GSK plans £2 billion share buyback, boosts long-term outlook
The buyback comes after GSK saw earnings per share, excluding some items, at 23.2 pence in the fourth quarter
GSK plans to buy back £2 billion (S$3.4 billion) of shares as it raised its long-term growth outlook on optimism around the drug pipeline.
The British drugmaker boosted its 2031 sales forecast to over £40 billion, up from the more than £38 billion it previously expected. GSK said this reflected progress in its late stage pipeline, including several oncology medicines.
The buyback comes after GSK saw earnings per share, excluding some items, at 23.2 pence in the fourth quarter, higher than the 20 pence estimated by analysts surveyed by Bloomberg.
GSK’s shares rose as much as 4.5 per cent in early trading in London. They’ve been held back by concern over the pipeline and what is seen as few near-term catalysts, and were down 17 per cent over the past 12 months through Tuesday’s (Feb 4) close.
The better-than-expected earnings were offset by concern over vaccine sales. The company now expects turnover from vaccines to drop by a low single-digit percentage this year. Meanwhile, its specialty medicines, which include cancer and HIV drugs, are anticipated to increase by a low double-digit percentage.
US health officials have recommended restricting RSV vaccination to people who are older and more at risk, reducing the potential size of a market for GSK’s RSV shot Arexvy. It also faces competition from Pfizer and Moderna.
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Pipeline optimism
Still, the drugmaker is optimistic about its prospects for the potential re-launch of its blood cancer drug Blenrep this year. Following positive results on the previously withdrawn medicine, GSK thinks Blenrep could be a blockbuster.
GSK will increase and prioritize R&D investment in its respiratory, immunology and inflammation, oncology and HIV drugs, chief executive officer Emma Walmsley said in a statement Wednesday. Overall, spending on R&D is expected to increase in line with sales, the company said.
“GSK needs more pipeline wins to narrow the gap between its 2031 sales target of £40 billion and consensus’ £34 billion,” Bloomberg Intelligence’s senior industry analyst John Murphy said in a note.
The company is hoping its bet on cancer drugs will pay off, agreeing in January to buy cancer biotech IDRx for as much as US$1.15 billion. The return to oncology is part of a strategic shift as it grows its specialty medicines portfolio, Walmsley told Bloomberg TV last month.
GSK also pointed to several key pipeline catalysts coming this year including a drug for COPD and two antibody drug conjugates.
The share buyback will be implemented over the next 18 months. BLOOMBERG
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