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The shares in GlaxoSmithKline (GSK) rose more than three percent after the company announced an increase in its sales and profits. However, it cautioned the market regarding a rising threat to the company’s Advair drug.
The revenue of GSK rose by eight percent to £30.2bn last year, while pre-tax profit grew to £3.5bn from the £1.9bn of the previous year.
Sales increased across the three businesses of the company, with revenue from pharmaceuticals increasing by seven percent to £17.3bn, vaccines are up by 12 percent to £5.2bn and consumer healthcare increased by two percent at £7.8bn.
GSK also said that it continues to expect a dividend amounting to 80p for 2018, calming the fears of investors that it could be reduced.
The shares of the firm were up by more than 3.5 percent at 1,286.4p at around 5 in the afternoon.
Looking ahead, GSK said that there was uncertainty that is surrounding growth in the adjusted earnings per share of the company due to a possible generic version of its Advair inhaler being introduced in the US market.
In the absence of a generic competitor, earnings are expected to improve between four and seven percent this year. However, a mid-year generic launch, which Moody’s stated was “increasingly likely,” would cause the earnings of Advair to be flat down to three percent. Advair is the best selling product of GSK.
Emma Walmsley, the chief executive of GSK, struck a positive note. However, she said that the sales momentum from recent and new launches and some improvements in operating performance mean that GSK is “increasingly confident” in the company’s ability to deliver mid to high-single-digit improvement in adjusted earnings per share between the period of 2016 and 2020.
GSK is currently working to build up the drug pipeline of the company, and last year, it unveiled three key approvals in respiratory, shingles, and HIV drugs.
Walmsley stated: “Improving our pharmaceuticals business remains our main priority, and we are strengthening our pipeline with a focus on priority assets in two current therapy areas, respiratory and HIV, and two potential areas, oncology and immuno-inflammation. We will provide a further update to investors at Q2 on our plans for R&D.
“Cash generation also continues to be a key focus with free cash flow for the year improving to £3.4bn. We met our commitment to pay a total dividend of 80p for 2017 and continue to expect to pay 80p for 2018.”