GSK Q3 results beat expectations as it gears up to sell consumer healthcare unit

GSK Q3 results beat expectations as it gears up to spin off consumer healthcare business. Photo; Reuters
GSK pharmaceuticals sales rose by 5.5% to £4.4bn. Photo: Reuters

Pharma giant GSK (GSK.L) delivered better-than-expected third quarter results thanks to double-digit sales growth in its pharmaceuticals and vaccines divisions as well as continued cost-cutting.

The company also announced it had raised its annual profit outlook.

Group turnover was up by 5% to £9.07bn ($12.5bn) for the three months to 30 September. Analysts had expected slightly lower Q3 earnings of of £8.73bn, as per a consensus compiled by the company.

Pharmaceuticals sales rose by 5.5% to £4.4bn, and its vaccines unit saw sales growth of 7% to £2.2bn.

The company now expects 2021 adjusted earnings per share to decline by between 2% and 4% at constant exchange rates, excluding any boost from its COVID-19 offerings. It had previously expected profit to fall by mid-to-high single digit percentages.

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Shares in the company ticked up 3.2% on Wednesday afternoon.

CEO Emma Walmsley said: “GSK has delivered another quarter of strong business performance. This has allowed us to improve our full-year guidance and, alongside the progress in strengthening our R&D pipeline, reinforces our confidence in the outlook for a step-change in growth and performance in 2022 and beyond.”

“We also continue to make excellent progress towards unlocking the value of consumer healthcare through a successful demerger in mid-2022.”

GSK's stock was up on Wednesday afternoon. Chart: Yahoo Finance UK
GSK's stock was up on Wednesday afternoon. Chart: Yahoo Finance UK

Last month activist hedge fund Bluebell Capital Partners had turned up the pressure on Walmsley after it followed in the footsteps of Elliott Investment Management and bought a stake in the pharma firm. Both parties have called for a sale of the consumer healthcare unit.

The CEO has also been under pressure for lagging behind in the coronavirus vaccines race compared with rivals such as AstraZeneca (AZN.L).

Earlier this month GSK had signed a deal to supply 10,000 doses of its COVID-19 monoclonal antibody therapy to the Canadian government.

Two weeks ago, CureVac (CVAC) said it will give up on its first-generation COVID-19 vaccine candidate and instead focus on working with GSK to develop improved mRNA vaccine technology.

In its latest results GSK said its vaccines business faced significant disruption during 2021, given the governments’ prioritisation of COVID-19 vaccinations.

This impacted GSK's immunisations, including shingles vaccine Shingrix, particularly in the US.

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GSK said in Q3 2021, the surge in the COVID Delta variant delayed the expected second half recovery in Shingrix prescriptions but "this was more than offset by beneficial year-on-year wholesaler inventory comparisons and by growth in the US non-retail channel as well as encouraging sales outside the US from existing and new launch markets."

It now expects vaccines revenue for 2021 to decline by mid-single digits but it remains "confident in the underlying demand and medium term prospects for Shingrix and our vaccines portfolio."

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