Concerns about the H1N1 flu may have eased, but the virus is still boosting the bottom lines of several companies - at least for now.
Yesterday, British drug giant GlaxoSmithKline PLC, one of the world's largest makers of H1N1 vaccines, reported a 60-per-cent jump in fourth-quarter profit and a 17-per-cent increase in sales from the same period a year earlier. Profit increased to £1.63-billion ($2.76-billion), compared with £982-million a year earlier. Sales jumped to £8.1-billion.
"Obviously, H1N1 was a significant contributor to sales during the year," Glaxo's chief executive officer Andrew Witty told analysts on a conference call.
Glaxo has invested heavily in vaccines in recent years, seeing the drugs as a way of minimizing losses as a result of increased competition from generic medicines. The vaccine investments gave the company a leg up when the H1N1 hit last year.
Yesterday, Glaxo said its overall vaccine sales increased 30 per cent year over year and reached £3.7-billion. Sales of Relenza, a flu drug, were £720-million in 2009 compared with £57-million in 2008. Sales of H1N1 shots reached £883-million in 2009, most of which came in the fourth quarter. Meanwhile, the company said it lost £1.4-billion in sales because of generic competition.
Glaxo isn't the only company benefiting from H1N1.
Oakland, Calif.-based Clorox Co., which makes Clorox bleach, Glad bags and Brita water filters, said H1N1 concerns boosted sales of its bleach and disinfectant wipes for the third straight quarter. Swine flu drove two percentage points of overall sales growth during the latest quarter.
"So, obviously, [H1N1]is a bit of a boom for us in the first half," said Larry Peiros, chief operating officer of Clorox North America. Clorox said its profit in the fiscal second quarter, ended Dec. 31, was up 28 per cent to $110-million (U.S.) Revenue climbed 5 per cent to $1.28-billion from $1.22-billion.
However, there are signs that the H1N1 impact may be running out of steam.
Glaxo noted that sales of H1N1 vaccines have flattened and that some governments are scaling back purchases of the flu shot.
Yesterday, health officials in Czech Republic said they plan to hold talks with Glaxo about cancelling purchases. The country had ordered one million doses. The British government also announced yesterday that it is closing its National Pandemic Flu Service because of a steady reduction in the number of cases.
"There's no certainty that a government isn't going to come back tomorrow morning or in three weeks' time and say, we want to have another conversation," Mr. Witty said during the conference call. "So I can't - and I'm not going to pretend that these things are absolutely bulletproof because you are talking about working with very few customers on our whole business."
Nonetheless, Mr. Witty said the company expects H1N1-related sales to be the same in 2010.
Clorox also noted that its H1N1-related sales have dropped in recent months. The company said sales of its disinfectant wipes jumped 40 per cent last October but have fallen sharply since then.
"Given concerns about H1N1 flu appear to be waning, we are anticipating a bit of a trough in our disinfecting products during the second half," Mr. Peiros said.
GlaxoSmithKline (GSK)
Close: $38.49, down 43¢
Clorox (CLX)
Close: $60.35, down 31¢
Paul Waldie