The company reported Q1 sales of £7.2bn, down 2% annual equivalent rate (AER). Credit: flikr/Montgomery County Planning Commission

GlaxoSmithKline has published its first quarter report for 2018, revealing that sales and earnings fell by 2% due to ‘significant currency impact and movements in Sterling’.

The company reported Q1 sales of £7.2bn, down 2% annual equivalent rate (AER), a decrease that has been attributed to the strengthening of the pound against the dollar. The company has also faced increased competition and pricing pressure, especially in respiratory medicine. However, turnover increased 4% at constant exchange rates (CER).

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Earnings per share were down by 35%, which GSK said was a result of the ‘revaluation of consumer healthcare business following agreement to acquire full ownership’.

Free cash flow was down by 50%, primarily due to the impact of a £317m vaccine sales milestone payment to Novartis. In this quarter, GSK also reached an agreement with Novartis to acquire full ownership of its consumer healthcare business for $13bn, subject to shareholder approval.

However, there was some good news for the pharma giant, with the strengthening of GSK’s drug portfolio seeing pharmaceuticals sales increase by  2% CER, which GSK said was due to the success of its dolutegravir-based HIV products, including new two-drug regimen Juluca, which received positive Committee for Medicinal Products for Human Use (CHMP) opinion in Europe during the quarter.

The company also reported that sales of the newly-launched shingles vaccine Shingrix reached £110m after the drug was approved in Europe and Japan. This significantly exceeds expectations of sales of £35m. Sales of Ellipta respiratory products reached £386m, an increase of 25% AER.

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GSK CEO Emma Walmsley said: “GSK has continued to make good progress in the first quarter with sales growth on a CER basis across all three businesses. We are strongly focused on commercial execution with encouraging starts for our most recent new product launches, Shingrix, Trelegy and Juluca. This performance combined with continued cost discipline has driven a further improvement in the group’s adjusted operating margin at CER.

“We also agreed to acquire full ownership of the consumer healthcare business during the quarter, delivering on one of our key capital allocation priorities. This will help improve future cash generation and support capital planning for the Group’s main priority to strengthen the pharmaceuticals business and R&D pipeline.”

GSK shares fell 3% following the results.