Sterling plunge boosts Glaxo profits but generics pose real threat

GlaxoSmithKline has revealed a boost to annual earnings from the Brexit-hit pound but warned over a potential hit from looming competition to its blockbuster asthma drug.

The FTSE 100 drugs giant, which makes a significant amount of its earnings overseas, posted a 36 per cent surge in underlying operating profits to £7.8 billion (€9.13bn) for 2016 thanks to the pound’s plunge since the EU referendum.

It said it hopes to make “continued progress” in 2017 but cautioned over “uncertainty” if US regulators allow generic competitors to its asthma drug Advair.

The group said if generic competition to Advair launched in the US in the summer, it could wipe out earnings growth and even leave earnings per share lower.

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Outgoing chief executive Andrew Witty said: "Clearly, this year we face some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US."

But the group is hoping its new asthma medicines will help offset the sales blow.

“While there will be an inevitable financial impact to absorb, we fully expect to maintain leadership in this therapy area given our new product portfolio and the innovation we have in our pipeline,” said Mr Witty.

Presenting his last set of results, he unveiled a 17 per cent surge in annual revenues to £27.8 billion and a 21 per cent leap in the fourth quarter.

With the benefit of the weak pound on overseas earnings stripped out, full-year revenues were 6 per cent higher, while operating profits lifted 14 per ent.