None of these drugs is expected to replace Seretide’s 5 billion pounds of sales on its own, but combined they could exceed Seretide’s sales and they give Glaxo a much more balanced product portfolio for the future.
For all of Glaxo’s strengths, the diversity of its business within health care may be where it really shines. Glaxo is primarily a pharmaceutical company, but it still gets 25% of its sales from over the counter health care products such as Sensodyne, Citrucel, and Horlicks, which has become a big seller in India of late.
The international spread of Glaxo’s sales is another way it provides diversification for investors. Most pharmaceutical and health care companies have a large focus on developed markets, but Glaxo’s sales are truly global with 33% of pharmaceutical sales in the U.S., 21% in Europe, 8% in Japan, and 20% in emerging markets. The rest come from specialty sales, and the previously mentioned consumer goods business is global in nature, too.
A good investment?
After their recent gains, GlaxoSmithKline plc (LON:GSK) shares suddenly look expensive at 20 times trailing earnings. I believe the market is betting on earnings growth from new product sales in the coming years and that Glaxo’s shares are more affordable than they appear at first glance. I also believe the market is probably right — do you think Glaxo’s shares warrant a rather lofty valuation?
The article 3 Reasons to Love GlaxoSmithKline originally appeared on Fool.com and is written by Nathan Parmelee.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.