Pharma major GlaxoSmithKline Plc posted a quarterly loss hit by a massive charge to settle further litigation related to its diabetes drug Avandia, but the company raised its dividend and said it would resume its share buyback program.
Despite the weak results, Glaxo said the changes it has made are delivering diversified underlying sales growth, increasing pipeline potential and improved cash generation.
In 2011, we expect underlying sales momentum to continue and translate into sustainable reported growth in 2012, chief executive Andrew Witty said on Thursday. This expectation includes our assessment for further pricing reductions in the USA and Europe, which is expected to amount to an incremental 325 million pounds in 2011.
For the quarter ended Dec. 31, Glaxo reported a pretax loss of 476 million pounds ($768 million), compared with a profit of 2.25 billion pounds a year ago. Quarterly results included a 2.2 billion pound charge as a result of a legal charge relating to a U.S. investigation into the group's sales and promotional practices and to product liability connected to anti-diabetes drug Avandia.
Last year, US health regulators placed severe restrictions on the diabetes drug while European regulators recommended suspension of the medicine from the market.
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Quarterly revenue fell 13 percent to 7.2 billion pounds.
Full-year pretax profit fell to 3.16 billion pounds from 7.89 billion pounds, while revenue slipped 1 percent to 28.39 billion pounds.
Witty said the 'washout' of pandemic products, Avandia and Valtrex, which altogether represented sales of more than 2 billion pounds in 2010, will clearly impact the comany's reported sales and margin for the new year and especially during the first half.
The company declared interim dividend of 19 pence per share, taking the total dividend for the year to 65 pence, up 7 percent from 2009.
Glaxo said it expects to repurchase 1 billion to 2 billion pounds of shares this year, after it suspended its repurchase plan n 2008.
The company also announced its plans to accelerate growth and focus its Consumer Healthcare business around a portfolio of 'priority' brands and the emerging markets. These two dimensions represent around 90 percent of Glaxo's current sales base. The company plans to sell the remaining 10 percent of sales (500 million pounds), which consist of European and American non-core OTC brands, by late 2011.
Shares of the company closed Thursday's trading at 1,168 pence on the London Stock Exchange.