GlaxoSmithKline says 2018 adjusted EPS growth uncertain due to Advair
CEO Emma Walmsley said: ""Looking ahead, in 2018 we could see a potential generic version of Advair in the US and our 2018 guidance reflects this. With the sales momentum we anticipate from new and recent launches and focused improvements in operating performance we are increasingly confident in our ability to deliver mid to high single digit growth in Adjusted EPS CAGR in 2016-2020 at 2015 CER. Cash generation also continues to be a key focus with free cash flow for the year improving to GBP 3.4B. We met our commitment to pay a total dividend of 80p for 2017 and continue to expect to pay 80p for 2018." The Group expects to make continued progress in 2018, although the expectation for Adjusted EPS growth is impacted by a number of factors including, in particular, uncertainties relating to the timing and extent of potential generic competition to Advair in the US. In the event that no substitutable generic competitor to Advair is introduced to the US market in 2018, the Group expects 2018 Adjusted EPS growth of 4 to 7% at CER. This is based on an expected decline in 2018 US Advair sales of 20-25% at CER. In the event of a mid-year introduction of a substitutable generic competitor to Advair in the US, the Group expects full year 2018 US Advair sales of around GBP 750 million at CER, with Adjusted EPS flat to down 3% at CER. The effective tax rate for 2018 is expected to be approximately 19-20% of Adjusted profits after the impact of US tax reform which is expected to benefit the Group effective tax rate by two to three percentage points. If exchange rates were to hold at the average rates for January 2018 for the rest of 2018, the estimated negative impact on full-year 2018 Sterling turnover growth would be around 4% and if exchange gains or losses were recognized at the same level as in 2017, the estimated negative impact on 2018 Sterling Adjusted EPS growth would be around 6%.