GSK Stays Strong As Healthy Sales Beat Expectations

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Natalie Grover and Maggie Fuck

LONDON (Reuters) - GSK started 2023 with quarterly results that beat analysts' expectations, extending its run of positive results on strong sales of its vaccines and HIV and respiratory medicines.

The company has revised its 2023 guidance and expects adjusted operating profit growth to be higher in the second half but lower in the first half as expected drug launches push up costs.

In recent quarters, the British drugmaker, which spun off its Haleon consumer goods business last year, has begun to catch up years behind its peers and recover from losing a significant share of its COVID-19 drug market.

Citi analyst Andrew Baum wrote in a note that even after deducting one-off payments, core sales and earnings beat expectations by 3% and 4%, respectively.

Those are good results for GSK investors, said Lucy Cootes, chief investment officer at wealth management firm JM Finn, which owns GSK stock.

Baum added that there is little significant risk to GSK's near-term earnings, although investors are nervous ahead of California trials of discontinued heartburn drug Zantac, which plaintiffs say has been linked to cancer.

Some of those concerns dissipated in December after a US judge dismissed some 50,000 federal court cases.

This will not directly affect the tens of thousands of similar cases pending in state courts, and July's trial will be the first experience of how the Zantac cancer trial will play out in front of a jury.

Investors are also concerned about the company's long-term prospects given the imminent loss of patent protection for one of GSK's anti-HIV drugs and a decline in its oncology drug market portfolio.

To offset this, the company announced a series of acquisitions, including Bellus Health, Affinivax, and Sierra Oncology.

The company wants to continue buying, CEO Emma Walmsley said in a phone call with an income statement.

GSK also relies in part on its potential RSV vaccine, which causes thousands of hospitalizations and deaths each year.

The company plans to launch the vaccine in the United States and Europe later this year, subject to regulatory approval, as does competitor Pfizer with its own RSV vaccine.

($1 = £0.8039)

(Reporting by Maggie Fick and Natalie Grover in London, edited by Louise Havens, Barbara Lewis and David Goodman)

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