Gains on disposals cushioned profits at GlaxoSmithKline in the first quarter as a sharp fall in revenue from flu products weighed on sales, following last year's pandemic-linked windfall.
Britain's biggest drugmaker acknowledged the first three months of 2011 had been tough but pointed to an improving picture in underlying growth as its diversified portfolio adjusts to pressure on prices and competition from generics.
Quarterly sales fell 10 per cent to £6.59 billion - somewhat below forecasts - while earnings per share before major restructuring were better than expected and rose 9 per cent to 32.2 pence, GSK said.
Analysts had expected sales of £6.66 billion and EPS of 30.4p, according to consensus forecasts.
Exceptional demand for vaccines and anti-flu drug Relenza flattered results a year ago and their absence this year - plus sharply lower revenue from diabetes pill Avandia and herpes drug Valtrex - lopped around £1 billion off quarterly sales.
Profits, however, were shielded by chunky disposal gains on the group's stake in Quest Diagnostics and the sale of North American rights to cold sore treatment Zovirax.
GSK had a rocky 2010, hit by big legal charges due, in part, to claims surrounding Avandia, which has been linked to heart risks and now faces severe restrictions on its use.
The group has also suffered increased generic competition to key drugs, such as Valtrex. But it is now moving through the biggest period of patent losses ahead of its main rivals.
On paper, GSK has a comparatively robust growth profile through 2015 - certainly compared to rival AstraZeneca, where sales are expected to fall over the next five years - but this is arguably already reflected in its rating.
GSK shares trade at around 11 times this year's forecast earnings, slightly above Novartis on 10.5 and well above sector laggards like AstraZeneca and Sanofi-Aventis on 7.2 and 8.0 times respectively.
As with Novartis, which has multiple sclerosis medicine Gilenya to interest investors, GSK also has a ground-breaking new drug in Benlysta, for lupus - though the British group has to share its profits with Human Genome Sciences.
Pharmaceutical companies across the globe are grappling with with US healthcare reforms and a push by cash-strapped governments in Europe to slash the prices of drugs, along with competition from cheaper generic treatments.
That means new products which really make a difference to patients are more important than ever.
So far, European drugmakers have had a mixed first-quarter report card, with Novartis last week beating expectations on the back on strong sales of its newer drugs, while Swiss rival Roche disappointed on April 14th.
