GSK vaccine sales slump drags shares down despite profit beat

GSK shares dropped sharply on Wednesday.

The decline came even though the company reported results that exceeded analyst forecasts. Investors reacted negatively to softer sales of its major vaccines and newly launched drugs. The British firm is the second-largest pharmaceutical company in the UK.

Pre-tax profit for the third quarter fell by 19% to 1.9 billion pounds. The company recorded 318 million pounds in restructuring costs, with further charges anticipated. Core operating profit increased by 5% and core earnings per share rose by 1%, both figures surpassing market expectations. Third-quarter turnover reached 8.9 billion pounds, a 5% increase from the same period last year. This growth was driven by strong sales of HIV, cancer, and lupus treatments.

Vaccine sales declined by 2% to 2.6 billion pounds. The shingles vaccine Shingrix saw a 5% drop, while the respiratory syncytial virus vaccine Arexvy fell by 24%. The decline in Arexvy sales was partly due to difficult comparisons with the previous year. Sales of the meningitis vaccine increased by 12%. The newly launched asthma drug Exdensur also missed analyst expectations.

Luke Miels, who became chief executive in January, defended the position of Arexvy. He stated that the company maintains market leadership against Pfizer. Miels noted that the firm is securing good orders outside the United States. He said the full picture will emerge over the next few months. Since taking office, Miels has announced several acquisitions, including a 7.9 billion dollar US cancer specialist. He also launched a cost-saving program in July to accelerate drug development.

Investors remain concerned about the upcoming loss of patent protection for dolutegravir, a blockbuster HIV drug. This change will allow rivals to sell generic versions. GSK has set a target of more than 40 billion pounds in annual revenue by 2031. The company aims to rebuild its cancer business to meet this goal.

Miels said the company is slightly ahead of its three-year plan to save 1.9 billion pounds annually. The restructuring will cost 2.4 billion pounds, with most of the expense occurring this year and next. The impact on the UK will be relatively limited. Support roles in human resources and procurement at the London headquarters and hubs in Poland and India will be affected. Miels said he wants more people working in the lab rather than in headquarters.

The company is reorganizing its vaccine business in Belgium. Greater use of digital tools and automation is expected to result in about 1,200 job losses. Belgium will still produce the bulk of the company's vaccines. GSK employed nearly 67,000 people worldwide at the end of last year. The firm kept its annual forecasts and expects to start 22 late-stage studies of new medicines by the end of the year. Miels called Shingrix a remarkable product with potential to grow next year. Two large studies are examining whether it reduces dementia risk and major cardiovascular events. First data for these studies is due in 2029 and 2027, respectively. High street chemists in Britain have reported higher demand for the shingles vaccine after studies linked it to a lower risk of dementia.