GlaxoSmithKline: Reliable, Dependable ... Kinda Boring

I like British drug giant GlaxoSmithKline (NYSE:GSK). Really, I do. But sometimes it just seems a little too reliable, a little too staid. With that in mind, I'm not keen to look past the fact that the company's valuation doesn't leave a lot of margin of safety. I mean, let's face it, there's a reason that reliable workhorses stay on the farm and flighty thoroughbreds go the race track -- and Glaxo is not likely to post the kind of growth that will compensate for buying at the wrong price.

Glaxo did, however, deliver another solid quarter of performance. Global sales rose 9% in constant currency terms, with operating profits up 13% and margins up slightly. Standbys like Advair and Avandia continue to do well, and newer drugs like Coreg and Valtrex are still growing.

Since Glaxo talked a bit about the impact of Medicare Part D on the pharmaceutical industry, I figure I'll chip in my two cents as well. It's certainly true that the government entitlement program will give the elderly better access to medications and that this could provide a short-term boost in several drug categories. Over the long haul, though, I'm not sure it's such a boon. Giving UnitedHealth (NYSE:UNH) and WellPoint (NYSE:WLP) more power may not necessarily be a great thing -- and it may be only a matter of time before managed health squeezes Big Pharma to keep its profits nice and high (and growing).

Be that as it may (or may not), Glaxo at least has a good pipeline going for it. Or perhaps I should add "in theory." After all, until the FDA says yes and your drug is on the shelves behind the counter at Walgreen, you just never really know. So while the company's DPP-IV inhibitor Redona (just to pick one) may be great -- and a serious threat to Novartis (NYSE:NVS) and/or Merck (NYSE:MRK) -- pipelines are anything but certain.

As I said in the opening paragraph, Glaxo is a basically dependable company that just isn't tremendously cheap. Then again, there aren't too many cheap pharma stocks left nowadays -- unless you want a riskier situation, like say, Pfizer (NYSE:PFE). I wouldn't chase Glaxo, but it might be worth another look if the sector swoons again.

For more pharm-fresh Foolishness:

• Wait for a Bad Day at Merck
• Glaxo's Story Still Worth Reading

GlaxoSmithKline and Merck are both Motley Fool Income Investor recommendations, while Pfizer and UnitedHealth are Motley Fool Inside Value picks. UnitedHealth is also a recommendation in our Motley Fool Stock Advisor service. You can try any of our services free for 30 days, with no obligation to buy.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).