GSK Looks to Future Cost Savings and Manufacturing Changes

GSK is evaluating potential cost-saving measures and manufacturing adjustments in Europe as it aims to invest in the launch of new products while moving away from older legacy drugs. City analysts predict that GSK’s new chief executive could oversee an efficiency programme estimated at £1 billion within the FTSE 100 business. The company is expected to announce its full-year results soon, representing the first financial report under the leadership of Luke Miels.

Management is currently awaiting the outcomes of forthcoming late-stage drug trials across key areas such as oncology and respiratory, immunology, and inflammation. Successful results from these trials may result in reshaping the company’s manufacturing footprint, allowing for a greater emphasis on new product development and a strategic reduction in resources allocated to older drugs.

Under the previous leadership of Dame Emma Walmsley, GSK made significant strides, including debt reduction and improved operating margins. The company has seen nearly double the investment in research and development, amounting to £6 billion. GSK also achieved several upgrades to its financial outlook, continuing to target the launch of 15 major products to support its ambitious sales growth goal of over £40 billion by 2031. One of these potential blockbusters is bepirovirsen, a treatment for chronic hepatitis B, which has recently shown promising results from late-stage trials.

Shifts to the company’s resources are likely to focus on mainland Europe, as the UK operations have already undergone extensive restructuring under Walmsley. This restructuring included closing the Ulverston manufacturing plant in Cumbria, establishing a new facility in Ware, Hertfordshire, and upgrading the factory in Montrose, Scotland. According to a City banking source, the UK division is regarded as the most productive, with recent downsizing primarily occurring there due to operational efficiency.

Analysts from Jefferies foresee an upward trend in profit forecasts for 2027, anticipating that GSK’s leadership may facilitate a £1 billion efficiency programme throughout the organisation. GSK’s total employee count has declined from 98,462 in 2017 to around 68,629 in 2024, a reduction partly attributed to the separation of Haleon, a consumer healthcare business, in 2022.

Consensus forecasts among analysts predict GSK will report group revenue of £32.5 billion for 2025, a rise from £31.38 billion in the previous year, with operating profit anticipated to be £9.68 billion, an increase from £9.15 billion. There remains a gap between GSK’s revenue target for 2031 and the current consensus, yet management expresses confidence in navigating challenges such as the expiration of the patent on the key HIV drug dolutegravir in 2028. Jefferies has estimated the company’s capacity for future deals at approximately £30 billion, providing flexibility without compromising its balance sheet or dividend.

Recently, GSK agreed to acquire RAPT Therapeutics, a California-based clinical-stage firm focused on therapies for inflammatory and immunological diseases, further enhancing its product pipeline beyond 2031.