By Eva Mathews
(Reuters) -GSK raised its full-year profit forecast on Wednesday on strong demand for vaccines and specialty medicines though it noted sales growth would slow in the second half.
CEO Emma Walmsley’s strategy has focussed on vaccines and infectious diseases and a shift in its HIV focus to long-acting treatment and prevention therapies. The strategy has paid off as the company gears up for 12 launches from 2025.
The London-listed drugmaker said it expected a rise of 8% to 10% in annual adjusted earnings per share, up from the 6%-9% growth previously forecast. It expects 2024 sales to grow in the upper end of its 5% to 7% forecast range.
Its 100-listed shares were up nearly 1% in early trade.
Sales of recently launched products such as respiratory syncytial virus (RSV) vaccine Arexvy and bone marrow cancer therapy Ojjaara have been strong since the start of 2024, while asthma drug Trelegy has also performed better than expected, GSK said.
It also attributed its increased forecast to a successful royalty dispute appeal for ovary cancer drug Zejula in the first quarter.
The British company reported a first-quarter profit of 43.1 pence per share on sales of 7.36 billion pounds ($9.18 billion) for the first quarter, beating analysts’ forecast for 37.3 pence earnings and sales of 7.07 billion pounds, a company-compiled consensus showed.
GSK noted, however, that sales would grow faster in the first half.
“In particular, second half 2024, compared to the same period in the prior year, is expected to be influenced by the 2023 launch dynamics and initial channel inventory build attributable to Arexvy. In addition, we expect the majority of Shingrix sales in China in to be in the first half,” it said in a statement.
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GSK is in the midst of a series of lawsuit settlements related to its discontinued heartburn drug Zantac in the United States, alleging the blockbuster medicine caused cancer.
The company took a legal provision of 312 million pounds in the first quarter, up from 267 million pounds in the Oct-Dec period. That figure includes various legal liabilities and not those related to Zantac only.
GSK has not disclosed how much it expects to pay out for the thousands of Zantac cases still pending, but analysts have estimated total costs at about $5 billion.
External estimates suggest the potential downside from the settlements is bigger than already priced in, said Hargreaves Lansdown analyst Derren Nathan.
“The next update from the key Delaware hearing will relate only to the admissibility of evidence so it could be a while before more clarity emerges. But, under all that, it’s hard to fault ongoing financial and clinical progress.”
($1 = 0.8020 pounds)