Drug giants GSK and AstraZeneca have revealed better-than-forecast first quarter profits thanks to strong sales for cancer treatments.
AstraZeneca's strong performance
AstraZeneca notched up a 12% hike in operating profits to 4.25 billion US dollars (£3.14 billion) in the three months to the end of March, helped by an 8% jump in sales on a constant currency basis to 15.3 billion US dollars (£11.3 billion). The blue chip stalwart said cancer treatments accounted for 45% of total revenues in the quarter.
GSK's solid results
It was a similar picture for fellow FTSE 100 pharmaceutical firm GSK, which posted a 5% rise in sales to £7.6 billion and a better-than-forecast 9% hike in first quarter earnings to £2.3 billion, in what marked a decent set of results for new chief executive Luke Miels. Almost half of GSK’s sales haul was driven by demand for speciality medicines, which included a 28% rise in sales of cancer medicines.
Market reaction
Dan Coatsworth, head of markets at AJ Bell, said: “AstraZeneca’s treatments are flying off the shelf, helping to drive solid revenue and earnings growth. It won a host of regulatory approvals on various treatments. There is significant momentum in the business, putting AstraZeneca in fine health. GSK also enjoyed a good quarter with existing product sales and progress in the laboratory, as well as completing a few acquisitions. It’s the ideal start for new chief executive Luke Miels who can hit the ground running in the top job.”
Shares in the two firms fell despite the profits cheer, with GSK off 4% and AstraZeneca down 2% amid wider falls on the FTSE 100 Index and as both firms held off from increasing their full-year earnings outlook. Mr Coatsworth said: “Against an uncertain economic and geopolitical backdrop, big pharma is reminding the market why its expertise can yield big bucks in any kind of market environment.” But he said the lack of any upgrade was likely to have left investors “feeling short-changed against a solid start to the year.”
