GSK, the British pharmaceutical giant, has announced better-than-anticipated results for the fourth quarter of 2024. This strong performance has led the company to raise its 2031 sales target to nearly $50 billion. GSK plans to invest significantly in specialty medicines to counterbalance a decline in vaccine sales.
Share Price Soars
Shares of GSK surged by almost 6% in early trading on Wednesday. The company also revealed a share buyback plan of £2 billion ($2.5 billion) over the next 18 months. Analysts view the positive fourth-quarter results, the optimistic outlook, and the share buyback as encouraging signs for investors.
Q4 Earnings Beat Estimates
GSK’s fourth-quarter earnings surpassed expectations. The company’s HIV and oncology portfolios performed particularly well, offsetting a decrease in sales of its respiratory syncytial virus (RSV) and shingles vaccines. “We are increasing and prioritizing R&D investment in promising new long-acting and specialty medicines,” stated CEO Emma Walmsley. These investments will focus on respiratory, immunology and inflammation, oncology, and HIV treatments.
Market Response and Vaccine Concerns
GSK’s stock was among the top gainers in Europe on Wednesday. It is poised for its best day since December 2022 if these gains hold. However, vaccine manufacturers have faced challenges recently. The nomination of Robert F. Kennedy Jr. to lead the Department of Health and Human Services has caused concern due to his controversial views on vaccines. Although Kennedy insists he is not anti-vaccine, shares in U.S. drugmakers declined further on Tuesday as he gained support from a key Republican senator.
Navigating Challenges in the Vaccine Market
Walmsley’s focus on the blockbuster RSV vaccine, Arexvy, has encountered obstacles in the United States. Changes in public health recommendations, prioritization of other vaccines like COVID-19, and lower seasonal infections have all impacted sales.
Shifting Focus for Future Growth
Since becoming CEO in 2017, Walmsley has steered GSK back to growth by concentrating on cancer and infectious diseases. This strategic shift aims to address patent expirations and declining revenue from some of GSK’s top-selling products by 2030.
Financial Projections and Performance
GSK anticipates revenue growth between 3% and 5% in 2025. This is a slower pace than the 7% growth reported for 2024. Analysts had predicted sales growth of around 3.5% for this year. Despite the projected slowdown, GSK has increased its 2031 sales forecast to more than £40 billion ($49.9 billion), up from the previous target of £38 billion.
For the fourth quarter ending December 31st, GSK reported core earnings per share of 23.2 pence on sales of £8.12 billion. This exceeded analysts’ expectations of 19 pence earnings per share on sales of £7.75 billion. However, GSK predicts a “low single-digit percent” decrease in revenue from its vaccine business in 2025.
