GSK maintains guidance after mixed third quarter

(Sharecast News) - GSK reported a mixed third-quarter performance on Wednesday, with a notable boost from specialty medicines helping to offset weaker sales in vaccines.

The FTSE 100 pharmaceutical giant said overall quarterly revenue totalled £8bn, down 2% at actual exchange rates but up 2% at constant exchange rates.

Specialty medicines led the growth with a 19% rise in sales, driven by a 12% increase in HIV treatments, a 94% surge in oncology, and a 14% gain in respiratory and immunology.

General medicines saw a 7% sales uptick, supported by a 16% rise in Trelegy sales.

Conversely, vaccines sales dropped 15%, attributed to shifting guidelines for immunisations in the US, including a 7% dip in Shingrix and a sharp 72% fall in Arexvy due to Covid-19 vaccine prioritisation and the annualisation effect of Arexvy's third quarter launch last year.

Total operating profit plummeted 86%, and earnings per share declined 100%, primarily due to a £1.8bn charge related to the Zantac settlement.

However, core operating profit and core earnings per share each rose 5%, reflecting the underlying strength in specialty medicines and prudent cost management.

Operating cash flow in the quarter was £2.5bn, with free cash flow of £1.3bn.

GSK said it also made significant strides in research and development, reinforcing its growth prospects.

Highlights included EU approval of Arexvy for high-risk adults aged 50 to 59, and positive data supporting its protective effect across three RSV seasons.

Additionally, the US FDA accepted the filing for gepotidacin for uncomplicated UTIs, and Japan granted SENKU designation for bepirovirsen in chronic hepatitis B.

In HIV, real-world data showed 99% effectiveness of Apretude, GSK's long-acting HIV PrEP.

GSK's guidance for 2024 remained intact, with expectations for 7% to 9% turnover growth, 11% to 13% core operating profit growth, and 10% to 12% core earnings per share growth, with results anticipated around the midpoint of those ranges.

The company declared a third-quarter dividend of 15p, and reiterated its full-year target of 60p per share.

"We have delivered another quarter of sales and core operating profit growth, and further good progress in R&D," said chief executive officer Emma Walmsley.

"Strong growth in specialty medicines helped to offset lower vaccine sales and reflected successful new product launches in oncology and HIV, as well as the resilience we have now built into GSK's portfolio and performance.

"Our pipeline continues to strengthen with 11 positive phase III trials reported so far this year and we are currently planning launches for five major new product approval opportunities next year - Blenrep, Depemokimab, Nucala for COPD, Gepotidacin, and our new vaccine to prevent meningitis (MenABCWY)."

Walmsley also noted that the company had resolved the "vast majority" of Zantac litigation in the quarter, to remove uncertainty and so it could focus forward.

"All this means we are on track to deliver our 2024 guidance, and we are even more confident in our 2026 and 2031 outlooks."

At 0807 GMT, shares in GSK were down 2.48% at 1,416p.

Reporting by Josh White for Sharecast.com.