GlaxoSmithKline (GSK) reported a mixed bag of results for the third quarter, with sales coming in slightly below analyst expectations due to a slump in vaccine revenue. The company recorded $10.42 billion in sales, down 2% year-over-year, but up 2% on a constant currency basis. Analysts had anticipated sales of $10.78 billion.
The decline in sales was primarily attributed to a significant drop in vaccine revenue, which fell 18% (or 15% at constant currency) to 2.65 billion pounds. GSK attributed this decline to a combination of factors, including:
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Changes in ACIP Guidelines:
The Advisory Committee on Immunization Practices (ACIP) revised its guidelines for certain vaccines, impacting sales of Arexvy, a shingles vaccine.*
Prioritization of COVID-19 Vaccinations:
The ongoing focus on COVID-19 vaccinations has led to reduced demand for other vaccines.*
Lower Seasonal Infections:
Lower seasonal infection rates have contributed to a decrease in vaccine demand.*
Tough Comparators:
The company faced tough comparisons due to strong initial stockpiling of Arexvy last year.Despite the decline in vaccine sales, GSK’s specialty medicine division saw strong growth, increasing by 14% to 2.97 billion pounds. This growth was driven by robust performances in the company’s HIV drugs and oncology therapies.
GSK’s HIV drug revenues grew by 8% to 1.75 billion pounds, while General Medicines sales rose by 3% to 2.39 billion pounds. The company highlighted the strong performance of Trelegy, its asthma drug, which saw sales reach 600 million pounds, up 12% year-over-year.
Despite the mixed results, GSK maintained its positive outlook for 2024, reaffirming its adjusted EPS growth forecast of 10% to 12%. The company also expects core operating profit to increase by 11% to 13% and sales to expand by 7% to 9%.
However, GSK did adjust its outlook for vaccine sales, now projecting a decrease in the low-single-digit percentage compared to earlier guidance of an increase in the low to mid-single-digit percentage. The company expects strong growth in its specialty medicine division, with revenue projected to increase by a high-teens percentage compared to a prior growth range of mid-to-high teens percent. GSK forecasts General Medicines sales to rise at a mid-single-digit percentage compared to earlier guidance of low to mid-single-digit percent.
While GSK stock was down 4.69% to $36.38 during the premarket session, the company’s reaffirmation of its 2024 financial guidance and its continued investment in high-growth specialty medicines suggests a positive long-term outlook for the company.
