GSK share price rises on COVID treatment boost

·3-min read
British multinational pharmaceutical company GlaxoSmithKline (GSK) on top of its headquarters in London
GSK’s turnover rose 32% to £9.8bn between January and March, while profit before tax climbed 71% to £2.6bn. Photo: Justin Tallis/AFP via Getty Images

GSK has beaten expectations for the first quarter of the year thanks to strong sales of its COVID treatment.

Britain’s second-biggest drugmaker revealed on Wednesday that revenue in the first three months was boosted by £1.3bn ($1.64bn) in sales from its antibody treatment Xevudy, as well as sales of its shingles vaccine Shingrix, which rose 32% to nearly £700m in the latest quarter.

Xevudy, known chemically as sotrovimab, was shown to have worked against the Omicron variant of COVID-19.

The drug is made by cloning an antibody that can stick to the spike protein of the virus and neutralise it – this stops it from getting into your lungs and causing an infection.

However, it has been pulled from the US market after recent data suggested it was unlikely effective against the BA.2 subvariant dominant in the country.

Read more: UK taxpayers lose £15bn to COVID fraud in government schemes

GSK’s turnover rose 32% to £9.8bn between January and March, while profit before tax climbed 71% to £2.6bn.

The pharmaceutical giant is currently planning to spin off its consumer health division, which will be known as Haleon, in July.

The unit, which makes Sensodyne toothpaste and Panadol painkillers, will be listed separately on the London Stock Exchange after pressure from the activist hedge fund investor Elliott Management to improve the company’s performance, and shore up its drugs portfolio.

The consumer health division is expected to post annual organic revenue growth of between 4% and 6%, GSK said, with underlying operating profit growth of 12-14%, in line with previous guidance.

GlaxoSmithKline also announced a 14p interim dividend, sending shares 2% higher in London.

It comes after GSK agreed a $1.9bn (£1.5bn) deal to buy cancer specialist Sierra Oncology after rejecting three bids from consumer giant Unilever (UVLR.L) in December, worth £50bn.

“We have delivered strong first quarter results in this landmark year for GSK, as we separate consumer healthcare and start a new period of sustained growth. Our results reflect further good momentum across specialty medicines and vaccines, including the return to strong sales growth for Shingrix and continuing pipeline progress,” chief executive Emma Walmsley said.

“We also continue to see very good momentum in consumer healthcare, demonstrating strong potential of this business ahead of its proposed demerger in July, to become Haleon.”

Sebastian Skeet, senior analyst for healthcare sector companies at Third Bridge, said: “With a consumer division split off set for July, GSK’s biggest task is to restore investor confidence in their pipeline. All eyes will be on the guidance GSK will issue alongside Q2 results, and how the post-Hal Barron pipeline will tackle the patent cliff edges set for 2028.

“The recent $1.9bn acquisition of Sierra Oncology adds a near-term launch candidate into the fold, however previous clinical data and a crowded market clouds the commercial opportunity.”

Watch: GSK's COVID-related sales close to $2bn