GlaxoSmithKline Abreva $10 Mil. Sales Help Offset Smoking Cessation Woes
This article was originally published in The Tan Sheet
Executive Summary
GlaxoSmithKline's Abreva posted $10 mil. in sales during the OTC cold sore medication's first full quarter on the U.S. market.
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GlaxoSmithKline's Abreva posted $10 mil. in sales during the OTC cold sore medication's first full quarter on the U.S. market. The docosanol 10% cream, which began shipping in mid-October, garnered a 28% market share for cold sore/fever blister treatments in the first quarter ended March 31, GSK reported April 24. Abreva received FDA approval in July for treatment of cold sores and fever blisters. GSK markets the cream under an agreement with San Diego-based Avanir Pharmaceuticals. SmithKline Beecham began a multi-media ad campaign in November, highlighting Abreva's unique positioning as the only OTC specifically indicated for treatment of cold sores as well as accompanying symptoms (1 (Also see "Abreva Shortened Healing Time, Duration Of Cold Sores Stressed In Promos" - Pink Sheet, 4 Dec, 2000.)). Abreva's early success helped offset declines in other GlaxoSmithKline OTCs from the year-ago quarter, including a 25% drop in U.S. smoking cessation sales and a 7% decline in worldwide sales of respiratory tract products. During a media conference call the same day GSK released its Q1 financials, CEO Jean-Pierre Garnier noted NicoDerm CQ transdermal patch and Nicorette gum continue to feel the financial sting of U.S. private label competition. GSK's market share "is currently around 70%, and in the case of the patches we're seeing actually a slight improvement quarter to quarter," Garnier said. "In the case of Nicorette, we're still eroding slightly but, on balance, I think we've felt the worst." Overall, OTC sales fell 7% from the year-ago quarter to $497 mil., while existing oral care sales, helped by a 4% growth in Aquafresh, rose 4% to $228 mil. Nutritional healthcare sales rose 5% to $190 mil., led by strong performance in India, the company said. Excluding the Block Drug portfolio, GSK's Consumer Healthcare sales totaled $915 mil. for the quarter, a 2% drop under constant exchange rates. The Block acquisition, which was completed in January, added $209 mil. to GSK's books for the quarter, bringing total Consumer Healthcare revenue to $1.12 bil., a 19% increase over the prior year quarter under constant exchange rates. Consumer Healthcare trading profit rose 11% under constant exchange rates to $145 mil., reflecting Block Drug's contribution. Garnier said with the Block deal, GSK's Consumer Healthcare business "will generate roughly $1 bil. of sales every quarter, so it's a good-sized business." It also is a business that would be bolstered considerably by a merger with American Home Products. A recent British press report said GSK is considering restarting merger talks with AHP. SmithKline Beecham discussed a possible merger with AHP in late 1997 before concentrating on Glaxo as a potential merger partner. Adding AHP's Whitehall-Robins portfolio to GlaxoSmithKline would create a consumer healthcare division with annual revenue of $6.5 bil., based upon 2000 sales. AHP reported consumer healthcare sales of $569.9 mil. for the first quarter ended March 31 (2 (Also see "Whitehall Dimetapp Reformulations, New Products Drive U.S. Growth" - Pink Sheet, 30 Apr, 2001.)). During an analysts conference call, GSK's Garnier declined to comment specifically on the AHP merger report, saying only: "I wouldn't believe everything I read in the paper." However, he noted GSK is focusing on in-licensing opportunities, rather than mergers, as a near-term priority to build its late-stage Rx pipeline. While Garnier did nothing to discourage speculation that GSK quickly would seek another merger deal, he suggested a medium-sized biotech or pharmaceutical company would be the likely target. He also noted GSK is "particularly interested" in building its Rx cardiovascular franchise, which he described as being "small for a company of our size." GSK continues to implement manufacturing and restructuring plans begun by both SmithKline and Glaxo and is proceeding with integrating the two businesses. The combined firm incurred $502 mil. in merger, integration and restructuring costs during the quarter, including $23 mil. related to the Block Drug integration, for an after-tax charge of $425 mil. GSK's consolidated sales for the quarter increased 9% to $6.9 bil., with earnings of $1.42 bil., up 13% under constant exchange rates. |