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GSK’s Blockbuster Vaccine Sales Plummet After US Troubles

(Bloomberg)

(Bloomberg) -- Sales of GSK Plc’s leading vaccines sank in the third quarter after the British drugmaker was hit by limited demand for the shots in the US.

Arexvy, a vaccine for respiratory syncytial virus, brought in £188 million ($245 million) while revenue from its shingles jab Shingrix was £739 million, both far below analysts’ estimates.

Arexvy has been affected by an unexpected recommendation from US officials to restrict access to adults aged 75 or over and more at risk patients. GSK wanted the shot to be greenlit for people over 60. The number of prescriptions for both Shingrix and Arexvy had already indicated slowing sales this quarter, with analysts working these figures into their models ahead of the earnings. 

GSK’s shares fell as much as 4.1% in early London trading, and are now down 16% in the last six months.

The prioritization of Covid-19 jabs in the US also affected sales of its vaccines, GSK said in a statement Wednesday.  

The poor vaccine sales have not hurt GSK’s medium to long-term prospects for Arexvy or Shingrix, said Chief Executive Officer Emma Walmsley on a call with reporters. The drugmaker is expecting re-vaccination for Arexvy at either the three, four or five year mark, and there is also significant room to reach more patients, she said. 

Zantac Litigation

 

Walmsley has bet on GSK’s vaccine business reviving the drugmaker and is also making headway in reviving other parts of the drug pipeline. The policy seemed to be producing results and helping to keep activist investor Elliott Investment Management at bay. Now, slowing sales of key vaccines are hitting the stock, which has failed to see the uplift that was expected when the drugmaker earlier this month settled the majority of cases relating to allegations that its old heartburn drug Zantac caused cancer.

The Zantac settlement meant total operating profit was down 86%, although core operating profit was up 5%, the drugmaker said.

Earnings per share excluding some items were 49.7 pence, higher than estimated by analysts surveyed by Bloomberg. GSK posted better-than-expected sales of some HIV and asthma drugs, helping to offset poor vaccine sales.

The beat on earnings per share and reiterated full-year guidance “is overshadowed by weak performances from its Shingrix and Arexvy vaccines, which are likely to reignite growth concerns” given they account for over 40% of the incremental three-year revenue growth, said Bloomberg Intelligence’s John Murphy in a note.

--With assistance from Chloé Meley.

(Updates with CEO comments in paragraph six.)

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