GSK profit falls as vaccine sales slump

GSK posted a 19% drop in pre-tax profit for the third quarter, a figure that spooked investors despite other metrics beating expectations. The British pharmaceutical firm reported profit of 1.9 billion pounds for the period from July to September. The decline overshadowed the company’s core earnings per share, which rose 1% and exceeded analyst forecasts.

Shares in the company fell as much as 7% during Wednesday’s trading session. The stock recovered slightly to close down 3.8%, making it the second-largest loser on the FTSE 100 index. Investors focused on softening sales for the firm’s major vaccines. Total turnover reached 8.9 billion pounds, up 5% from the same period last year, but vaccine revenue slipped 2% to 2.6 billion pounds.

The shingles vaccine Shingrix saw sales drop 5%, while the RSV vaccine Arexvy declined 24%. Chief Executive Luke Miels, who took over from Emma Walmsley in January, defended Arexvy’s position. He noted that the company still holds market leadership compared to Pfizer. "We are getting good orders outside of the US, so I think we need to just see what happens over the next couple of months to have the full picture," Miels said. Strong sales in HIV, cancer, and lupus medicines helped offset the vaccine weakness.

The company booked 318 million pounds in restructuring charges, with more costs expected. Miels stated the firm is slightly ahead of its three-year plan to save 1.9 billion pounds annually by simplifying operations. The total restructuring cost is estimated at 2.4 billion pounds, with most of the expense occurring this year and next. He described the impact on the UK as relatively limited, noting that support roles in human resources and procurement at London headquarters would be affected.

GSK is reorganizing its vaccine business in Belgium, where automation and digital tools are expected to eliminate about 1,200 jobs. The country will continue to produce the bulk of the company’s vaccines. The firm employed nearly 67,000 people worldwide at the end of last year. Miels said the company is directing more money toward research and development, with R&D spending set to grow faster than sales.

Investors also weigh the loss of patent protection for the HIV drug dolutegravir toward the end of the decade. This will allow rivals to sell generic versions. GSK targets more than 40 billion pounds in annual revenue by 2031 as it rebuilds its cancer business. The company expects to start 22 late-stage studies of new medicines by the end of the year. Two large studies are examining whether Shingrix reduces the risk of dementia and major cardiovascular events, with data due in 2027 and 2029.

Miels called Shingrix a "remarkable product" with the potential to grow next year. High street chemists in Britain have reported higher demand for the vaccine following studies linking it to lower dementia risk. "We've got a lot of studies that show a correlation. We're trying to demonstrate causation," Miels said.