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4 Reasons Why You Should Add Glaxo (GSK) to Your Portfolio
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GlaxoSmithKline (GSK - Free Report) is a good stock to own in the drug and biotech sector. An investor looking to invest his money in a relatively safe yet prospective sector can look to the drug and biotech sector as these stocks are profitable companies and these profits provide regular funds for innovation, which is the key to the growth of biotech companies.
Glaxo boasts a diversified base and presence in different geographical areas The company has made significant progress in expanding its presence in emerging markets by acquiring product portfolios from companies like Bristol-Myers and UCB.
Earnings estimates for Glaxo’s earnings have risen 9.7% for 2021 and 6.2% for 2022 over the past 60 days. Glaxo’s stock has risen 17.3% this year so far compared with an increase of 16.2% for the industry.
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Successful New Product Launches: Glaxo’s new and specialty products are doing well and have become key drivers of top-line growth. New and specialty products like Nucala, Trelegy Ellipta, Shingrix and Juluca, approved in the past couple of years, are driving sales, making up for a decline in Established Pharmaceuticals due to generic erosion. Sales of Glaxo’s new and specialty pharma products increased 18% in the first nine months of 2021.
Strong Pipeline & Collaborations: Glaxo has made significant progress in its pipeline. Several new drug/line extension approvals are expected in 2021/2022, which should boost sales.
In 2020, Glaxo established multiple partnerships to develop COVID-19 solutions, including with CureVac to develop next-generation mRNA COVID vaccines. It entered into a partnership with Sanofi (SNY - Free Report) to make an adjuvanted COVID-19 vaccine.
Glaxo also inked a deal with Vir Biotechnology (VIR - Free Report) for therapeutic antibody treatments like Xevudy (sotrovimab).
Glaxo and Vir Biotech’s Xevudy was granted emergency approval by the FDA in May 2021 while it is under review in the EU. Sotrovimab is also authorized for temporary/conditional use in several other countries, including Japan and Canada.
Glaxo and Sanofi’s adjuvanted recombinant protein-based COVID-19 vaccine candidate is in late-stage development. The vaccine is being developed by combining Sanofi’s recombinant protein-based technology with Glaxo’s pandemic adjuvant technology.
Glaxo is also working on expanding the label of marketed products like Nucala, Benlysta and Trelegy Ellipta into additional indications. Glaxo plans to launch more than 20 new products/line extensions by 2026, with more than 10 having blockbuster potential. The successful development and commercialization of the pipeline candidates should boost the company’s top line.
Focus on Oncology: In oncology, Glaxo now has a development portfolio of 15 potential medicines. This has been achieved through the advancement of internal programs as well as targeted business development including the January 2019 acquisition of Tesaro and the February 2019 global alliance with Merck KGaA (to co-develop bintrafusp alpha, a promising new oncology medicine).
Meanwhile, it divested its non-core Consumer Healthcare (CHC) nutrition business to Unilever and has formed a new Consumer Healthcare joint venture with Pfizer (PFE - Free Report) to focus on its pharmaceuticals business, particularly oncology.
In August 2019, Glaxo and Pfizer merged their consumer healthcare unit into a new joint venture (JV). Glaxo owns a controlling stake of 68% in the JV. The JV operates globally as GSK Consumer Healthcare. Pfizer deconsolidated Pfizer Consumer Healthcare from its financial statements following the closure of the transaction.
Glaxo intends to separate its Consumer Healthcare segment into a standalone company in 2022. The spin-off of the Consumer unit will allow it to focus on its drug development, mainly in oncology.
Zejula,the ovarian cancer drug Glaxo acquired from the Tesaro acquisition was approved for the treatment of late-stage ovarian cancer in October 2019. Meanwhile, Zejula was approved by the FDA for first-line maintenance therapy of women with platinum responsive ovarian cancer (regardless of BRCA mutational status) based on the results of the PRIMA study in April 2020. The label expansion has significantly expanded Zejula’s eligible ovarian cancer patient population.
Conclusion
Generic competition for key drug, Advair is hampering sales of Glaxo’s respiratory products, which we believe may not be compensated by new respiratory drugs. Competitive pressure on HIV drugs has risen. The surge in the Delta variant has delayed the expected second-half recovery in Shingrix volumes. Despite these issues, consistently strong sales of its new and specialty drugs and vaccines, rapid pipeline development and regular new product launches can keep the stock afloat in 2022.
