GlaxoSmithKline posted a 10 percent fall in third-quarter earnings on Thursday, as the weak dollar and competition in anti-depressants hit sales, but reiterated it would return to growth from the fourth quarter.
Europe's biggest maker of prescription drugs said third-quarter earnings per share fell to 18.7 pence, in line with the average forecast in a Reuters poll of 15 analysts.
Some analysts were concerned by a bigger-than-expected 8 percent drop in sales, as well as mixed news on the Anglo-American firm's pipeline of experimental drugs, which they see as the main reason for investing in the stock.
Navid Malik at broker Williams de Broe said a one-year delay in an experimental drug for depression codenamed '162 was "quite disappointing." However, this was balanced by the acceleration of Cervarix, a vaccine for cervical cancer.
At 1400 GMT, shares in the world's second-biggest drug-maker behind Pfizer were down 0.4 percent at 11.46 pounds, having been up about 1.8 percent before the results.
"The results broadly follow the pattern we've seen in the US, with sales a bit below expectations and profits supported by lower SG&A (selling, general and administration) costs," said John Wilson, a fund manager at Standard Life Investments.
"What the market really wants is top-line growth, not cost cuts," he added.
Third-quarter sales fell to 5.02 billion pounds ($9.2 billion), slightly short of the average forecast of 5.16 billion, as demand for GlaxoSmithKline's (GSK) top selling drug, Advair for asthma, came in slightly below expectations.
Advair sales rose 20 percent to 609 million pounds against an average forecast of 631 million.
GSK makes over half of its sales in the United States and so has suffered from the weak dollar as US sales are translated into sterling. It has also been struggling with cheap, copycat competition to anti-depressant drugs Paxil and Wellbutrin.
Paxil sales slumped 51 percent to 246 million pounds.
Annual comparisons should get easier from the fourth quarter onwards, however, and GSK also boasts one of the industry's biggest line-ups of experimental medicines, although many of these are still at an early stage of development and could fail. Britain's fourth biggest company by market value reiterated that earnings at constant exchange rates would at least match 2003, with growth resuming from the fourth quarter of this year.
Shares in GSK, which makes energy drink Lucozade, Aquafresh toothpaste and Nicorette anti-smoking products as well as prescription drugs, have lagged the European drugs sector by 11 percent this year. The stock trades at about 14 times forecast 2005 earnings, a discount to the sector average of about 16 times, reflecting uncertainty about the pipeline.
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