Glaxosmithkline: Q1 2006 results

8:38 a.m. Fri 28 Apr 2006

Although Glaxosmithkline's growth is slightly lower than Astrazeneca's it has the advantage of being far more diversified and less dependent on a small number of block-buster products: no single drug added more than £112 of Glaxosmithkline's £459m (10% at CER) increase in sales, almost all major drugs produced significant growth and there were no major declines.

Operating profit growth of 24% and EPS growth of 26% were much as expected for the growth in sales.

News on Glaxosmithkline's pipeline has been very positive recently with an early filing for approval for a cervical cancer vaccine and an early filing for breast cancer drug Tykerb expected. Glaxo has a strong short term pipeline but the company's sheer size means that the impact of even block buster drug launches is muted.

At 1532p Glaxosmithkline is trading, almost in line with Astrazeneca, on a prospective PE of 17× with a 2.9% yield. Both the major UK listed pharma companies look reasonably safe by sector standards with dependable short to medium term growth. Astrazeneca's new launches are less exciting but more dependable while Glaxo has more diversified growth drivers - however all these are diversifiable risks and should not overly concern most investors.