By Salma El-Sakka
Shares in GSK tumbled on Wednesday, making the British drugmaker the biggest faller on the FTSE 100, despite reporting better-than-expected quarterly results. Investors were rattled by declining vaccine sales, significant restructuring charges, and concerns over the company's long-term outlook.
Profit decline and restructuring costs
GSK reported a 19% drop in pre-tax profit to £1.9 billion for the July-to-September quarter, alongside £318 million in restructuring charges. The company warned more charges would follow as part of a £2.4 billion cost-reduction programme aimed at saving £1.9 billion annually. Shares fell as much as 7% during the session before paring losses to a 5.5% decline.
Vaccine sales weigh on performance
While overall turnover rose 5% at constant currency to £8.9 billion, driven by strong HIV, cancer, and lupus drug sales, vaccine revenue slipped 2% to £2.6 billion. The shingles vaccine Shingrix fell 5%, and the RSV vaccine Arexvy dropped 24%, though meningitis vaccine sales grew 12%.
Patent cliff and future strategy
Investors remain wary of the looming patent expiration for GSK's blockbuster HIV drug dolutegravir, expected towards the end of the decade. Chief executive Luke Miels, who succeeded Emma Walmsley in January, has pursued acquisitions including a £7.9 billion U.S. cancer specialist and aims to generate more than £40 billion in annual revenue by 2031.
Job cuts and operational changes
The restructuring will have a "relatively limited" impact in the UK, Miels said, with some support-role reductions at the London headquarters. In Belgium, the vaccine business reorganisation is expected to cut about 1,200 jobs, though the country will continue producing the bulk of GSK's vaccines. The company employed nearly 67,000 people globally at the end of last year.
Pipeline and Shingrix potential
GSK maintained its annual forecasts, with research and development spending set to outpace sales growth. The company plans to start 22 late-stage studies by year-end, 18 already underway. Miels highlighted Shingrix's "potential to grow next year," citing two large studies exploring its effect on dementia risk and cardiovascular events, with initial data expected in 2029 and 2027 respectively.
