GSK sales fall after demand for Covid treatment plummets

GSK beat expectations on revenue and earnings in the first quarter, despite a drop in sales of the Covid-19 treatment Xevudy after the US regulator said it was unable to tackle the most prevalent variants of the virus.

Total sales fell 8 per cent at constant exchange rates to £7bn, against expectations of £6.5bn. Excluding sales related to Covid-19, revenues rose 10 per cent to £6.8bn, driven by sales of HIV medicines and a vaccine for shingles.

Operating profit was down 15 per cent to £2.1bn partly because of comparison with the first quarter last year, when GSK received extra money from a one-off legal settlement with Gilead. Adjusted earnings per share were 37p, above the consensus forecast for 33.2p.

Emma Walmsley, GSK’s chief executive, said the company had made a “strong start to 2023”, with significant approvals and clinical trial results to come.

“We are very focused on our upcoming launches, including our potential RSV [respiratory syncytial virus] older adult vaccine, and on continuing to strengthen our pipeline,” she said.

Earlier this month, GSK agreed to buy Canadian biotech Bellus Health in a $2bn deal, adding a speciality medicine aimed at the 10mn people who suffer from a debilitating and persistent cough. Last year, GSK also made a $1.9bn acquisition of Sierra Oncology and agreed a deal worth up to $3.3bn for vaccine maker Affinivax.

In a media call on Wednesday, Walmsley called on the UK government to invest in technology to make the most of the “unique opportunity” of data held by the NHS and address a dramatic drop in clinical trials. 

She added that the UK was at a “tipping point” in its relationship with the life sciences sector, which has been battling the government over taxes on drug prices, and what it says is a lack of investment in innovation. The number of industry clinical trials in the UK has fallen 41 per cent since 2017.

GSK maintained its full-year guidance, forecasting turnover to increase between 6 and 8 per cent, and a 12 to 15 per cent rise in adjusted earnings per share. The guidance is at constant exchange rates and excludes sales related to Covid-19. GSK declared a dividend of 14p, with 56.5p expected for the full year 2023.

During the quarter, a London court found that GSK owed royalties to AstraZeneca for all of its sales of its Zejula cancer drug, rather than just a proportion of them, including back sales. But it has not yet decided how much GSK will owe. On Wednesday, GSK said it is considering an appeal.

Separately on Wednesday, Swiss pharmaceutical company Roche said first-quarter sales fell 7 per cent to SFr15.32bn, driven by much lower demand for Covid-19 tests. Roche had previously warned this would be the case.

Sales from its pharmaceuticals division grew 5 per cent to SFr11.7bn in the same period, driven by newer medicines. Eye drug Vabysmo, launched a year ago, was the biggest growth driver, Roche said.

Roche shares fell 1.3 per cent in early trading, while AstraZeneca was down 1.7 per cent by mid-morning.