GSK is in good health, as its latest revenues and profits beat expectations

GSK’s quarterly results beat expectations yesterday, boosting the hopes for a long-awaited recovery at the London listed drugs manufacturer.

GSK has revealed positive figures for revenue and profit for the first quarter of 2023, a week after it announced a billion dollar deal with a Canadian pharmaceuticals company.

Sales of HIV, respiratory and vaccine medicines drove a 10 percent increase in revenue to £6.8billion, despite the decline of Covid-19 sales. Analysts had predicted £6.5billion. GSK’s preferred measure of adjusted profit per share, 37p, exceeded analyst predictions of 33.22p. The company has also confirmed its forecast for this year, which is a revenue growth between 6 and 8 percent and a growth in adjusted earnings-per-share of 12 to 15 percent.

The news boosted the FTSE 100’s share prices, which climbed in morning trading, before slipping back and closing down 58p or 3.9 percent at £14.42.

GSK is one the two biggest pharmaceutical companies in Britain, alongside AstraZeneca. GSK focuses on vaccines and medicine, especially for infectious diseases.

Dame Emma Walmsley (53), the GSK chief executive who led the separation of Haleon in July last year as part of a refocus effort on the core business of GSK, has said that it’s been a good start to the new year. She also noted the confidence she had about achieving the growth targets. GSK’s longer-term goal is to generate sales of over £33 billion in 2031.

It has invested extra firepower generated from the PS7 billion in dividends that was generated through the separation of Haleon, to acquire late stage drugs and companies. agreed to purchase Bellus Health a Canadian biopharmaceuticals company for £1.6 billion last week, giving it access a potentially blockbuster treatment of refractory chronic croup. This acquisition followed ‘s $1.9 billion purchase of Sierra Oncology in California last July, and ‘s $2.1 billion purchase of Affinivax a vaccines company based in Boston last May. The company is looking for similar bolt-on acquisitions.

GSK’s pipeline includes 68 vaccines, including 17 that are in late-stage trials or registration. The company issued four positive readouts from late-stage trials in the first quarter, and is expecting four regulatory approvals for this year. This includes a potential blockbuster respiratory virus vaccine for older adults.

Shingrix, the shingles vaccine and long-acting HIV medications were both a major contributor to sales in the first quarter.

The adjusted operating profit remained flat at £2.1 billion. This was partly due to legal provisions related to a dispute over royalty payments with AstraZeneca regarding Zejula, an anti-cancer drug. A court in the UK ruled in favor of AstraZeneca and against GSK in a judgement that meant GSK would owe its competitor royalties “in an amount which will be determined in another phase of proceedings”. GSK is also “responsible” for future payments on the same basis.

Citi analysts, a joint-house broker, stated that even after removing the one-time contribution of Advair (GSK’s inhaler) and pandemic solution [products], “the underlying revenue beat and earnings are respectable.” Citi analysts said that there is no material risk to GSK near-term earnings. This was due to the “pervasive” liability background ahead of a California court case in July over allegations that Zantac (GSK’s old heartburn medication) caused cancer. They also noted concerns about GSK being able to manage the loss of exclusivity for dolutegravir (the most commonly used HIV medicine), which will expire in 2028.

Smith & Nephew reported that its orthopaedics division was doing well, thanks to the increase in elective surgeries following pandemic-driven disruptions.

Smith & Nephew reported a surge in demand for elective surgical procedures that had been suspended during Covid

Sports medicine, which includes joint repair and keyhole surgery as well, grew by 10 percent. Advanced wound management for diabetic ulcers, post-operative wounds and situations burns improved by 7.9%.

The FTSE 100 shares rose to a ten month high of £12.941/2, up 20 1/2p or 1.6 percent on the day, after the news that group revenues had increased by nearly 7 per cent in the first quarter to $1.35billion.

Deepak Nath said, “We saw a strong elective procedures volume which now puts our surgical business in a better position to benefit.”