GSK Shares Slide 5.5% as Weaker Vaccine Sales and Rising Costs Unnerve Investors

Shares in British drugmaker GSK fell sharply on Wednesday. Although the company reported better-than-expected financial results, investors were unnerved by weaker vaccine sales, restructuring charges and its overall outlook. The shares dived as much as 7% at one point before paring back to a 5.5% drop, still the biggest fall on London's FTSE 100 index that day.

GSK is Britain's second-biggest pharmaceutical company. Its pre-tax profit in the July to September quarter fell 19% to £1.9bn. Restructuring charges in the same period came to £318m, with more to come, the company said.

The sales picture was mixed. Turnover in the third quarter rose 5% at constant currency rates to £8.9bn, thanks to strong sales of its HIV, cancer and lupus medications. Vaccine sales, however, dipped 2% to £2.6bn.

Among the vaccines, sales of the shingles shot Shingrix fell 5% and sales of the RSV vaccine Arexvy fell 24%, while sales of meningitis vaccines rose 12%.

Investors are also worried about the looming patent cliff for its blockbuster HIV drug dolutegravir. It will lose patent protection towards the end of the decade, which means other drugmakers will be able to make cheaper, generic versions.

Luke Miels, who took over from Emma Walmsley as chief executive in January, has announced a number of acquisitions, including a £7.9bn US cancer specialist, and a major cost-saving programme in July to speed up drug development.

GSK has set a goal of generating more than £40bn in total annual revenue by 2031, rebuilding its cancer business as part of that plan. Miels said the company was slightly ahead on its three-year cost reduction plan to save £1.9bn a year. The restructuring will cost £2.4bn in total, and most of those charges will come this year and next.

The impact on the UK was relatively limited, Miels said, with some job cuts at its headquarters in central London affecting support roles. He said a headquarters should never be too big and that he wanted people working in the laboratory.

GSK is also reorganising its vaccine business in Belgium, where increased use of digital tools and automation is expected to lead to about 1,200 job losses. The country will continue to produce the bulk of its vaccines, the company said. GSK had nearly 67,000 employees globally at the end of last year, according to its annual report.

The company stuck to its annual forecasts, with research and development spending set to grow faster than sales. It expects to begin 22 late-stage studies of new medications by the end of the year, 18 of which are already under way, with a focus on specialty medicines and vaccines.

Miels said Shingrix had the potential to grow next year, describing it as a remarkable product. Two large studies of the vaccine are assessing whether it reduces dementia risk and its effects on major adverse cardiovascular events such as heart attacks and strokes, with the first data available in 2029 and 2027 respectively, he said.