British pharmaceutical giant GSK (GSK.L) on Wednesday beat analysts’ expectations for its first-quarter results and reaffirmed its 2022 forecast.
Highlights
Strong sales growth across Biopharma and Consumer Healthcare
- Biopharma: £7.1 billion +40% AER, +40% CER;+14% AER, +15% CER excluding COVID-19 solutions
- Specialty Medicines £3.1 billion +98% AER, +97% CER; HIV +15% AER, +14% CER; Oncology +15% AER, +15% CER; Immuno-inflammation, respiratory and other +18% AER, +18% CER; COVID-19 solutions (Xevudy) sales £1.3 billion
- Vaccines £1.7 billion +36% AER, +36% CER; Shingrix £698 million >100% AER, >100% CER
- General Medicines £2.3 billion +2% AER, +3% CER
- Consumer Healthcare £2.6 billion +14% AER, +14% CER
Continued R&D delivery and strengthening of pipeline
- US FDA regulatory approvals: Cabenuva treatment of virologically supressed adolescents living with HIV; Triumeq dispersible single tablet regimen for treatment of children with HIV
- US FDA regulatory submission acceptance of daprodustat for anaemia of chronic kidney disease (PDUFA action date 1 February 2023)
- Benlysta approved in China for adults with active lupus nephritis
- EU regulatory submission acceptance for Sanofi-GSK COVID-19 vaccine (Vidprevtyn) and Canadian regulatory approval for Medicago-GSK COVID-19 vaccine (Covifenz)
- Proposed acquisition of Sierra Oncology Inc. strengthens late-stage specialty pipeline. Momelotinib has potential to address significant unmet medical need of myelofibrosis patients with anaemia
- Multiple pipeline catalysts in next nine months, including phase III data read outs for the RSV Older Adults and meningitis (MenABCWY) vaccine candidates, Blenrep, Jemperli and otilimab, and phase IIb data for bepirovirsen
Cost discipline supports delivery of improved operating margin and Adjusted EPS of 32.8p
- Total Group operating margin 28.6%. Total EPS 35.9p +67% AER, +66% CER
- Adjusted Group operating margin 26.7%. Adjusted EPS 32.8p +43% AER, +43% CER. This included a contribution to growth from COVID-19 solutions of approximately +15% AER, +15% CER for Q1 2022
- Q1 2022 cash generated from operations £2.8 billion. Q1 2022 free cash flow £1.7 billion
On track to demerge and list Haleon, a new global leader in consumer healthcare, in July 2022
- New growth outlooks set out in Q1 2022, for annual organic revenue growth of 4-6% and sustainable moderate expansion of adjusted operating margin over medium term at CER
Reconfirming 2022 guidance
- GSK expected to deliver growth in 2022 sales of between 5% to 7% at CER and growth in 2022 Adjusted operating profit of between 12% to 14% at CER
- 2022 guidance excludes any contribution from COVID-19 solutions
- Dividend of 14p declared for Q1 2022
Emma Walmsley, Chief Executive Officer, GSK said:
We have delivered strong first quarter results in this landmark year for GSK, as we separate Consumer Healthcare and start a new period of sustained growth. Our results reflect further good momentum across specialty medicines and vaccines, including the return to strong sales growth for Shingrix and continuing pipeline progress. We also continue to see very good momentum in Consumer Healthcare, demonstrating strong potential of this business ahead of its proposed demerger in July, to become Haleon.
Earnings per share
Total EPS was 35.9p compared with 21.5p in Q1 2021. This primarily reflected leverage from significant sales growth during the quarter, with the upfront income of £924 million from the settlement with Gilead partly offset by an increase in finance costs. Adjusted EPS was 32.8p compared with 22.9p in Q1 2021, up 43% at AER, 43% CER, on a 39% CER increase in Adjusted operating profit primarily reflecting sales of Specialty Medicines and Vaccines, including COVID-19 solutions sales, tight cost control and a lower effective tax rate. These were partly offset by higher supply chain costs, increased R&D investment, favourable legal settlements in Q1 2021 and higher interest costs. The contribution to growth from COVID-19 solutions was approximately 15% at AER, 15% at CER.
COVID-19 solutions expectations
In 2022, based on known binding agreements with governments, we expect that COVID-19 solutions will contribute a similar sales level to 2021, but at a substantially reduced profit contribution due to the increased proportion of lower margin Xevudy sales. We expect this to reduce the new GSK Adjusted Operating profit growth (including COVID-19 solutions in
both years) by between 5% to 7%. The overwhelming majority of expected COVID-19 solutions sales were achieved in the first quarter this year. In April 2022, the US FDA updated Xevudy’s authorisation to reflect the increase in COVID-19 cases caused by the Omicron BA.2 sub-variant and as a result, Xevudy is no longer authorised to treat COVID-19 in any US region. However, we will continue to discuss future opportunities to support governments, healthcare systems, and patients whereby our COVID-19 solutions can address the emergence of any new COVID-19 variant of concern. All expectations, guidance and targets regarding future performance and dividend payments should be read together with ‘Guidance, assumptions and cautionary statements’ on page 43. If exchange rates were to hold at the closing rates on 31 March 2022 ($1.31/£1, €1.18/£1 and Yen 160/£1) for the rest of 2022, the estimated positive impact on 2022 Sterling turnover growth for new GSK would be 2% and if exchange gains or losses were recognised at the same level as in 2021, the estimated positive impact on 2022 Sterling Adjusted Operating Profit growth for new GSK would be 3%.
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