Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
GSK has raised its profit forecast for the year after higher than expected sales from HIV drugs and its shingles vaccine helped the British pharmaceutical group boost sales by 10 per cent in the first quarter of the year.
The company now expects core profits, its preferred measure, to grow by 9 to 11 per cent, compared with 7 to 10 per cent in previous guidance, while sales for the current financial year are set to grow at the top end of a previously guided range of 5 to 7 per cent.
Total sales for the quarter were £7.4bn, ahead of analysts’ estimates, and driven by slightly higher than expected income from the company’s shingles vaccine and HIV treatments.
Welcoming positive late-stage trials for gonorrhoea, long-acting HIV and cancer drugs, chief executive Emma Walmsley said on Wednesday that the company had “strengthened prospects for growth in all of our key therapeutic areas this quarter: infectious diseases, HIV, respiratory [and] immunology and oncology”.
The results signal a continued strong start to the year for GSK, whose shares are up by more than 15 per cent since January, well ahead of the FTSE 100, including a rise of almost 1.7 per cent in early trading on Wednesday.
That was despite a fall in sales for Arexvy, the company’s new vaccine for respiratory syncytial virus, a common flu-like condition, which dropped to below £200mn, compared with more than £500mn in the previous quarter. The result was lower analysts’ expectations and suggests that the income from the jab is likely to be seasonal.
GSK has long faced doubts from analysts about how it will replace some of its best-selling drugs when they go off patent, with drugs based on dolutegravir, its leading HIV medicine that will lose exclusivity in about 2028, bringing in £1.3bn in the quarter.
GSK is also facing a legal threat over its former heartburn medicine Zantac, which plaintiffs in the US allege caused cancer, which the company disputes. GSK said trial dates had been set in California and Illinois in the months ahead, and Citi analysts expect cases to be settled for up to £3bn in the next six months.
However the prospect of a resolution to Zantac cases in Delaware, where a judge will soon decide whether to admit scientific evidence for more than 70,000 plaintiffs, has helped contribute to a more positive outlook among analysts, alongside the successful launch of Arexvy and results for new HIV products.
Peter Welford, an analyst at Jefferies, said “long-acting HIV injectables, vaccines, and new pipeline launches mean profits likely face a ‘blip’ not ‘cliff’ on [HIV patent expirations]”.
Credit: Source link
