In the biotech arena, there are few names that attract as much attention as GlaxoSmithKline PLC (GSK, Financial), which closed at $43.42 on Sept. 23, 2016 (down by 0.37 percent from the previous close). The stock has gyrated in a 52-week range between $37.24 and $45.58, which indicates that valuations are currently at the bullish end of the spectrum.
GlaxoSmithKline PLC is currently showing a return of over 9% on a year-to-date basis, and ownership in the stock comes with the company’s current dividend yield stands at a strong 4.6%. These are strong returns but still below what is seen in alternative investments strategies like those seen on the Fundrise platform. But the stock's price multiple stands at a staggering 1608 times, so investors are now wondering whether or not these current trends can continue further.
GlaxoSmithKline is a global conglomerate with most of its exposure in the health care industry and its forex businesses are engaged in researching, developing, manufacturing and marketing of pharma products.
Key categories here include vaccines, OTC drugs and consumer health care products and each is comprised of highly specific segments.
Chart view: GSK daily chart
The company posted revenues of $36.5 billion and profits of $12.8 billion in fiscal year 2015, with an impressive profit growth of over 181%. Earlier, the company had entered into an asset swap with Novartis to exchange its cancer meds with vaccines, resulting in core growth of 16% in the last quarter. This quarter also showed vaccine segment growth of 11%, consumer health care growth of 7% and pharma growth of 2%. These are numbers investors are likely to view as supportive.
The company recently changed its course of action from that of a traditional biomedicine company to that of a new age bioelectronics medical company. This was accomplished largely by joining hands with Verily Life Sciences (formerly Google Life Sciences) to create ailments for chronic diseases.
The aim of the JV is to develop small biotech implants to cure heart and breathing-related diseases. The chronic disease markets have created medicine sales worth $5 billion to $10 billion, and the JV’s aim is to create disruptive technology which can replace the current pharmaceutical market completely, if successful.
Revenue generators
The company’s achievements in creating a vaccine for malaria is likely to be the biggest money earner in the future, as malaria is world’s one of the deadliest and most widespread diseases. The company also got an approval from the EU for its new stem-cell gene therapy for immunodeficiency disorders. GlaxoSmithKline PLC has lined up its filings of drugs for approval this year for diseases like shingles, lupus, pulmonary diseases and rheumatoid arthritis. These are factors that should further propel the stock, if successful.
Moreover, the company currently has more than 40 drugs in the pipeline for development. Along with these developments and the organization’s policy to focus on volume sales (rather than price) in an environment of skyrocketing prices in the pharma industry, and this is something that will augur well for the organization in coming quarters.
