GSK raises 2024 profit forecast despite expected sales slowdown

GlaxoSmithKline revised its full-year profit forecast upwards on Wednesday, citing strong demand for vaccines and specialty medicines. However, the pharmaceutical giant cautioned that sales growth is expected to decelerate in the latter half of the year.

Under the leadership of CEO Emma Walmsley, GSK has strategically focused on vaccines, infectious diseases, and shifted its HIV focus towards long-acting treatment and prevention therapies. This strategic pivot has yielded positive results, with the company gearing up for 12 product launches starting from 2025.

The London-listed drugmaker now anticipates an 8 per cent to 10 per cent increase in annual adjusted earnings per share, up from the previously forecasted growth range of 6 per cent to 9 per cent. Moreover, it expects 2024 sales to land at the higher end of its previously projected 5 per cent to 7 per cent growth range.

In early trading, GSK's shares on the FTSE 100 rose nearly 1 per cent, reflecting investor confidence in the company's improved outlook.

Strong sales of recently launched products such as the respiratory syncytial virus (RSV) vaccine Arexvy and the bone marrow cancer therapy Ojjaara have bolstered performance since the beginning of 2024. Additionally, the asthma drug Trelegy has outperformed expectations, contributing to GSK's positive trajectory.

The company also attributed its heightened forecast to a successful royalty dispute appeal for the ovary cancer drug Zejula during the first quarter.

Despite the positive outlook, GSK cautioned that sales growth would be faster in the first half of the year. It attributed the anticipated slowdown in the latter half to dynamics related to the launch of Arexvy in 2023 and initial channel inventory build-up. Moreover, the majority of Shingrix sales in China are expected to occur in the first half of the year.

GSK is currently navigating a series of lawsuit settlements concerning its discontinued heartburn drug Zantac in the United States, where it faces allegations that the medicine caused cancer. The company provisioned 312 million pounds in legal provisions during the first quarter, up from 267 million pounds in the previous quarter, encompassing various legal liabilities beyond those related solely to Zantac.

(With Reuters inputs)