GSK backs guidance despite third-quarter hit from Zantac

GSK PLC reaffirmed its full-year guidance on Wednesday, reporting "another quarter of sales and core operating profit growth," despite a significant drop in third-quarter profits due to legal charges.

GSK backs guidance despite third-quarter hit from Zantac

The London-based pharmaceutical and biotechnology company revealed that its pretax profit for the third quarter ending September 30 fell 96% to £64 million from £1.79 billion the previous year, primarily due to a £1.8 billion charge related to a Zantac court settlement. However, core operating profit decreased only 0.4% during the quarter, totaling £2.76 billion compared to £2.77 billion the year before, reflecting strong sales in specialty medicines and effective cost management, according to GSK. For the year to date, pretax profit stood at £2.91 billion, down 49% from £5.69 billion last year, while core operating profit reached £7.71 billion. Revenue for the third quarter declined by 1.7% to £8.01 billion from £8.15 billion a year ago. In contrast, revenue for the first nine months increased by 4.4% to £23.26 billion from £22.28 billion. GSK noted a "lower than anticipated" demand for vaccines in the quarter and adjusted its full-year vaccine revenue forecast to a low-single-digit percentage decrease, down from the previous expectation of a low to mid-single-digit increase. Nonetheless, growth in specialty medicines helped mitigate the decline in vaccine sales, prompting GSK to raise its specialty medicines guidance to a high-teens percentage increase, up from a mid to high teens increase. Guidance for general medicines sales was also revised upward to a mid-single-digit increase from a low to mid-single-digit increase.

Dividend remains unchanged

The company declared a third-quarter dividend of 15.00 pence per share, unchanged from the previous quarter but up 7.1% from 14.00 pence per share last year. GSK continues to expect a total dividend of 60.00 pence per share, reflecting a 3.4% increase from 58.00 pence in 2023. Looking ahead, GSK maintains its annual guidance, forecasting revenue growth between 7% and 9%, and core operating profit growth between 11% and 13%. Chief Executive Officer Emma Walmsley stated, "We have achieved another quarter of sales and core operating profit growth, along with significant advancements in research and development. The strong growth in specialty medicines offset lower vaccine sales and highlighted the success of our new product launches in oncology and HIV, demonstrating the resilience we have built into GSK's portfolio. "Our pipeline is strengthening, with 11 positive phase 3 trials reported this year, and we are planning launches for five major new product approvals next year: Blenrep, Depemokimab, Nucala for chronic obstructive pulmonary disease, Gepotidacin, and our new vaccine for meningitis (MenABCWY). "We also resolved most of the Zantac litigation this quarter, removing uncertainty and allowing us to focus on future opportunities. All of this means we are on track to meet our 2024 guidance and feel increasingly confident about our outlook for 2026 and 2031."