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GSK's new CEO gets short-term win from generic Advair delay
[LONDON] GlaxoSmithKline's new CEO Emma Walmsley, who takes over on April 1, has won a short-term reprieve from the threat of generic Advair with a delay in US approval for Mylan's copy of the blockbuster lung inhaler.
Shares in the British drugmaker gained 0.7 per cent in early London trading on Thursday on the news.
It is unclear how long Mylan will have to wait to get its version of the asthma and chronic lung disease medicine on the market, after receiving a so-called complete response letter (CRL) from the US Food and Drug Administration (FDA).
If the delay is down to a minor issue, Mylan could refile within two months and get an FDA response as early as July 2017.
But more fundamental issues and deeper FDA concerns about generic Advair copies might push back approval by as much as two years, according to Peel Hunt analysts.
That is a worry for other firms hoping to sell substitutable generic Advair in the big US market.
Shares in Hikma, which hopes to hear back from the FDA by May 10 on its generic application, fell one per cent and those in its partner Vectura dropped two per cent by 0735 GMT.
Nonetheless, analysts are convinced that generic Advair is coming.
"It is still likely that US Advair will ultimately be genericised in the near future. In this context, any delay is likely to be simply viewed as a short-term cash-flow benefit to GlaxoSmithKline," Jefferies analysts said in a note to investors.
GSK said it had noted Mylan's CRL announcement late on Wednesday, adding that the possible introduction of generic Advair in the United States this year was "an event we have anticipated and planned for".
The company said in February that core earnings per share, in constant currencies, would be flat to slightly lower in 2017, if substitutable Advair generics arrive in the United States by mid-year. If they don't launch, EPS should rise between five and seven per cent.
If generics do arrive by mid-2017, GSK has forecast Advair's US sales will be around £1 billion (S$1.749 billion), down from £1.83 billion in 2016.
GSK has a raft of newer respiratory medicines to help fill the gap left by declining sales of Advair and Britain's biggest drugmaker believes it can maintain its leadership position in treatments for lung disorders.