Global focus on Covid vaccine dents performance at GSK

Drugmaker GlaxoSmithKline has seen a drop in business over the last three months as Governments put its vaccines on hold in favour of its rivals’ Covid jabs.

The business, which has not yet developed a Covid-19 vaccine, said that its vaccines division had taken a 32% hit, with revenue dropping to £1.2 billion.

It pushed the company’s overall revenue down by 18% in the first three months of the year, hitting £7.4 billion.

Analysts had expected a drop, but only to £7.8 billion, according to a consensus average.

Operating profit also dropped 16% to £1.7 billion compared to the same period last year.

On a call with reporters chief executive Emma Walmsley said that the business had been hit by the comparison to the first three months of 2020, when healthcare providers were stockpiling its goods ahead of the Covid-19 pandemic.

The company also saw a hit to its shingles vaccine Shingrix, which saw sales drop 47% while low spread of colds and flu also ate into the company’s top line.

“Shingrix sales were impacted by the prioritisation of Covid-19 programmes,” Ms Walmsley said.

GSK expects strong growth from Shingrix in the second half of the year.

GSK is a business in transformation and is planning to split its consumer healthcare business from the rest of the company next year.

Ms Walmsley promised more information in the weeks to come.

However she would not comment on any talks GSK might have had with Elliott Management, a US activist investor which according to reports has built up a multi-billion pound stake in the drugmaker.

Elliott is likely to put pressure on GSK through the split, but it has not yet publicly said what it is hoping to influence.

“Not only have existing challenges such as a muted shingrix recovery, late-stage pipeline setbacks, and increased competition around key on-market assets persisted at GSK, but we have seen additional pressures in the form of currency and shareholder activism,” said Sebastian Skeet, senior analyst at Third Bridge.

“The outcome of Elliott’s multibillion-dollar stake in the company is currently unclear given GSK’s planned 2022 consumer health split.”