By Eli Greenblat
AUSTRALIA'S biggest pharmaceutical business, GlaxoSmithKline, has suffered a near 50 per cent drop in profits for the 2008 calendar year but is on track to improve profits this year thanks to royalty income from its influenza drug Relenza and the popularity of brands such as Panadol, Nicabate and Macleans toothpaste.
The global pharmaceutical giant is also pushing ahead with poppy trials in Victoria as it seeks to broaden its growing base beyond Tas- mania, where the $100 million-a-year crop supplies about 20 per cent of the world's medicinal opium needs.
Documents filed with the Australian Securities and Investments Commission show GSK's Australian operations recorded a profit of $35.84 million last year, down from $65.84 million in 2007.
Revenue for the period from GSK's three divisions, pharmacy, consumer and chemicals, was $1.437 billion compared with $1.47 billion in 2007.
A spokeswoman for GSK said the sliding profits were a function of an exceptional year in 2007 when the company's overseas offices paid it strong royalties for sales of Relenza. In 2006 the company's local profit was $27.3 million.
She said Relenza royalties were expected to pick up again this year.
Overall, GSK's pharmacy division, which owns drugs such as Zantac and the nausea treatment Zofran, was increasing sales at 3 per cent to 5 per cent a year but the group's earnings growth would depend on government reform of the health-care system.
Its consumer business, taking in popular brands such as Panadol, Lucozade, Horlicks, Ribena and the Macleans range of dental products, was reaping annual sales growth of 10 per cent to 15 per cent.
The chemicals division, which looks after the cultivation of poppies for use in opium, was posting 25 per cent growth rates.
At present, GSK harvests poppies only in Tasmania but it has begun trials in Victoria.
''Over the coming months GSK will be implementing a series of initiatives to grow the poppy business and to ensure strong customer demand is fulfilled,'' a spokesman said.
''Strong customer demand means GSK must continue to find ways to secure supply when faced by uncertain weather and economic conditions in Australia.''