By Maggie Fick and Ludwig Burger
LONDON -GSK raised its full-year profit and sales guidance on Wednesday after its second-quarter earnings beat expectations, helped by strong sales of its shingles vaccine Shingrix and HIV medicines.
The strong results may further help revive investor confidence in CEO Emma Walmsley, coming a year after the company spun off its consumer health business, Haleon (LON:HLN), in its most radical shake-up in 20 years.
The British drugmaker has lagged rivals in recent years, with some investors and analysts worried about the strength of its pipeline of drugs in development and costly U.S. litigation over discontinued heartburn drug Zantac.
Walmsley, at the helm since 2017, said in a media call investors would come to better appreciate the progress made in drug and vaccine development.
"We feel better and stronger year on year in terms of our ability to deliver the long-term outlooks and I'm sure that over time the market will recognise that," she said.
GSK reckons the spin-off has allowed the company to sharpen its focus on vaccines and infectious diseases and with $7 billion generated by the Haleon spin-off, it can fund deals to bolster a lacklustre drug pipeline.
The London-listed drugmaker said it now expects adjusted earnings per share growth of 14%-17% for the year, excluding the effect of currency swings, up from its earlier expectations of 12%-15%.
Sales will likely increase by 8% to 10% this year, also foreign-exchange adjusted, compared with 6% to 8% previously and for adjusted operating profit to increase between 11 to 13%, up from 10% to 12%.
Analysts at Citi, JP Morgan and other brokerages said gains of the pound against the dollar, reducing the value in Sterling of overseas revenues, would translate into a weaker outlook.
GSK stock gained 0.9% at 0953 GMT, bouncing back from an initial decline of 1.4% and outperforming London's blue-chip FTSE 100 index.
The company also reported an adjusted profit of 38.8 pence per share for the quarter, on sales of about 7.18 billion pounds ($9.26 billion).
Analysts were expecting a profit of 34.7 pence per share on sales of about 6.77 billion pounds, according to company-compiled consensus estimates.
Sales of Shingrix, the company's top-selling drug, generated 880 million pounds, beating analyst estimates of 872 million pounds.
Sales of HIV treatments generated 1.58 billion in the quarter, ahead of the company-compiled consensus of about 1.5 billion pounds in the quarter.
NEW VACCINE LAUNCH
The results come ahead of the much-anticipated U.S. launch in the autumn of the company's inoculation against respiratory syncytial virus (RSV), which GSK hopes will be its next blockbuster drug, though initial sales would not grow as rapidly as Shingrix, Walmsley said.
The Arexvy-branded RSV shot was approved by U.S. drug regulators in May.
RSV is a leading cause of pneumonia in toddlers and the elderly, causing thousands of hospitalisations and deaths each year.
GSK shareholder Markus Manns, senior portfolio manager at Union Investment, said the new guidance was expected after a strong first quarter.
He said he hoped to hear more on the company's preparations for the RSV vaccine debut.
The results highlighted the strength of GSK's underlying business driven by HIV and vaccines, Dani Saurymper, a portfolio manager at Pacific Asset Management, and a GSK shareholder, said.
But without an update on the Zantac litigation or change in pipeline outlook, the shares may continue to lag peers, he said.
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