Britain's GSK raised its annual profit outlook after better-than-expected third-quarter results on strong sales of key drugs and cost cutting ahead of a planned split next year.
GSK's outperformance buys CEO Emma Walmsley space as she faces questions from two activist investors over her ability to manage the separation and reinvigorate the drug development pipeline. Walmsley has stood her ground, saying the vast majority of investors were behind her strategy.
The drugmaker now expects 2021 adjusted earnings per share to fall by between 2% and 4% at constant exchange rates, excluding any boost from its COVID-19 offerings. It had previously expected a mid-to-high single digit percentage drop.
GSK's improved outlook rests on expected pharmaceuticals sales growth, despite a forecast for lower vaccine sales as a surge in the coronavirus Delta variant delayed an expected recovery, including for its key shingles shot.
Quarterly Highlights
Turnover at the world's biggest vaccine maker by sales rose 5% to £9.1 billion (€10.8 billion) for the three months to 30 September, while adjusted earnings were up 3% to 36.6 pence per share.
Analysts had expected third-quarter earnings of 29.4 pence per share on sales of £8.73 billion (€10.3 billion), a company-compiled consensus showed.
The company's consumer healthcare unit reported sales worth £2.5 billion (€3 billion), up 3% compared to the same period last year.
GSK said it was sticking with its plan to spin off consumer health in a mid-2022 stock market flotation, after a report the business could attract bids from private equity firms.
Activist investors Elliott and Bluebell have called for a sale of the unit, among other proposals for the remaining pharmaceuticals and vaccines business, which will retain the GSK name, including leadership changes.
In a recent development setback for Walmsley, GSK and Germany's Merck KGaA last month ended their collaboration on cancer treatment bintrafusp alfa, once seen as holding great promise, on disappointing trial data.
'Pipeline Pains'
"Despite a quarter in which pipeline pains have persisted and activist investors continued to question (Walmsley's) suitability as CEO, GSK has improved full year EPS guidance," Sebastian Skeet, healthcare analyst at Third Bridge, said.
In preparation for splitting the company, a new chair of the consumer healthcare business, a joint venture between GSK and Pfizer, is expected to be announced before the end of the year, GSK said.
In July, the unit's chief executive Brian McNamara was appointed to stay at the helm after its independence.
