GSK Pharma posts its lowest revenue growth at 3.3%

GSK Pharma’s March quarter performance reflected the company's failure to maintain its trajectory of recovery. At 3.3%, GSK Pharma has posted its lowest revenue growth in the last four years for the quarter ended March 2012.

The operating and net profit figures were the lowest in the last four quarters. At 17.6%, the company posted one of the poorest operating profit margins in recent years.

The slowdown in the acute therapy segments – that is the dominant category for GSK Pharma contributing over 60% to the company’s topline has adversely impacted its performance. Inventory adjustment along with the high base effect also led to a muted growth in revenues for the quarter.

Though the company expects to grow its revenues at 13-15% in the current year, it appears tough. With a poor growth in the first quarter, the company will have to strive hard in an intensely competitive market of acute therapies.

Besides, the new drug price control policy is likely to be unveiled this year. Many of the company’s flagship products like Augmentin will come under the price control policy which will further strain the company’s bottom line.

While this quarterly performance may be an aberration, most analysts have cut their growth estimates for the company’s revenues and profits. The stock is also likely to remain under pressure till a fresh positive trigger.