Glaxo sales drop 2 percent in second quarter

Drugmaker GlaxoSmithKline reported Wednesday a 2 percent drop in worldwide sales during the second quarter and flat numbers for the first half of 2012.

Glaxo is based in London, but has Center City operations and facilities in several Pennsylvania and New Jersey towns.

Chief Executive Officer Andrew Witty said in a statement the company was restructuring its regional commercial organization and combining the European and emerging markets business units under the leadership of Abbas Hussain.

"This will increase our capability to flex resources to support delivery of the pipeline and continued investment in emerging markets," Witty said in the statement. "These changes will improve GSK’s ability to realize new growth opportunities and remain competitive in the current global pricing environment.

"As we stated in April, given economic circumstances, we could not rule out further adverse impact to pricing on our more established products. Since then the outlook for Europe has materially worsened. Sales for our European business declined 8% in the quarter reflecting a 7% adverse pricing effect and 1% volume decline. Sales in our U.S. Pharmaceutical and Vaccines business also declined in the quarter. Here, we are also seeing pressure on our mature portfolio exacerbated by genericisation and discontinuation of certain products. However, we remain confident that our US business can return to sales growth in the future given the potential contribution of the pipeline and recent performance of newly launched products such as Votrient and Arzerra.

"These pressures in Europe and the US are responsible for the sales decline we have seen in the second quarter. Overall Group sales declined 2% in the quarter and were flat for the first 6 months. In this context and with the known adverse prior year comparisons to come in Q3, we now expect that sales this year will be in line with 2011 on a constant currency basis."

The company said after-tax profit was 1.25 million pounds ($1.94 billion), up from 1.1 billion pounds a year earlier. The increase reflected a tax rate of 15 percent compared with 28 percent a year earlier. Pretax profit was down 2.5 percent at 1.55 billion. Core earnings per share of 26.4 pence fell 2 percent below consensus.