GSK lifts annual guidance on strong virus treatment sales

(Sharecast News) - UK pharmaceutical giant GSK lifted annual profits guidance on Wednesday, as it pinned its hopes on demand for its respiratory virus and shingles treatments. The company said it now expected a rise of 8% - 10% in annual adjusted earnings per share, up from the 6% - 9% previously forecast, while sales were tipped to be at the upper end of its 5% to 7% forecast range. Core operating profit growth was forecast to increase 9% - 11%, up from 7% - 10%).

First-quarter core profit was up 17% to £2.4bn. Sales rose 6% to £7.4bn.

Sales of shingles treatment Shingrix, rose 13% to £945m in the quarter due to strong demand after public funding expansion in international and european markets, GSK said.

It cited new national immunisation programmes in Australia and Europe, including the UK, together with earlier than anticipated supply to Zhifei, GSK's co-promotion partner in China, as the main drivers.

Markets outside the US now represent more than 50% of global sales, with Shingrix launched in 39 countries. The majority of these markets have average cumulative immunisation rates below 5%, GSK said.

Derren Nathan, head of equity research at Hargreaves Lansdown said GSK's research and development investment had paid off "given the clinical success emerging from the pipeline".

"With four positive phase III read outs so far this year the odds of further approvals are on the increase. And in the vaccines space applications for additional authorisations for respiratory virus jab Arexvy and shingles injection Shingrix could help accelerate the uptake of two important products," he said.

"GSK's valuation lags the peer group, with the Zantac litigations continuing to cast a shadow. GSK won't put a number on the potential liability but external estimates suggest the potential downside is more than priced in."

"The next update from the key Delaware hearing will relate only to the admissibility of evidence so it could be a while before more clarity emerges. But, under all that, it's hard to fault ongoing financial and clinical progress."

Reporting by Frank Prenesti for Sharecast.com