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magazineWhy GlaxoSmithKline is dominating the competition
GlaxoSmithKline (GSK) £15.24
Loss to date: -0.3%
Original entry date: Buy at £15.30, 1 December 2016
Pharmaceuticals giant GlaxoSmithKline (GSK) is emerging stronger after surviving competitive threats against its asthma and HIV treatments from rivals Hikma (HIK), Gilead Sciences and Mylan.
Several companies have been attempting to develop a generic version of GlaxoSmithKline’s off-patent asthma medicine Advair Diskus – and all have failed to gain the necessary regulatory approval so far.
Earlier this year, the US Food and Drug Administration blocked the launch of Mylan’s Wixela Inhub in its current form and delayed the launch of Hikma’s VR315.
This is reassuring as sales of GlaxoSmithKline’s Advair/Seretide fell in the US in the first quarter of 2017. If Hikma or Mylan had succeeded, the decline could have been worse.
GlaxoSmithKline also faces competition from Gilead’s HIV treatment Bictegravir, but the latest clinical studies revealed it was only equally as good, rather than superior. This is important as the HIV division has been one of the biggest growth drivers for Glaxo over recent years.
Beaufort Securities analyst Ben Maitland says these developments highlight the strength of company’s drug portfolio and intellectual property, which makes it harder for its rivals to make superior products.
He believes this is true for other parts of the company’s portfolio and flags the potential for acquisition-based growth thanks to a healthy net cash position of around £1bn.
GlaxoSmithKline currently trades on an undemanding forecast 12.2 times earnings per share for the year to 31 December 2018.
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