GSK beats forecasts on back of Covid and shingles treatments

Bumper sales of GlaxoSmithKline's Covid-19 antibody treatment and a bounce back in demand for its shingles vaccine helped the UK drugmaker beat expectations in the first quarter.

GSK reported £9.8 billion (€11.6 billion) in revenue, up 32 per cent year on year, and higher than the consensus forecast of £9.2 billion.

Sales of Xevudy, the Covid antibody treatment that received emergency approval last year, hit £1.3 billion in the quarter. Sales of Shingrix, the vaccine to prevent shingles, doubled to £698 million after being hit hard in the first quarter of last year, when Covid jabs were given priority.

Adjusted earnings per share were 32.8p, up 43 per cent on constant exchange rates, and higher than the average analyst estimate of 30p. GSK declared a dividend of 14p for the first quarter.

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Emma Walmsley, the drugmaker's chief executive, said it had delivered "strong first-quarter results in this landmark year for GSK", as it prepared to spin off its consumer healthcare division into a company to be named Haleon.

Ms Walmsley has been under pressure from activist shareholders, including US hedge fund Elliott Management, to show that she can refill the company's lacklustre drug pipeline. The spin-off will expose the pharmaceuticals business to more scrutiny – but also provide cash that could be used to acquire companies or do more partnerships to access their assets.

During the quarter, GSK announced it had reached an agreement to acquire Sierra Oncology for $1.5 billion (€1.4 billion).

Opportunity

Ms Walmsley said she saw other opportunities for deals based on GSK’s approach, which focuses on the science of the immune system, genetics and new technologies. She added that it also looked for the “right kind of discipline on value”.

She stressed that GSK had a good record on partnerships in particular, including its joint venture with ViiV Healthcare on HIV medicines, and its more recent collaboration with German mRNA vaccine maker CureVac.

GSK confirmed its guidance for the full year, with the slimmed down company focused on pharmaceuticals and vaccines expecting sales growth of 5 to 7 per cent, and adjusted profit to rise between 12 and 14 per cent, at constant exchange rates.

The 2022 guidance excludes any contribution from Xevudy, developed with Vir Biotechnology. Xevudy had benefited as rival antibody treatments struggled to treat patients infected with the Omicron variant. But with the rise of the BA.2 version of Omicron, Xevudy lost its US emergency use authorisation, after data showed it was unlikely to be effective against the subvariant.

Haleon – which sells products including vitamins and over-the-counter medicines – unveiled its guidance earlier in the quarter, forecasting annual organic revenue growth of between 4 and 6 per cent, and “sustainable moderate expansion” of adjusted operating margin over the medium term. – Copyright The Financial Times Limited 2022