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GSK plc (GSK - Free Report) reported second-quarter 2022 adjusted earnings of 87 cents per American depositary share (“ADS”), beating the Zacks Consensus Estimate of 76 cents. Adjusted earnings improved 23% year over year on a reported basis and 6% at a constant exchange rate (“CER”).
Quarterly revenues increased 19% on a reported basis and 13% at CER to $8.73 billion (£6.93 billion) but missed the Zacks Consensus Estimate of $9.35 billion. The upside can be attributed to a rise in sales across all business segments and additional sales from its COVID-19 antibody drug, Xevudy.
From the second quarter of 2022, GSK started reporting financial figures under three segments: Specialty Medicines, Vaccines and General Medicines. Earlier this month, GSK completed the spin-off of its Consumer Healthcare segment into a new standalone company called Haleon.
Prior to the demerger, the Consumer Healthcare segment was a joint venture between GSK and Pfizer (PFE - Free Report) . Pfizer and GSK created the world’s largest Consumer Healthcare business by merging their consumer businesses in 2019.
Following the demerger, Pfizer holds a 32% stake in Haleon, while GSK holds a 6% stake. A 54.5% stake in Haleon is held by the shareholders of GSK. Pfizer announced plans to sell its overall stake in Haleon last month.
Image Source: Zacks Investment Research
Specialty Medicines, Vaccines and General Medicines are clubbed as commercial operations. The Specialty Medicines and General Medicines were part of the erstwhile Pharmaceutical segment. Following the demerger of the Consumer Healthcare business, the segments under commercial operations constitute the new BioPharma business.
Shares of GSK have lost 22.9% so far this year against the industry’s 3.6% rise.
BioPharma Business Remains Strong
The reclassified BioPharma business includes all medicines and vaccines, including Xevudy, in GSK’s portfolio. Sales were up across all segments under the BioPharma business, especially Specialty Medicines.
Sales from commercial operations were up 13% at CER, driven by strong Shingrix sales and additional Xevudy sales. Excluding sales from Xevudy, total BioPharma sales were up 10% at CER.
Sales in the United States were up 7%. Sales in European and International markets gained 25% and 14%, respectively, at CER.
Sales of the Specialty Medicines segment surged 35% at CER, driven by consistent growth across all therapy areas. Revenues from the Specialty Medicines segment were up 13% at CER, excluding Xevudy sales. Sales growth of HIV, oncology and respiratory drugs was strong.
Xevudy generated sales of £466 million ($587.2 million) in the second quarter, compared with £1.31 billion in the first quarter. Xevudy sales contributed 22 percentage points at CER to the Specialty Medicines segment growth. However, the drug negatively impacted adjusted margins due to its higher cost of sales.
GSK developed Xevudy in collaboration with Vir Biotechnology (VIR - Free Report) . The monoclonal antibody treatment from GSK and Vir Biotechnology was granted emergency use authorization (EUA) for patients at risk of hospitalization in the United States in May 2021. However, the FDA withdrew this EUA in April when data showed that it was unlikely for Xevudy to be effective against the Omicron variant, which is the dominating COVID-19 variant in the United States as well as Europe. The Vir Biotechnology-partnered drug received conditional marketing authorization in Europe in December 2021.
HIV sales increased 14% year over year on a reported basis and 7% at CER. Sales growth of new HIV drugs — Juluca, Dovato, Cabenuva, Rukobia and Arpetude — and favorable pricing mix in the United States were partially offset by weaker sales of Triumeq. It is worth mentioning that GSK markets Juluca in collaboration with J&J (JNJ - Free Report) .
GSK generates the majority of its HIV sales from its dolutegravir franchise, comprising three-drug regimens — Triumeq and Tivicay — and two-drug regimens — Dovato and J&J-partnered Juluca. The launch of the two-drug regimens has been eroding sales and market share of the three-drug regimens following their launch. During the second quarter, GSK and J&J’s Juluca and Dovato generated 33% of total HIV sales, up from 25.6% in the year-ago quarter. The company added a single-drug regimen — Rukobia — and the long-acting drug — Cabenuva — to its HIV franchise in 2020 and 2021, respectively. The company launched the first injectable treatment for HIV pre-exposure prevention, Apretude, approved in December last year.
Sales of the dolutegravir franchise were up 5% at CER in the U.S. market and 16% in Europe. In International markets, sales were down 30% at CER.
Sales of Triumeq declined 7% at CER while Tivicay sales slumped 21% at CER. The combined sales of Dovato and J&J-partnered Juluca gained 41% at CER. Sales of Rukobia, Cabenuva and Apretude also contributed to growth. Overall, the new HIV drugs gained 63% at CER.
Sales of the immuno-inflammation drug, Benlysta, were up 29% in the quarter, reflecting growth across all regions.
Sales of the respiratory drug, Nucala, were up 19% at CER during the quarter, driven by growth in all markets.
Oncology sales were up 23% year over year, mainly driven by Zejula. Sales of Zejula rose 16% in the quarter. Sales of the drug, Blenrep, gained 33% during the quarter. The recently-launched Jemperli added £4 million to the top line in the second quarter.
