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Glaxo boosted by cost cutting
LONDON, England (Reuters) -- GlaxoSmithKline Plc, Europe's biggest drugmaker, posted a forecast-beating rise in first-quarter earnings on Wednesday as cost savings helped to offset the impact of a weaker U.S. dollar on sales. Earnings per share rose 15 percent to 21.8 pence, above the range of 18.5-20.5 forecast by analysts. Sales grew two percent to 5.22 billion pounds ($8.3 billion), driven by asthma drug Advair, with pre-tax profits up 11 percent at 1.77 billion. The higher growth in profits than sales reflects continued cost-cutting at the group, which was created through the merger of Glaxo Wellcome and SmithKline Beecham in 2000. "Effective cost control is continuing to improve profitability,'' Chief Executive Jean-Pierre Garnier said in a statement. At 1115 GMT, GSK shares were 1.6 percent higher at 1,249 pence. Excluding currency effects, GSK earnings rose 26 percent and the company said it remained on track to achieve its goal for the full year of high single-digit EPS growth at constant exchange rates. If exchange rates remained at current levels for the rest of the year, they would have a negative impact of three-to-four percent on 2003 earnings, GSK said. The group's performance came despite lower sales of antibiotic Augmentin, following the introduction of generics in the United States last year. Like many of its peers, GSK is facing the threat of generic competition to a range of its drugs with the arrival of copycat versions of top-selling antidepressant Paxil in the United States now widely expected in 2004. A lack of new promising new drugs in the pipeline is also a concern for investors but an announcement earlier this year that GSK will hold a long-awaited research-and-development day has fuelled hopes its lean times may be coming to an end. GSK said on Wednesday the R&D day would be held on December 3 in the UK and December 4 in the United States.
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