Despite concerns over patent expirations, we continue to recommend this UK-based pharmaceutical stock based on its dividend and robust pipeline of future drugs, suggests global expert Benjamin Shepherd, editor of Personal Finance.

Many investors had questions about the health of Glaxo SmithKline (GSK) over the past year, doubts that kept the share price essentially flat. Of course, with a better than 5% yield, Glaxo is still a cash cow.

The biggest worry has been whether Glaxo would be able to breathe easy now that patents are expiring on its top-selling lung treatment Advair.

Those concerns seem to be abating, after management predicted earnings growth of 10% to 12% this year.

Over the long haul, management believes it can capitalize on its robust pipeline to improve growth.

The company expects to launch 11 new products by next year that should generate sales of about $7.9 billion annually, which is about 22% of last year’s total number.

One potential new product that leverages GlaxoSmithKline’s vaccine expertise is a novel inoculation for the Zika virus, although that isn’t included in the upcoming launch count of new products.

After a series of feasibility studies, the company said it would create a Zika vaccine using self-amplifying mRNA (SAM).

Unlike using a weakened live virus or dead virus to make a vaccine, the SAM method only uses a bit of genetic code that self-replicates thousands of times after entering a cell.

Unfortunately, no one can say when any Zika vaccine will hit the market because the development process typically takes a decade or more, even when a proven technology is used.
Despite more than two decades of research, there are no vaccines currently on the market that are made using SAM technology.

But if Glaxo is able to make the technology work, the it will get higher quantities from a single batch of vaccine because it can be administered in lower doses.

That would help lower manufacturing costs, so even if the company’s Zika vaccine were just as effective as a competitor’s, Glaxo’s would quickly become the preferred choice.

For those worried about investing in a U.K.-based company now that Britain has voted to leave the European Union, Glaxo also seems to have that surprise under control.

Only about 13% of its revenue comes from the U.K. And, as most of Glaxo’s revenue is generated by vaccines and pharmaceuticals, I would expect demand to remain steady no matter how the U.K.’s separation from Europe shakes out.

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By Benjamin Shepherd, Editor of Personal Finance