GSK Shares Tumble as Weak Vaccine Sales Overshadow Better-Than-Expected Results

Shares in GSK fell sharply on Wednesday even though the British drugmaker posted results that beat analyst expectations. Investors were unsettled by softer sales of its shingles and respiratory syncytial virus (RSV) vaccines, as well as of some recently launched medicines.

The company, Britain's second-biggest pharmaceutical firm, reported a 19% drop in pre-tax profit to £1.9bn for the July to September quarter. It also booked £318m in restructuring charges, with more expected. Core operating profit rose 5% and core earnings per share rose 1%, both ahead of what analysts had forecast.

The stock fell by as much as 7% at one stage before recovering some ground to end down 3.8%. That made it the second-biggest faller on the FTSE 100 index of blue-chip companies.

Third-quarter turnover reached £8.9bn, up 5% on the same period last year, helped by strong sales of GSK's HIV, cancer and lupus medicines. Vaccine sales, however, slipped 2% to £2.6bn. Shingrix, the shingles vaccine, fell 5%, and the RSV vaccine Arexvy dropped 24%, partly because of tough comparisons with the previous year. Meningitis vaccine sales rose 12%. Sales of Exdensur, a recently launched asthma drug, also disappointed analysts.

Chief executive Luke Miels, who took over from Emma Walmsley in January, defended the position of Arexvy. "When we look at our market share versus Pfizer, we still have leadership there. 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," he said. Since taking the helm, Miels has announced several acquisitions, including a £7.9bn US cancer specialist, and a cost-saving programme launched in July to speed up drug development.

Investors are also concerned about the loss of patent protection for the blockbuster HIV drug dolutegravir toward the end of the decade, which will allow rivals to sell cheaper generic versions. GSK has set a target of more than £40bn in annual revenue by 2031 as it rebuilds its cancer business.

Miels said the company was slightly ahead on its three-year plan to save £1.9bn a year by simplifying operations and directing more money to research and development. The restructuring will cost £2.4bn, most of it this year and next. He said the effect on the UK would be relatively limited, with some support roles such as human resources and procurement affected at the London headquarters and at hubs in Poland and India. "You never want headquarters to be too big; I want people on the bench in the lab," he said.

GSK is also reorganising its vaccine business in Belgium, where greater use of digital tools and automation is expected to lead to about 1,200 job losses. The country will still produce the bulk of the company's vaccines. GSK had nearly 67,000 employees worldwide at the end of last year.

The company kept its annual forecasts, with R&D spending set to grow faster than sales, and expects to start 22 late-stage studies of new medicines by the end of the year. Miels said Shingrix had the "potential to grow next year" and called it "a remarkable product". Two large studies are examining whether it reduces dementia risk and major cardiovascular events such as heart attacks and strokes, with first data due in 2029 and 2027 respectively. Both could be "transformative", he said.

High street chemists in Britain have reported higher demand for the shingles vaccine after studies linked it to a lower risk of dementia. "We've got a lot of studies that show a correlation. We're trying to demonstrate causation," Miels said.