Source: Seeking Alpha
Q2 2014 Earnings Conference Call
July 23, 2014 09:00 AM ET
Andrew Witty – CEO
Simon Dingemans – CFO
Graham Parry – Bank of America Merrill Lynch
Tim Anderson – Sanford Bernstein
Alexandra Hauber – UBS
Andrew Baum – Citigroup
Mark Clark – Deutsche Bank
James Gordon – JPMorgan
Steve Scala – Cowen
Nicolas Guyon – Morgan Stanley
Seamus Fernandez – Leerink Swann LLC
Good afternoon, welcome to today’s call to everybody. GSK’s performance in the second quarter provides evidence of the very significant changes are taking place in the Group’s portfolio. As you know our strategy over the last six years has been to fundamentally reshape the Group and our R&D operations in particular, so that we can replace the significant sales we lost to generics and ensure that the Company can succeed in an environment where our biggest product Advair faces increasing competition.
It’s clear we are now in that period of transition and this is a critical moment to ensure we made the right strategic choices particularly around investment for the long-term health of GSK in the new products and this is reflected in some of the decisions we have taken during the quarter.
Group sales for the quarter declined 4% to £5.6 billion, largely driven by lower sales in the U.S. where we are seeing earlier and more significant generic competition to Lovaza than expected and continued pricing and contracting pressure in the respiratory market including for Advair. However, while Advair sales are now likely to continue to decline, we expect new respiratory products Breo, Anoro and Incruse to generate new sales growth. Already we are seeing some recovery in our overall respiratory volume share as new launches progress albeit at lower price points. These assets together with the six other respiratory products in development will diversify and strengthen our respiratory portfolio and we remain confident we can maintain our leadership position in this therapy area well into the next decade.