Hours before unveiling its half-year numbers, GlaxoSmithKline (GSK) made a splash with the news that it would supply 60m doses of a potential Covid-19 vaccine to the UK government. Together with French company Sanofi (FR:SAN), the pharma giant hopes to enter early-stage clinical trials in September. This is just one of various vaccines that GSK is partnering on, in the belief that “multiple options” will be needed to tackle the new coronavirus.
However, GSK does not expect to profit from such pandemic-related collaborations and though its efforts to tackle the outbreak have – understandably – taken precedence in recent months, the group’s latest financial results serve as a reminder that the healthcare sector is not immune to the havoc wreaked by the crisis. Indeed, GSK’s revenues for the three months to June slipped by 3 per cent at constant currencies to £7.6bn – 1.2 per cent below market consensus estimates.
Central to that decline was the group’s vaccines business, which saw second-quarter sales drop by more than a quarter at constant currencies to $1.1bn – 10 per cent below analysts’ projections. This stemmed from a fall in the number of routine GP visits during lockdown – something also noted by other companies, such as Walgreen Boots Alliance (US:WBA). GSK’s pharmaceuticals business reported a lesser contraction of 5 per cent to £4.1bn, which the group attributed to “destocking” after the first quarter.
Conversely, GSK’s consumer business saw revenues ramp up by a quarter to £2.4bn – an improvement driven by the inclusion of Pfizer’s (US:PFE) portfolio, thanks to a joint-venture (JV) between the two companies. The ambition is for said JV to be spun out into a separate Plc, leaving behind a research and development-focused biopharma group. To that point, the group’s pipeline remains strong – comprising 35 medicines and 15 vaccines. More than three-quarters of those assets concentrate on immunology, a key area for the ‘New GSK’.
Overall, half-year revenues climbed by 8 per cent to £16.7bn. Meanwhile, operating profits soared by two-thirds to £4.8bn – reflecting the proceeds from the disposal of ‘Horlicks’ and other consumer brands. Adjusted profits rose by 2 per cent.
