GSK boosts profit expectations on record sales of its shingles vaccine

GlaxoSmithKline (GSK) has boosted full-year profit expectations on the back of strong specialty medicine sales and the success of its Shingrix vaccine. 

The drugs giant’s second quarter turnover rose 13 per cent to £6.9billion, and GSK now expects sales to grow by 6 to 8 per cent and adjusted operating profit to climb by 13 to 15 per cent on 2021 levels, excluding Covid-19 revenues.

GSK had previously expected annual sales growth of 5 to 7 per cent and adjusted operating profit growth of 12 to 14 per cent.

This quarter, shingles vaccine Shingrix generated £731million for the company, outstripping the GSK-compiled consensus estimate of £610 million. Turnover for the first half of the year rose to £14.1billion; an increase of 28 per cent.

The company expects strong double-digit growth and record annual sales in 2022 from the vaccine, based on strong demand in existing markets and continued geographical expansion. 

The results come days after the company spun-out consumer business Haleon, a move which provided a dividend of more than £7billion for the group’s investors.

A 16.25p dividend was announced, bringing the total for the half to 27.5p.

Emma Walmsley, chief executive of GSK, said: ‘This is GSK’s first set of results as a newly focused biopharma company, and we have delivered an excellent second quarter performance, with strong growth in Specialty Medicines, including HIV, and a record quarter for our shingles vaccine Shingrix. 

‘With this momentum in sales and operating profit growth, we have raised our full-year guidance and are confident in delivering the long-term growth outlooks we set out for shareholders last year.

‘We continue to strengthen our pipeline, notably with very positive high-level results from our late-stage RSV vaccine candidate, together with targeted business development acquisitions of Sierra Oncology and Affinivax. 

‘These improvements in R&D and operating performance, together with a strengthened post-demerger balance sheet, create new capacity and flexibility for GSK to invest in growth and innovation for patients and shareholders.’

GSK shares rose in early trading, increasing 0.46 per cent to 1,763.2p, bringing gains to 9.27 per cent for the year to date. 

However, the pharmaceutical giant said it expected to see lower reported growth in the second half of the year, compared to the same period in 2021, due to increased spending on research and development as well as the uncertain macro-economic conditions and the ongoing threat from Covid-19.

Its pandemic solutions business has also slowed as the public health consequences of the virus has abated, while the withdrawal of authorisation for antibody medicine Xevudy in the US has also taken its toll. 

Second-quarter Xevudy sales fell to £466million, after generating about £1.3billion in the first quarter – a drop of 64 per cent.

Sales of antiviral Covid-19 drug Xevudy has fallen sharply in Q2, down 64%, as USA regulators withdrew authorisation for the medicine. 

Equity analyst at Hargreaves Lansdown Laura Hoy said: ‘GSK’s first set of results without its consumer healthcare arm Haleon under the umbrella were promising. 

‘The group’s captialising on a return to more normal buying patterns following the pandemic as lower priority vaccines for conditions like Shingles are back in demand and the antibiotics market recovers. 

‘GSK’s also making good on promises to grow Specialty Medicines through a portfolio of new HIV drugs, which contributed over a third to the division’s revenue growth in the second quarter. 

‘All of this supported improved guidance for the full year, suggesting the leaner organization is more nimble than expected.

‘The rosy results received tepid reaction from markets as worries about a looming prolonged downturn continued to weigh. While GSK is in many ways insulated from the impact of a recession—healthcare falls firmly into the essentials bucket—the group’s not immune. 

‘Drug pricing remains a hot topic for debate in the group’s largest market, the US. As lawmakers look for ways to ease the cost of living crisis, they could put big pharma back in the hot-seat.’