Boost for GSK as it reports earnings at £1.4bn in Covid-related sales

Pharmaceutical company’s boss, Emma Walmsley promised a ‘step-change in growth’ after better than expected results

Last modified on Wed 9 Feb 2022 05.10 EST

GSK made £1.4bn from Covid-related medicines last year, beating earnings forecasts in its first financial results since rejecting Unilever’s £50bn buyout offer in December, as chief executive Emma Walmsley pledged “step-change in growth” in a landmark year.

The company is under the spotlight after promising to raise billions by spinning out its consumer arm, whose brands include Nicorette, Panadol and Aquafresh, in a London stock market listing this summer.

GSK reported total sales of £34bn for 2021, in line with last year. The consumer healthcare business contributed £9.6bn, down 4% from 2020. GSK’s annual profit before tax fell to £5.1bn, from £6.4bn in 2020.

In the final quarter of the year, turnover rose 9% to £9.5bn, slightly ahead of analysts’ forecasts, while earnings per share were also better than expected at 25.6p. Analysts at Morgan Stanley and Goldman Sachs described the results as “solid”.

GSK’s biggest Covid treatment was Xevudy (sotrovimab), an injected antibody treatment approved by the UK drugs watchdog in early December. It is designed for people with mild to moderate Covid-19 who are at high risk of developing severe disease, and trials found it cut the likelihood of hospital admission and death by 79% in high-risk adults.

The drug brought in £958m of sales while GSK’s pandemic adjuvant, a formula added to Covid vaccines developed by others to make them more effective, generated sales of £447m.

Walmsley said: “This is going to be a landmark year for GSK, with a step-change in growth expected and multiple research and development catalysts, including milestones on up to seven key late-stage pipeline assets. 2022 is also the year when we demerge our world-leading consumer healthcare business.”

She said GSK would set out the future growth ambitions and financial profile of the consumer business at an investor event on 28 February. The remaining pharmaceuticals and vaccines business, called New GSK, is expected to deliver sales growth of 5%-7% at constant exchange rates this year, compared with 5% growth last year for the whole group.

Walmsley is under pressure from the activist investor Elliott Management, a New York hedge fund, which is clamouring for change along with the much smaller London-based Bluebell Capital Partners. Both have pushed for a sale of the consumer business. GSK recently rejected three offers from Unilever as too low, the last of which was worth £50bn, and Unilever walked away. Elliott and Bluebell have also demanded that Walmsley reapply for her job after the company’s split, but she has insisted that she will continue to lead the drugmaker.

GSK’s vaccines sales dropped 10% to £1.8bn last year, as countries’ normal vaccination programmes were disrupted by the Covid-19 vaccination drive, hitting sales of the drugmaker’s shingles and meningitis jabs.

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