GSK pledges to step up growth as it prepares for consumer unit spin-off

Emma Walmsley, GlaxoSmithKline’s chief executive, who has been under pressure from activist investors, has promised a “step change in growth” at the UK drugmaker this year after its quarterly profits beat expectations.

Walmsley said the company had overcome “many years of challenges” to start to deliver in this “landmark year”.

The pledge comes as the FTSE 100 group prepares to spin off its consumer health unit after rejecting Unilever’s £50bn offer late last year for the maker of over-the-counter medicines and vitamins.

Walmsley told reporters on Wednesday that GSK had broad shareholder support for its decision to press ahead with a spin-off, rather than a sale, of the business.

“We have a lot of encouragement to stay very focused on this demerger,” she added.

GSK predicts sales for the new pharmaceuticals and vaccines business will climb between 5 and 7 per cent this year, while adjusted operating profits will rise between 12 and 14 per cent. The unit expects milestone data on up to seven late-stage drug candidates.

The consumer business is forecast to grow faster than its category, at a more than 5 per cent compound annual growth rate from 2021 to 2026, aiming to hit £33bn in sales by 2031. GSK forecasts adjusted profit for the separated division will have at least a 10 per cent compound annual growth rate from 2021 to 2026.

After taking stakes in GSK, activist investors Elliott Management and Bluebell Capital Partners have pushed the group to revitalise its drug pipeline and pressed it to consider a sale of the consumer health unit, rather than a spin-off.

But Unilever dropped plans to buy the business after its bids were rejected by GSK and US drugmaker Pfizer, which owns a stake in the consumer health unit.

In its fourth-quarter results on Wednesday, GSK reported earnings of 25.6p per share, better than the average analyst estimate of 23.8p. It will pay a dividend of 23p a share for the quarter.

The group’s sales were in line with the consensus forecast, at £9.5bn. Its Covid-19 antibody treatment, developed with Vir Biotechnology, had sales of £958mn in the quarter. Governments signed large contracts during the most recent Covid-19 wave as, unlike some rivals, the drug can tackle the Omicron coronavirus variant.

Sales of its vaccines fell 7 per cent, however, as the need for coronavirus jabs continued to reduce demand for other shots, including the company’s Shingrix, which prevents shingles. The decline was partly offset by sales of its pandemic adjuvant, which boosts the efficacy of several vaccines in development, including one with Sanofi. Sales for the product came in at £447mn for the full year.

GSK reported sales of £34bn for the full year, up 5 per cent from a year earlier. Its adjusted earnings per share were up 9 per cent at 113.2p.

Shares in GSK, which have risen 29 per cent in the past year, were flat at 1,648.45p in early morning trading on Wednesday in London.