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4 Reasons Why You Should Add Glaxo (GSK) to Your Portfolio
GlaxoSmithKline (GSK - Free Report) is a good stock to own in the drug and biotech sector. An investor looking to invest his money in a relatively safe yet prospective sector can look to the drug and biotech sector as these stocks are profitable companies and these profits provide regular funds for innovation, which is the key to the growth of biotech companies.
Glaxo boasts a diversified base and presence in different geographical areas The company has made significant progress in expanding its presence in emerging markets by acquiring product portfolios from companies like Bristol-Myers and UCB.
There are several reasons to own the stock.
Favorable Rank and Rising Estimates and Share Price: Glaxo has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Glaxo’s earnings have risen 9.7% for 2021 and 6.2% for 2022 over the past 60 days. Glaxo’s stock has risen 17.3% this year so far compared with an increase of 16.2% for the industry.
Successful New Product Launches: Glaxo’s new and specialty products are doing well and have become key drivers of top-line growth. New and specialty products like Nucala, Trelegy Ellipta, Shingrix and Juluca, approved in the past couple of years, are driving sales, making up for a decline in Established Pharmaceuticals due to generic erosion. Sales of Glaxo’s new and specialty pharma products increased 18% in the first nine months of 2021.
Strong Pipeline & Collaborations: Glaxo has made significant progress in its pipeline. Several new drug/line extension approvals are expected in 2021/2022, which should boost sales.
In 2020, Glaxo established multiple partnerships to develop COVID-19 solutions, including with CureVac to develop next-generation mRNA COVID vaccines. It entered into a partnership with Sanofi (SNY - Free Report) to make an adjuvanted COVID-19 vaccine.
Glaxo also inked a deal with Vir Biotechnology (VIR - Free Report) for therapeutic antibody treatments like Xevudy (sotrovimab).
Glaxo and Vir Biotech’s Xevudy was granted emergency approval by the FDA in May 2021 while it is under review in the EU. Sotrovimab is also authorized for temporary/conditional use in several other countries, including Japan and Canada.
Glaxo and Sanofi’s adjuvanted recombinant protein-based COVID-19 vaccine candidate is in late-stage development. The vaccine is being developed by combining Sanofi’s recombinant protein-based technology with Glaxo’s pandemic adjuvant technology.
Glaxo is also working on expanding the label of marketed products like Nucala, Benlysta and Trelegy Ellipta into additional indications. Glaxo plans to launch more than 20 new products/line extensions by 2026, with more than 10 having blockbuster potential. The successful development and commercialization of the pipeline candidates should boost the company’s top line.
Focus on Oncology: In oncology, Glaxo now has a development portfolio of 15 potential medicines. This has been achieved through the advancement of internal programs as well as targeted business development including the January 2019 acquisition of Tesaro and the February 2019 global alliance with Merck KGaA (to co-develop bintrafusp alpha, a promising new oncology medicine).
Meanwhile, it divested its non-core Consumer Healthcare (CHC) nutrition business to Unilever and has formed a new Consumer Healthcare joint venture with Pfizer (PFE - Free Report) to focus on its pharmaceuticals business, particularly oncology.
In August 2019, Glaxo and Pfizer merged their consumer healthcare unit into a new joint venture (JV). Glaxo owns a controlling stake of 68% in the JV. The JV operates globally as GSK Consumer Healthcare. Pfizer deconsolidated Pfizer Consumer Healthcare from its financial statements following the closure of the transaction.
Glaxo intends to separate its Consumer Healthcare segment into a standalone company in 2022. The spin-off of the Consumer unit will allow it to focus on its drug development, mainly in oncology.
Zejula,the ovarian cancer drug Glaxo acquired from the Tesaro acquisition was approved for the treatment of late-stage ovarian cancer in October 2019. Meanwhile, Zejula was approved by the FDA for first-line maintenance therapy of women with platinum responsive ovarian cancer (regardless of BRCA mutational status) based on the results of the PRIMA study in April 2020. The label expansion has significantly expanded Zejula’s eligible ovarian cancer patient population.
Conclusion
Generic competition for key drug, Advair is hampering sales of Glaxo’s respiratory products, which we believe may not be compensated by new respiratory drugs. Competitive pressure on HIV drugs has risen. The surge in the Delta variant has delayed the expected second-half recovery in Shingrix volumes. Despite these issues, consistently strong sales of its new and specialty drugs and vaccines, rapid pipeline development and regular new product launches can keep the stock afloat in 2022.