Shares in pharmaceutical giant GlaxoSmithKline (GSK) gained 2.2% to £14.65 after the firm posted a healthy increase in third quarter income and lifted its full year earnings guidance.
Revenues for the third quarter were up 10% at constant exchange rates to £9.1 billion, driven by a 10% increase in the Pharmaceutical division to £4.4 billion and a 13% increase in the Vaccines division to £2.2 billion.
Pharmaceuticals revenues were strong across the board with oncology sales up 34%, respiratory drugs up 33%, immune-inflamation drugs up 32% and new and specialty medicines up 24% on 2020.
Vaccines were boosted by £502 million of sales for Shingrix, a 41% increase, and £209 million of Covid-19 solutions.
The company raised its full year earnings outlook to a decline of between 2% and 4% at constant exchange rates from its previous guidance of a mid-to-high single digit fall excluding any contribution from Covid-19 treatments.
For 2022, the firm said it expects a ‘meaningful improvement in revenues and margins’ with no forecast tailwind from Covid-related sales.
CONSUMER UNIT
The consumer healthcare division, formed by the combination of Glaxo’s consumer healthcare assets with those of US rival Pfizer in 2019, posted an 8% increase in turnover to £2.5 billion on a constant currency basis.
However, there was no new news on the firm’s plan to demerge at least 80% of its holding in the division by August 2022 and give investors a direct stake in well-known brands such as Advil, Nexium, Nicorette, Panadol and Sensodyne.
The division contributed 27% of group revenues in the third quarter, and divisional head Brian McNamara previously indicated it could be worth over £30 billion, making it a shoe-in for the FTSE 100 index.
However, recent press reports have suggested private equity firms are eagerly circling the unit, potentially pushing the valuation closer to £40 billion.
PAYOUT RESTORED
Income investors will be reassured that the firm has maintained its full year dividend target of 80p per share, putting the stock on a yield of 5.5%.
The latest quarterly dividend of 19p was more than covered by third-quarter earnings per share of 23.3p, despite increased impairments and lower milestone payments.
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