Analysis-GSK gives few clues about plans to fill Reuters medicine cabinet

© Reuters. FILE PHOTO: The GSK (GlaxoSmithKline) logo is seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Natalie Grover and Maggie Fick

LONDON (Reuters) – GSK Chief Executive Emma Walmsley on Wednesday made replenishing the maker’s stock of vaccines and therapies her number one priority.

But analysts were disappointed that she did not provide more details on how she and her management team plan to find the company’s next batch of blockbuster drugs.

Current developments will sustain growth through the end of this decade and beyond, Walmsley said in an interview after the world’s biggest vaccine maker reported better-than-expected fourth-quarter results.

But analysts say there isn’t enough in the medicine cabinet to sustain the momentum even beyond the next few years.

Investors were particularly keen to hear about the manufacturing strategy after GKS last July spun off Haleon, its consumer health products business, which makes Sensodyne toothpaste and other core products, providing cash to supplement its drug production.

GSK has largely missed out on the lucrative COVID-19 vaccine market, but has had a string of good quarters after years of underperforming rivals.

Fourth-quarter results were boosted by sales of HIV drugs and the successful Shingrix herpes vaccine.

But after an early surge, GSK shares on the London blue-chip ended down 0.2%.

“We didn’t really learn much today in terms of their efforts to expand the pipeline,” he said Barclays (LON:) analyst Emily Field.

The loss of patent protection until 2027 for dolutegravir, a compound that is part of GSK’s four HIV treatments, is particularly worrying as it puts more than 5 billion pounds ($6.2 billion) in sales at risk, Sebastian Skeet, a health analyst at research company Treči most.

Among a handful of prospects, GSK is primarily relying on its vaccine targeting respiratory syncytial virus (RSV), which causes thousands of hospitalizations and deaths each year, to at least partially offset that loss.

It has been submitted for review by regulators in the United States, the European Union and Japan.

But with rivals Pfizer (NYSE:) and Modern (NASDAQ: ) are also vying for a slice of the estimated $10 billion market, some analysts expect GSK could end up with just a fraction of that, Skeet told Reuters.

“The implication, then, is that there is still some ground to catch up on,” he said.

The company has announced some acquisitions, including a deal to buy U.S. firm Sierra Oncology (NASDAQ: ) in 2022, but has shed several programs from its lineup, including exiting a pact focused on cancer and the cell and gene therapy field as a whole.

GSK has also suffered setbacks in its cancer drug portfolio in recent months. Meanwhile, analysts say the market for Shingrix will eventually become saturated, further limiting the company’s growth prospects.


GSK’s R&D spending has long lagged its rivals, something activist investor Elliott highlighted in a 2021 letter pressuring the company to make sweeping changes.

The company has started to close the gap somewhat, spending just over 5 billion pounds ($6.2 billion) on research and development in 2022, but still lags behind rivals Roche, AstraZeneca (NASDAQ: ) and Pfizer, Andrew McConaghie said , Senior Health Analyst at Citeline.

GSK’s top scientists say they are working to double their R&D productivity from the industry standard of 10% to 20%, or take 2 in 10 drugs all the way from early trials to market, with the help of technologies like artificial intelligence.

Some investors and industry experts say there is still time for the company to turn around its drug pipeline.

Lucy Coutts, chief investment officer at asset management firm JM Finn, which holds GSK shares, said it was hoped the company would eventually deliver a modernized and specialized portfolio of blockbuster drugs.

But until that happens, stocks could remain under pressure.

“Investors at this stage see little of that,” she said.

($1 = £0.8107)

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