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GSK surpasses profit expectations on pain medication stockpiling

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·3-min read
FILE PHOTO: A GSK logo is seen at the GSK research centre in Stevenage
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By Pushkala Aripaka and Ludwig Burger

(Reuters) - GlaxoSmithKline <GSK.L> beat quarterly profit expectations on rising sales of its blockbuster shingles vaccine and strong demand for pain and respiratory medicines during the coronavirus pandemic.

The maker of Advil and Panadol painkillers on Wednesday joined AstraZeneca <AZN.L> and other large pharmaceuticals companies in sticking to or even raising full-year forecasts as lockdowns to combat the spread of the virus lead to stockpiling of medicines and other essentials.

The British company said sales from its over-the-counter products business jumped 44% to 2.86 billion pounds ($3.55 billion), surpassing the 2.78 billion pounds expected by analysts.

GSK's lung drugs and HIV medications businesses also reported growth, with respiratory sales coming in at 871 million pounds and HIV at 1.21 billion pounds - also beating expectations.

That boost, however, may not last long.

Consumption levels for its consumer business in China, where the outbreak originated, was returning to pre-crisis levels as the situation slowly gets back to normal in the country, Chief Executive Emma Walmsley said.

GSK also highlighted the challenges it faces during the pandemic, pointing to stalls in manufacturing and the supply chain and restrictions in its ability to conduct clinical trials.

Drugmakers and healthcare regulators worldwide are having to pause existing trials and reviews because of safety measures to protect participants and as they divert funds and research into potential COVID-19 treatments.

GSK, however, said it does not anticipate any significant delays to regulatory approvals due to the pandemic at this time.

GSK has struck a deal with Sanofi <SASY.PA> develop a coronavirus vaccine and Walmsley said the global push to develop an immunisation against the coronavirus would not lead to widely available products before the second half of next year.

The British drugmaker's turnover rose 19% to 9.09 billion pounds ($11.26 billion) in the first quarter to March from a year earlier, as sales of its shingles vaccine, Shingrix, exceeded expectations by 23%.

The vaccine has been a major growth driver for GSK, but it is expected to level at some point because the capacity of existing manufacturing sites, which cannot be expanded until 2024, will soon be exhausted.

"We do see some slowing of vaccination rates at the moment as healthcare workers come under pressure, but the underlying demand (for Shingrix) is strong and we would expect to see some resurgence of that," Walmsley said.

"The relevance of vaccines has never been more important."

While GSK pointed to the uncertainty around the pandemic and said it was unable to gauge its ultimate impact on the company, GSK still expects a 1% to 4% fall in profit for the year. This compares with analysts' prediction of a 7.2% drop.

First-quarter adjusted earnings of 37.7 pence per share beat analysts' expectation of 31.5 pence, according to a company-compiled consensus, while sales were predicted to come in at 8.75 billion pounds.

(Reporting by Pushkala Aripaka, Ankur Banerjee in Bengaluru and Ludwig Burger in Frankfurt; Editing by Supriya Kurane and Louise Heavens)

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