GSK sees lower profit as COVID-19 disruptions drag on

By Pushkala Aripaka and Ludwig Burger

(Reuters) - Britain's GSK warned of a bigger than expected fall in 2021 earnings as the COVID-19 pandemic continues to disrupt other healthcare treatments and it invests in new medicines ahead of a split from its consumer products business next year. The news came hours after the world's biggest vaccines maker by sales struck a deal to work on the next generation of shots to combat new COVID-19 variants, aiming to get its pandemic-fighting efforts back on track after two big setbacks.

"The race is on for a variety of different technologies to get as many people protected around the world as possible," CEO Emma Walmsley said on Wednesday, after GSK announced the collaboration with Germany's CureVac.

Rather than developing its own COVID-19 shot, GSK has so far focused on supplying its vaccine booster to other drugmakers. But a project with Sanofi has been delayed, and China's Clover ended its deal with GSK on Monday.

Meanwhile, companies using new technologies like mRNA, including Pfizer/BioNTech and Moderna, are already rolling out COVID-19 vaccines.

Walmsley said she stood by the group's work on more traditional vaccine technologies with partners such as Sanofi and Canada's Medicago.

"The key is to make sure that we follow and get ahead of the future of this virus," she said.

However, GSK's sombre outlook and a warning that it expects to pay a lower dividend after the group splits up in 2022 sent its shares tumbling as much as 5% to the bottom of London's blue-chip index

GSK expects adjusted earnings to fall by a mid- to high-single digit percentage at constant currency this year. Analysts' 2021 consensus had been for a decline of about 3%.

While the onset of the pandemic boosted demand for GSK's over-the-counter painkillers, it has hit its vaccines business, including its flagship shot for shingles, as health authorities focused on COVID-19 and patients made fewer trips to doctors.

GSK's shares were down 3.3% at 1,323.8 pence at 1445 GMT.

The group last year launched a two-year programme to split in two after the merger of its over-the-counter products business into a venture with Pfizer.

That process is on track, GSK said on Wednesday.

"GSK in its current iteration seems to be struggling to set out a clear vision of what it offers investors. Hopefully its successor companies are a little more streamlined," said Hargreaves Lansdown analyst Nicholas Hyett.

(Reporting by Pushkala Aripaka in Bengaluru and Ludwig Burger in Frankfurt; Editing by Saumyadeb Chakrabarty and Mark Potter)