Glaxo foresees margin improvement in 2012

26th Jul 2011 11:26

Pharmaceutical giant GlaxoSmithKline reported a 4% decline in quarterly revenue, indicating a significant drop in pandemic flu product sales, which was a major growth driver the year before as a result of the swine flu pandemic scare. However, the company's shares gained momentum after it gave a rosy outlook for 2012 and recorded a 5% rise in sales, excluding the pandemic flu product segment.For the second quarter, total group turnover was £6.72bn and as expected, sales in pandemic related products, Avandia and Valtrex, declined significantly from £600m to £128m 2011. The decline of these products had a significant negative impact on reported Pharmaceuticals and Vaccines sales growth in all regions, except Asia Pacific, the company said.Looking ahead, Glaxo said it expects operating margin to begin to improve in 2012. Glaxo also expects a total annual savings of £2.5bn a year by 2012 generated with no increase to the previously disclosed restructuring charges of £4.5bn."As we go forward sales trends improvements together with operational leverage, financial efficiencies and cash conversion provide the basis for improving returns to shareholders through enhanced EPS and cash generation," GSK said in its statement. Shares of the drugs maker surged 1.3% to 1,381p in midday trading in London.AR