GSK Reports Strong Q4 Earnings Driven by HIV and Respiratory Drugs, Reaffirms Growth Outlook

Intelligent Finance APP learned that GlaxoSmithKline (GSK.US) fourth-quarter profit was higher than expected, mainly due to its HIV drugs and an asthma drug now approved for treating lung diseases. The financial report shows that GSK's fourth-quarter revenue reached 8.62 billion pounds, a year-on-year increase of 6.3%, exceeding expectations by 170 million pounds.Adjusted earnings per share were 25.5 pence (approximately 35 cents), surpassing analysts' expectations.

The company also maintained its guidance for profit growth this year at 7% to 9%. Some analysts had previously forecast a guidance of approximately 6% to 8% earnings per share growth. New CEO Luke Miels has set a target for the year that could potentially be exceeded, with the anticancer drug Blenrep expected to boost revenue.

GlaxoSmithKline PLC.Sales growth of 3% to 5%, core operating profit growth of 7% to 9%, and core earnings per share growth of 7% to 9% are expected by 2026. The company forecasts sales to exceed £40 billion by 2031.

The company's operating activities generated a cash flow of 8.9 billion pounds, with a free cash flow of 4 billion pounds.

GSK is currently facing a significant "patent cliff" for its best-selling HIV drug. The company expects its specialty portfolio to achieve low double-digit revenue growth this year. This portfolio consists of HIV, cancer drugs, and Nucala, among others, with Nucala recently approved in the U.S. for the treatment of chronic obstructive pulmonary disease (COPD), a serious lung condition.

Revenue from the other two parts of the business — vaccines and general medicines — may see a decline.

During Robert F. Kennedy Jr.'s tenure as Secretary of Health, the shift in sentiment in the U.S. is putting pressure on the vaccine business. Nevertheless, the vaccine business performed better than expected last quarter, mainly due to increased demand outside the U.S., particularly the rise in sales of GlaxoSmithKline PLC.'s shingles vaccine in China.

Under former CEO Walmsley, GSK spun off its consumer health unit Haleon and made key acquisitions in an attempt to bolster its drug development pipeline. Even so, Mils must still prove to investors that the company can achieve its revenue ambitions by the end of this decade and beyond.

Last month, GSK agreed to acquire Rapt Therapeutics, a US-based biotechnology company dedicated to developing therapies for patients with inflammatory and immune system diseases, in a deal worth $2.2 billion.