroker, said that the most encouraging part was that sales growth was consistent across all the group's products, indicating that it was sustainable.
He said the shares were underpriced.
Tagamet, the ulcer treatment, remains the largest-selling drug, despite a 2 per cent fall in sales which was expected. SB has just reached an out-of-court settlement with nine Japanese drug manufacturers which should stop the importation and manufacturing of a key ingredient in Tagamet.
Another of SB's older drugs, Augmentin, had a strong quarter, increasing sales 24 per cent. The antibiotic is more than 10 years old, but has recently had a new lease of life and now has sales nearing dollars 1bn ( pounds 520m).
Of the new drugs, Kytril, which rivals Glaxo's Zofran in the anti- vomiting market, has just been launched in Japan and has been taken by 85 per cent of the country's hospitals.
Relafen, the anti-arthritis drug, was launched in the US this year and is on target for annual sales of pounds 200m. Seroxat, the anti-depressant, has achieved a 20 per cent share of the UK market but has yet to be launched in the US.
The group's animal health business continued to be depressed in line with the rest of the world market. However the clinical laboratories operation improved profits because of increased drug testing of employees in the US.
SB's consumer brands were helped by good growth for Ribena and Lucozade, due to the warm weather, and the strong performance of Tums, the indigestion treatment, which now has a 42 per cent market share in the US.
The company is looking to swap some of its non-medical brands - such as Brylcreem and Vosene - but talks are at an early stage.