Third Time's the Charm for Glaxo - Analyst Blog

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Recently, GlaxoSmithKline ( GSK ) announced that the US Food and Drug Administration (FDA) approved its combination vaccine MenHibrix (meningococcal groups C and Y and Haemophilus b tetanus toxoid conjugate vaccine) for treating children aged between six weeks and eighteen months. The FDA approved MenHibrix, which is administered in a in a four-dose regimen, for the prevention of invasive disease caused by Neisseria meningitidis serogroups C and Y and Haemophilus influenzae type b.

The approval came on the basis of data from trials conducted over seven years in the US, Mexico, Australia, Belgium and Germany. The trials enrolled a total of 7,521 infants and toddlers and they received at least one dose of MenHibrix.

We note that Glaxo received the approval in its third attempt. The company received Complete Response letter (CRL) from the FDA twice, in September 2011 and June 2010 asking for additional information.

The MenHibrix approval strengthens Glaxo's vaccine portfolio, which includes Cervarix for cervical cancer and Rotarix for rotavirus gastroenteritis. Glaxo's total vaccine sales increased 1% (on constant currency basis) year over year to £758 million in the first quarter of 2012.

Our Recommendation

We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold rating) in the short run. A major part of Glaxo's revenues will be exposed to generic competition as multiple drugs are scheduled to lose exclusivity in the next few years.

We expect the company's top line as well as gross margins to remain under pressure in the coming quarters. In addition to generic competition, EU pricing pressure will continue to affect sales.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CRL , GSK

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