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Glaxo suffers profits fall
2:13pm Wednesday 23rd July 2014 in Business
ONE of the region’s key employers warned that results will be flat this year after weak sales of its respiratory drugs, a continuing bribery investigation in China and a strong pound, took their toll.
Drug maker GlaxoSmithKline (GSK) has reported a 23 per cent fall in pre-tax profits to £986m from £1.29bn.
In China, where GSK's business has been rocked by allegations of bribery, sales were down 20 per cent.
Britain's biggest drugs maker said second-quarter revenue missed market expectations, falling 16 per cent to £5.56bn, from £6.62bn in the same quarter of the previous year.
Sales of its respiratory drugs fell 18 per cent to £1.56bn, dented by U.S. price pressures. The firm said it now expects no sales growth this year.
Sales of the company's key product, the asthma treatment Advair, continued to be hit by competition from copycat medicines.
The drugs company, which has 1,000 staff at its plant in Barnard Castle making it Teesdale’s biggest single employer, said that it was a "critical moment" to make the right choices, particularly around its investment to secure its long-term prospects.
Sir Andrew Witty, chief executive, said he felt "optimistic" about the potential of GSK's new products, though he did not provide a timeline for a return to sales growth.
He also warned of intensifying pricing pressure in the US, partly due to the healthcare reforms enacted by President Barack Obama.
"The pressure has been building up. The Affordable Care Act [Obamacare] added some fuel to this fire as it has driven some changes in behaviour of payers and providers," he said.
Sir Andrew said the "amplified" pressure had led GSK to launch several medicines at "substantially reduced prices" compared to similar products.
Chinese authorities are investigating whether GSK paid doctors to encourage them to use its drugs.
Earlier this month, GSK admitted to further bribery problems in its China business as long ago as 2001
GSK's troubles in China intensified last month when Peter Humphrey, the private investigator hired by the company months before it became embroiled in the bribery scandal, accused the drug maker of concealing the full extent of the allegations it faced.