GSK PLC on Wednesday raised its annual guidance after a strong second quarter but shares fell on a lowered outlook for its Vaccines arm and disappointing Shingrix sales.
For the second-quarter of 2024, the London-based pharmaceuticals firm said revenue rose 9.8% to £7.88 billion from £7.18 billion a year prior. Pretax profit, however, fell by a quarter year-on-year to £1.50 billion from £1.99 billion.
Core operating profit, which excludes items such as legal, restructuring and impairment costs from the equation, increased 16% to £2.51 billion from £2.17 billion.
Half-year revenue rose 7.9% on-year to £15.25 billion, while pretax profit was down 27% at £2.85 billion. Half-year core operating profit increased 16% to £4.96 billion, however.
GSK said the first-half performance reflected excellent business momentum, including increased sales growth of Specialty Medicines, particularly reflecting successful new launches in Oncology and for long-acting HIV medicines.
General Medicines, including Trelegy, also continued to perform better than expected. Sales are now expected to grow between 7% to 9% at constant exchange rates, compared with prior guidance of the ‘upper part of the range of between 5% to 7% increase’.
Improved sales performances in Specialty and General Medicines are expected to more than offset lower sales growth of Vaccines this year, which reflects revised recommendations for RSV vaccinations issued in June by the US Advisory Committee on Immunization Practices.
The firm now expects revenue will rise between 7% and 9% at constant currency for 2024, its view increased from its previous 5% to 7% range. GSK had expected growth ‘towards the upper part’ of that range.
Constant currency core operating profit growth of 11% to 13% is expected, as GSK raised its outlook from 9% and 11%.
Its guidance does not factor in its Covid-19 Solutions offering, as it does not anticipate further ‘pandemic-related sales or operating profit’ this year.
Despite the raised guidance, shares fell 2.1% to 1,510.00 pence each in London on Wednesday. It was the worst performing stock in the FTSE 100 which was up 1.3%.
GSK lowered guidance for its Vaccines division for revenue to increase by ‘low to mid-single digit per cent’ from prior guidance for a ‘high single-digit to low double-digit’ per cent increase.
The Vaccines division also reported ‘waning’ demand for shingles drug, Shingrix, where sales fell 4% during the quarter.
GSK said ‘channel inventory reductions, changes in retail vaccine prioritisation and lower demand in the US more than offset growth in International and Europe’ hit sales.
Overall, vaccines sales rose just 1% at constant exchange currency in the quarter to £1.99 billion.
Chief Executive Officer Emma Walmsley called GSK’s first-half an ‘excellent’ performance, ‘reflecting strong operational execution and the strengthening breadth of our portfolio to both prevent and treat disease’.
But Citi analyst Peter Verdult said while second quarter revenue and adjusted EPS beat expectations by 5% and 12% respectively, and full year guidance was raised, ‘we anticipate investor focus to fall on the lowered expectations for the vaccines division as a result of uncertainty around the target Arexvy patient population in the US following the June [Advisory Committee on Immunization Practices] meeting and slowing US Shingrix momentum.’
‘The vaccines portfolio was weaker, missing consensus by 9%,’ he noted while Shingrix missed by 20%, driven by weakness in the US.
He reiterated a ’buy’ rating on GSK but said developments make the ‘short term set up tricky’.
In June, shares in GSK fell after ACIP did not approve the firm’s respiratory syncytial virus jab, Arexvy, for adults aged under 60.
GSK lifted its second-quarter dividend by 7.1% to 15 pence per share from 14p a year prior. Its total first-half dividend amounted to 30p, up 7.1% from 28p. For the full-year, it expects a total 60p per share payout.
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