Glaxo 1Q profits hurt by U.S. generics

LONDON - GlaxoSmithKline PLC reported today that first-quarter profit fell more than 13 percent from a year ago as drug sales were hit hard by competition from generics in the United States.

Profit was 1.3 billion pounds ($2.58 billion), compared with 1.5 billion pounds a year earlier.

Glaxo has a U.S. headquarters in Philadelphia.

Revenue for Glaxo - the world's second-largest drug maker after Pfizer Inc. - rose 1.6 percent to 5.69 billion pounds ($11.3 billion), but in the key U.S. market, revenue fell 10 percent to $4.25 billion.

GlaxoSmithKline shares were up 0.4 percent at 1106 pence ($21.96).

Glaxo announced yesterday that it was buying Sirtris Pharmaceuticals Inc., based in Boston, for $720 million in cash.

Sirtris' research focuses on a recently discovered class of enzymes known as sirtuins, which are believed to be linked to the aging process, and appear to restrict calorie intake without a change in eating habits. For example, Sirtris is testing a modified version of a red wine extract called resveratrol in people with Type 2 diabetes.

The acquisition is expected to be completed in the second quarter.

"Our performance this quarter was in line with our expectations," said CEO J.P. Garnier. "We continue to see sustained growth from key areas of our business such as Seretide/Advair, vaccines and consumer. However, sales were impacted by generic competition and declines in Avandia sales."

The company said sales of asthma medication Seretide/Advair rose 10 percent to 954 million pounds ($1.89 billion), with strong growth in all regions; while sales of Avandia, for type 2 diabetes, fell 56 percent to 191 million pounds ($379 million).

Sales of heart medication Coreg fell 77 percent to 48 million pounds ($95 million), following the introduction of generic competition in September.

Other products hit by generic competition included the antidepressant Wellbutrin, down 3 percent; the Flixonase/Flonase treatment for rhinitis, down 33 percent; and the anti-nausea drug Zofran, where sales fell 69 percent.

Shares of Glaxo were trading at $43.73 this morning on the New York Stock Exchange, unchanged from yesterday's close.

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