Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GSK PLC (GSK, Financial) reported a 9% sales growth and 19% profit growth year-to-date, reflecting strong performance in Specialty Medicines.
- The company has made significant progress in its pipeline, with 11 positive Phase III readouts and plans for five major new product approvals next year.
- GSK PLC (GSK) successfully resolved the majority of Zantac litigation, removing a significant perceived risk.
- Specialty Medicines, particularly in HIV, respiratory immunology, and oncology, showed strong double-digit growth.
- The company reported improvements in cash flow, with GBP5.3 billion generated from operations year-to-date, supporting pipeline investment and shareholder returns.
Negative Points
- Total Vaccines sales were down due to lower sales of Arexvy and Shingrix, impacted by recent guideline changes and prioritization of COVID vaccines in the US.
- The US Inflation Reduction Act is expected to impact GSK PLC (GSK) with an estimated GBP400 million to GBP500 million effect, including on HIV sales.
- The company faces challenges in the Chinese market due to tighter POB budgets and macroeconomic pressures affecting vaccine sales.
- There is uncertainty around the revaccination and cohort expansion for Arexvy, which could limit growth potential in the near term.
- GSK PLC (GSK) experienced a significant decrease in Gardasil royalties, impacting profit growth by minus 8% in the quarter.
Q & A Highlights
Q: What is the latest update on the Affinivax product, and how does it relate to competitor data?
A: Tony Wood, Chief Scientific Officer, explained that GSK is prioritizing a 30-plus valent adult vaccine proposition due to its superior antigen coverage without diminishing immunogenicity. The company expects to start a first-in-human study next year and is developing both 24 and 30-plus vaccines for pediatric use, confident in their competitive setting.
Q: How should we think about 2025 in terms of Shingrix and Arexvy sales and SG&A spending?
A: Emma Walmsley, CEO, stated that GSK expects 2025 to be another year of profitable growth, with Specialty Medicines leading the way. Julie Brown, CFO, added that despite challenges, the company anticipates continued strong performance from Specialty Medicines and leverage in the P&L, with SG&A investments focused on new launches.
Q: Can you provide details on Shingrix sales in China and the contract with Zhifei?
A: Luke Miels, Chief Commercial Officer, noted that macroeconomic pressures in China are impacting sales volumes. GSK sold around EUR240 million out of the contracted 400 million, and there is flexibility in the contract with Zhifei. The focus remains on the long-term opportunity in China.
Q: What are the expectations for Arexvy sales outside the US, and how does the company plan to address pharmacy congestion?
A: Luke Miels highlighted that international sales are still in early stages, with encouraging feedback from markets like Germany. GSK aims to deseasonalize the vaccine and leverage its multiyear efficacy to manage pharmacy congestion better.
Q: How confident is GSK in achieving the GBP3 billion peak sales target for Arexvy, and what are the assumptions behind this?
A: Emma Walmsley reiterated confidence in Arexvy's long-term potential, driven by international expansion and eventual revaccination. The company is cautious in the near term but expects the vaccine to follow a similar penetration trajectory as flu vaccines over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
