The 5 Most Important Things GlaxoSmithKline's CEO Said During the Q4 Conference Call

Image source: GlaxoSmithKline.

The latest issues are with Anoro and Incruse. GSK and Theravance are having a hard time penetrating a market that's dominated by Spiriva and Advair. Physicians and consumers have die-hard allegiances to these therapies, and even getting doctors to notice that an all-in-one, once-daily, dual bronchodilator exists has been difficult.

Based on the data mentioned by Witty about new-to-brand prescriptions, Anoro and Incruse have nearly 30% of total NBRx market share. While this doesn't translate into immediate top- and bottom-line wins, it does signal that gains in market share are likely in the next six to 18 months. Slowly but surely, Anoro's ramp-up may be speeding up.

4. We're in no rush to acquire, but we're looking

This comment was particularly interesting because GSK appears to be one of the few drug developers to admit that valuations within the sector had gotten out of hand. Witty emphasizes that just because biotech and pharma have been pummeled so far this year, that doesn't mean that GSK is going to chase assets that are potentially still overvalued.

Image source: Flickr user Nguyen Hung Vu.

Nonetheless, GSK did pull the trigger on a deal with Bristol-Myers Squibb in December that saw it pay $350 million to acquire Bristol-Myers' HIV assets. GSK could wind up paying an additional $1 billion depending on whether or not certain sales and development milestones are met. The move complements GSK's rapidly growing HIV portfolio, which stems from its majority stake in ViiV Healthcare.

If I were a betting man, I'd look for more of these smaller, bolt-on type acquisitions (perhaps in the price range of $300 million to $3 billion) that complement GSK's existing portfolio, rather than a large deal.

5. Our pipeline is deep and maturing

Image source: Novartis.

Lastly, investors should keep in mind that GSK isn't under any pressure to cut deals any longer. GSK completely reorganized its business last year by sending its oncology business to Novartis for $16 billion, acquiring Novartis' vaccine business (minus influenza) for about $7 billion, and forging a joint venture with in consumer healthcare products. These moves gave GSK a healthy cash infusion that it can use to run its 93 clinical "projects" in the works.

Based on Witty's commentary, around two-thirds of GSK's clinical studies are currently in the mid-to-late stages, which is where safety and efficacy are really illustrated, and where peak sales potential can first be estimated. With its revenue generation more geographically and operationally balanced than it was before, the company can now focus on one of the industry's deepest pipelines.

The ongoing loss of revenue from Advair is likely to weigh on GSK in the near term, but the light at the end of the tunnel can finally be seen. Investors searching for a Big Pharma turnaround candidate with a healthy dividend may want to consider giving GSK a closer look.

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