GSK Pre-Tax Profit Plunges 19% to £1.9bn as Vaccine Sales Slip

GSK reported a 19% drop in pre-tax profit to £1.9bn for the July to September quarter on Wednesday. The decline followed softer sales of its shingles and respiratory syncytial virus vaccines, which weighed heavily on investor sentiment despite the company beating core earnings forecasts.

The stock fell by as much as 7% during trading before recovering to end the day down 3.8%. This performance made GSK the second-biggest faller on the FTSE 100 index. The company booked £318m in restructuring charges for the quarter, with additional costs expected in the coming months.

Vaccine revenue slipped 2% to £2.6bn, driven by a 5% drop in sales of Shingrix and a 24% decline in the RSV vaccine Arexvy. Sales of the recently launched asthma drug Exdensur also came in below analyst expectations. Conversely, turnover for the quarter reached £8.9bn, up 5% year on year, supported by strong performance in HIV, cancer, and lupus medicines.

Chief executive Luke Miels defended the position of Arexvy, noting that GSK maintains market share leadership compared to Pfizer. "We are getting good orders outside of the US, so I think we need to just see what happens over the next couple of months to have the full picture," Miels said. He also stated that Shingrix has the potential to grow next year and called it a remarkable product.

The company is implementing a cost-saving program to save £1.9bn annually by simplifying operations and directing more funds to research and development. The total restructuring will cost £2.4bn, with the majority of the expense occurring this year and next. Miels indicated the program is slightly ahead of schedule.

GSK is reorganizing its vaccine business in Belgium, where the adoption of digital tools and automation is expected to result in approximately 1,200 job losses. The country will remain the primary production site for the company's vaccines. The company had nearly 67,000 employees worldwide at the end of last year.

Investors remain focused on the impending loss of patent protection for dolutegravir, a blockbuster HIV drug, which is expected to allow generic competitors to enter the market toward the end of the decade. GSK has set a target of more than £40bn in annual revenue by 2031 as it works to rebuild its cancer business.

Two large studies are currently examining whether Shingrix reduces the risk of dementia and major cardiovascular events. Initial data is due in 2027 and 2029, respectively. Miels noted that high street chemists in Britain have reported higher demand for the vaccine following studies linking it to a lower risk of dementia. "We've got a lot of studies that show a correlation. We're trying to demonstrate causation," he said.