SmithKline Beecham Outperforms Glaxo Wellcome in 1999 Despite Merger Concerns

Strategic Insights -

SmithKline Beecham's 1999 results surpassed expectations, driven by strong sales of anti-depressant and antibiotic products. The company's 15% rise in earnings per share, exceeding 13% excluding currency effects, underscored its growth momentum. Meanwhile, Glaxo Wellcome's results were marred by slow sales growth and missed earnings targets. Analysts expressed concerns about the merged group's ability to match the growth rates of top US rivals.

Key Takeaways:

  • SmithKline Beecham's 1999 earnings per share increased 15%, or 13% excluding currency effects, exceeding analyst forecasts.
  • Glaxo Wellcome reported underlying EPS growth of 5% and annual sales growth of 6%, missing double-digit sales growth expectations.
  • SmithKline Beecham's sales rose 10% to £7.75 billion, with anti-depressant Seroxat/Paxil and antibiotic Augmentin driving growth.
  • Glaxo Wellcome's pre-tax profits rose 3.8% to £2.772 billion, excluding manufacturing restructuring costs.
  • Analysts warn that the merged entity may struggle to match the growth rates of top US rivals.
  • SmithKline Beecham's promising diabetes drug Avandia reached £91 million in sales in its first seven months on the market.

Statistics:

  • SmithKline Beecham's 1999 sales: £7.75 billion, up 10% from previous year.
  • Glaxo Wellcome's 1999 sales: £8.5 billion, up 6% from previous year.
  • SmithKline Beecham's 1999 pre-tax profits: £1.94 billion, up 13% from previous year.
  • Glaxo Wellcome's 1999 pre-tax profits (ex-manufacturing costs): £2.772 billion, up 3.8% from previous year.
  • Seroxat/Paxil sales: up 21% to £1.4 billion in 1999.
  • Augmentin sales: up 16% to £1.1 billion in 1999.
  • Avandia prescriptions written: over 1.4 million for more than 400,000 patients by end of January 2000.

Sources:

  • Financial Times: "SmithKline Beecham surpasses Glaxo Wellcome in 1999"
  • The Guardian: "SmithKline and Glaxo struggle for market dominance"