GSK Reports Strong 2021 Financial Results and Advances Toward Demerger of Pharmaceutical and Consumer Healthcare Businesses

Compiled by | Li Tom

In 2021, GlaxoSmithKline (GSK) achieved a good performance with annual revenue of £34 billion (approximately $46 billion), representing a 5% increase. Emma Walmsley, the consistently optimistic CEO, also stated that as the company is set to complete the spin-off of its pharmaceuticals and consumer healthcare businesses later this year, GSK’s financial position will be quite strong.

GSK, in its latest released Q4 and annual report of 2021, pointed out that the company's sales last year were mainly driven by its pharmaceuticals business, which achieved a revenue of £17.7 billion (approximately $23.95 billion), increasing by 10%. Specifically, GSK divided its pharmaceuticals business into two parts: new drugs and specialty medicines, and established products. The former achieved a revenue of £10 billion in 2021 (increasing by 20%), accounting for more than half of the segment’s revenue, while the latter earned £7.757 billion in 2021 (decreasing by 11%). In addition, the vaccine business revenue increased by 2% last year, reaching £6.8 billion (approximately $9.25 billion). The consumer healthcare business, which was highlighted, increased by 4%, with revenue of £9.6 billion (approximately $12.99 billion).

Walmsley once again touted the year-end performance, stating that as GSK moves closer to completing its business spin-off, this move aligns with the company’s previously established strategic priorities. At the 2022 JPM conference, Walmsley provided a detailed overview of GSK's five-year plan, which highlighted the company’s focus on R&D in four key areas: infectious diseases, HIV, oncology, and immunology/respiratory diseases, while remaining open to potential new opportunities. During a recent conference call with analysts and journalists, Walmsley stated frankly that 2021 was a year in which GSK made significant progress across multiple strategic priorities.

Among them, the monoclonal antibody Sotrovimab boosted GSK's sales in the fourth quarter of 2021 and is expected to become a blockbuster drug in 2022. The drug received emergency use authorization from the U.S. FDA in May last year. GSK markets it under the brand name Xevudy, with projected sales for 2022 reaching £1.4 billion. Xevudy was co-developed by GSK and Vir Biotechnology. A clinical trial showed that a single dose of the Sotrovimab monoclonal antibody reduced the risk of hospitalization and death by 79% in high-risk adults with symptomatic COVID-19. Additionally, early laboratory test data indicates that the Sotrovimab monoclonal antibody is effective against viruses carrying some of the hallmark mutations of the Omicron variant.

In addition to Xevudy, Trelegy and Nucala were also blockbusters with revenues exceeding $1 billion in 2021, driving the sales growth of GSK. Among them, Trelegy's sales reached £1.2 billion, while Nucala achieved £1.14 billion. Another highlight for GSK in 2021 was in the HIV field, including the FDA approval of Apretude, a long-acting injectable pre-exposure prophylaxis (PrEP) treatment option that reduces the risk of sexually acquiring HIV-1. Apretude, co-developed with ViiV Healthcare, was approved for use in December of last year. Another key approval in 2021 was for the oncology drug Jemperli, which received FDA approval in April of last year for the treatment of endometrial cancer. Jemperli is also one of the few anti-PD-1 drugs approved for this indication.

For the outlook in 2022, Walmsley predicted that this year would be a "landmark year" for GSK, with the upcoming 11 months expected to bring stepwise growth changes through various R&D catalysts and milestone events related to up to seven key late-stage pipeline assets. However, GSK has also removed the underperforming PRMT5 inhibitor and GSK3368715 from its pipeline. In a brief statement, GSK attributed the decision to a shift in R&D priorities and added that it would also terminate its licensing agreement with Epizyme next month. The two companies initially struck the deal in 2011, planning to develop small-molecule HMT inhibitors for three targets. It now appears that their collaboration has fallen through.

GSK boasts a robust pipeline with 21 vaccines and 43 drugs, several of which are expected to become potential best or first-in-class treatment options. Additionally, there are 22 ongoing pivotal clinical trials. The company also noted that it plans to seek regulatory approval in the U.S. and EU markets for daprodustat to treat anemia caused by chronic kidney disease in the first half of 2022. Notably, among the 11 new vaccines GSK is developing, about 7 are expected to achieve milestone progress, including a respiratory syncytial virus vaccine for the elderly.

As GSK moves into the new year and gradually completes the spin-off, the company stated its intention to build on these milestones, with the spin-off now in full "countdown" mode. The new GSK is expected to become a growth company driven by the development of novel vaccines and specialty medicines. The pharmaceutical business will focus on four core therapeutic areas: infectious diseases, HIV, oncology, and immunology/respiratory.

Last June, Walmsley outlined the expectations for GSK's business spin-off, predicting that by 2031, the independent pharmaceuticals business of GSK is expected to reach approximately $46 billion in revenue. It was also forecasted that sales would grow by 5% to 7% in 2022, with operating profit increasing by 12% to 14%. Operating profits are also expected to continue growing by over 10% in the next five years. Regarding further details of the spin-off, he mentioned plans to present the current financial status and future growth targets of the consumer healthcare business at the company’s capital markets event later this month.

References:

1、GSK kills one of Barron’s early darlings, axing two synthetic lethal programs and Epizyme pact

2、GSK Posts Strong 2021 as Demerger Countdown Begins