Healthcare Is Not Always Defensive

GlaxoSmithKline (GSK) gets more than 40% of their income from the U.S. The company produces virtually all categories of drugs and can be described as a direct competitor of companies such as Abbott Laboratories (ABT), Pfizer (PFE), Johnson & Johnson (JNJ), Novartis (NVS) and Sanofi Aventis (SNY).

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The most important segment in terms of sales is Respiratory. A key product is Seredite / Advair. This single drug brings in over 20% of total sales for GSK, which is impressive. It is, however, also a big mess for the company. Patent protection in the U.S. already expired for the year, and in Europe it will expire in 2013. This is relatively soon.

Their antiviral division has a broad portfolio of medicines. However, it doesn't have a commercial success like Respiratory does. Below are 4 interesting products. HIV treatment requires not just one product, but a group of drugs to combat this malicious virus. The treatment of this disease through GSK brings the company £1.5 billion a year.

Epzicom (Kivexa) is a solid promise for the future. It makes a turnover approaching £0.5 billion and the patent will expire in 2016 (2019 in the EU). Combivir is intended to cure, but the exclusivity that GSK has had for 3 years is now over. Trizivir has good potential for growth.

Other medicines will lose their patent relatively soon. Revenue is in the billions for Valtrex, which sells very well in the U.S. The patent expires soon in Europe.

The division of the Central Nervous System (CNS) is a portfolio containing predominantly commercially successful drugs. Lamictal sales are at almost 1 billion GBP. But unfortunately, it has a limited license close to expiry. Imigran (Imitrex), Seroxat (Paxil), Requip and Wellbutrin constitute about 10% of sales for the company. Unfortunately, all these medicines have limited license sales and are in radical decline. Treximet, however, is the future of medicine.

GSK is apparently inspired by Pfizer, whose business is mainly the treatment of cardiovascular diseases. The division of Cardiovascular and Urogenital has huge potential for the future. Medicines with expired licenses are only a small portion of the group. The rest can generate profits for at least 15 years.

The division of Metabolic, for the near-term, has the best prospects. In three years, the licenses for all existing drugs in this group will expire. Their total share of the company is about 6%; in the next 2 years this could grow to 10%. Important for the company is its product AVANDIA and its modifications.

The division Anti-bacterials is not significant. While Augmentin is a medicine in decline, Altabax is a medicine of the future. Revenues from Augmentin have not declined this year, and again, the pressure is on Altabax to earn immediately.

Oncology and Emesis is difficult too, because in this sector the number one is Genentech (DNA), which is seen in the overall sales of the company. Tykerb holds the only promise in this division.

Vaccines brings in over £2.5 billion a year. Most of the money is not protected by a patent. Interestingly, this division is more commercially successful in the EU than in the U.S., which certainly is related to the health care system in general.

There is strong competition in two key markets (U.S. and EU), and the potential of emerging markets is undoubtedly greater. Analysts usually predict profit growth of the company below 10% for the next 5 years. It is usually around 6%. Taking into account the above numbers and the significance of expiring patents, this will be very hard to achieve.

Comments

[miso:]

GSK's antiviral division certainly doesn't have a commercial success. That could have been different if they displayed some comprehension of the mutating influenza market, and some faith in the best neuraminidase inhibitor, zanamivir.
While Tamiflu has been failing by degrees over the last few years GSK has ignored the potential remaining in Relenza.
In the late 1990's GSK knew they needed a better inhaler so that the elderly could use Relenza. They had success trialling iv zanamivir. They had the best LANI candidate compounds.
Then Tamiflu stole Relenza's oxygen because it was a pill. As it has turned out, resistance prone "snakeoil" in a pill, but a commercial success. In response GSK kept the poor inhaler, stopped iv zanamivir trials, gave it's lead in LANI compounds away by returning them to Biota, and became fixated on vaccines.
Today iv peramivir is in phase III trials after receiving over $100 million in a HHS development grant.. It's a once a week injectable but prone to H274Y resistance (just like Tamiflu). What's happening with iv zanamivir? NOTHING.
Today Daiichi Sankyo is in partnership with Biota and is in phase III clinical trials of it's LANI compound. Biota was able to partner D.S. with the LANI compounds GSK considered worthless.
Today Relenza still comes with a crappy inhaler.

Today the world is desperate for flexible antivirals to replace Tamiflu, and zanamivir is still the best resistance resistant compound available. GSK could have had an injectable and a next generation LANI on the market years ago, instead they displayed a wilful neglect of the potential of zanamivir, an inability to interpret the likely consequences of Tamiflu resistance that appeared in the earliest studies, and a failure to impress health professionals and the market with the advantage that gave zanamivir over Tamiflu.

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>
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> INSOMNIA
>
> Here's a Superb Tesla Purple Positive Energy Plates that may be just
> the right gift for someone who wants to relax, sleep better, meditate,
> block out unwanted noises, enhance concentration, or feel more alert,
> comfortable &amp; ENERGISED. It’s a perfect Pain reliever &amp; u
> wouldn’t have to rush to HOSPITAL for a sudden Spondalities attack
> or a SUDDEN TOOTHACHE, Migraine or whatever if u have a purple plate
> with u. It protects u from all Electro Magnetic Radiation &amp; hence
> no Computer Related Injuries.RELIEVES. PAIN FASTER THAN ANY PAIN
> KILLERS.NO BODY CONTACT IS NECESSARY.
>
> I
> 1-Pocket size is 2.75 by 4.5 inches.- $8.00 [Rs350.00]
> 2- Large size is 12 by 12 inches _$30.00[ Rs1500.00] &amp; can be
> used as a Computer Guard as well as a Fridge Freshener.
> 3-HOLY &amp; PETS DISC _$4.00
>
> WITH US SHIPPING IS FREE !!! FREE !!! FREEE
>
> PAY TRU PAYPAL-MINIMUM ORDER $50.00
>
> For Vedic Research &amp; Innovations
> Krisshan Kant Sundriyal
> B 23 2nd Floor Sector 65
> NOIDA
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> 9873287974
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>
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>

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