Sales of General Medicines, which includes the Established Pharmaceuticals portfolio, were up 2%. Loss of sales from established drugs due to generic competition was offset by the strong sales growth of Trelegy Ellipta as well as the post-pandemic recovery of Augmentin sales. A few established drugs like Arnuity Ellipta, Avamys, Flixotide and Ventolin also demonstrated sales growth.
Trelegy Ellipta sales surged 50% year over year, driven by strong growth in all regions. Sales of Anoro Ellipta decreased 16% at CER during the second quarter. Key established drugs Advair/Seretide sales declined 27% year over year due to generic competition in all markets. Sales on Revlar/Breo Ellipta declined 4% at CER year over year.
Vaccine Sales Rise
GSK’s second-quarter vaccine sales gained 3% at CER, mainly driven by the recovery in Shingrix sales.
Shingrix sales more than doubled at CER during the quarter due to strong demand in the United States and Germany. During first-quarter 2022, GSK launched the product in four new countries, which also contributed to the sales growth.
In Meningitis vaccines, Bexsero sales fell 3%, while sales of Menveo were up 10%. Sales of the influenza vaccine, Fluarix, decline 9% at CER. Sales of Established vaccines were down 9% year over year.
Operating Expenses
Selling, general and administration (SG&A) costs increased 16% year over year at CER to £1.96 billion. The increase in SG&A costs was due to the launch of products in the Specialty Medicines and Vaccines segments.
Research and development (R&D) expenses remained stable year over year at CER to reach £1.16 billion.
2022 Guidance
GSK raised its guidance for 2022. The company expects sales of the new GSK to increase 6% to 8% in 2022, up from the previously guided range of 5% to 7%. The guidance excludes any revenues from its COVID-related products.
GSK expects sales of specialty drugs to increase approximately 10% at CER in 2022, while vaccine sales are expected to grow in low to mid-teens percentage at CER for this year. The company expects strong double-digit growth for Shingrix in 2022. GSK expects a slight decline in the sales for the General Medicines segment due to increased generic erosion of respiratory drugs.
Compared to the first half of the year, GSK expects to record slightly lower sales in the second half of 2022 due to some channel stocking in the United States during the first half of 2022.
The company expects operating profit growth to now increase between 13% to 15% at CER, up from the previous guidance of 12% to 14%. Adjusted EPS is anticipated to grow around 1% lower than operating profits.
Image: Bigstock
GSK's Q2 Earnings Beat, Sales Miss, Raises 2022 Guidance
GSK plc (GSK - Free Report) reported second-quarter 2022 adjusted earnings of 87 cents per American depositary share (“ADS”), beating the Zacks Consensus Estimate of 76 cents. Adjusted earnings improved 23% year over year on a reported basis and 6% at a constant exchange rate (“CER”).
Quarterly revenues increased 19% on a reported basis and 13% at CER to $8.73 billion (£6.93 billion) but missed the Zacks Consensus Estimate of $9.35 billion. The upside can be attributed to a rise in sales across all business segments and additional sales from its COVID-19 antibody drug, Xevudy.
From the second quarter of 2022, GSK started reporting financial figures under three segments: Specialty Medicines, Vaccines and General Medicines. Earlier this month, GSK completed the spin-off of its Consumer Healthcare segment into a new standalone company called Haleon.
Prior to the demerger, the Consumer Healthcare segment was a joint venture between GSK and Pfizer (PFE - Free Report) . Pfizer and GSK created the world’s largest Consumer Healthcare business by merging their consumer businesses in 2019.
Following the demerger, Pfizer holds a 32% stake in Haleon, while GSK holds a 6% stake. A 54.5% stake in Haleon is held by the shareholders of GSK. Pfizer announced plans to sell its overall stake in Haleon last month.
Image Source: Zacks Investment Research
Specialty Medicines, Vaccines and General Medicines are clubbed as commercial operations. The Specialty Medicines and General Medicines were part of the erstwhile Pharmaceutical segment. Following the demerger of the Consumer Healthcare business, the segments under commercial operations constitute the new BioPharma business.
Shares of GSK have lost 22.9% so far this year against the industry’s 3.6% rise.
BioPharma Business Remains Strong
The reclassified BioPharma business includes all medicines and vaccines, including Xevudy, in GSK’s portfolio. Sales were up across all segments under the BioPharma business, especially Specialty Medicines.
Sales from commercial operations were up 13% at CER, driven by strong Shingrix sales and additional Xevudy sales. Excluding sales from Xevudy, total BioPharma sales were up 10% at CER.
Sales in the United States were up 7%. Sales in European and International markets gained 25% and 14%, respectively, at CER.
Sales of the Specialty Medicines segment surged 35% at CER, driven by consistent growth across all therapy areas. Revenues from the Specialty Medicines segment were up 13% at CER, excluding Xevudy sales. Sales growth of HIV, oncology and respiratory drugs was strong.
Xevudy generated sales of £466 million ($587.2 million) in the second quarter, compared with £1.31 billion in the first quarter. Xevudy sales contributed 22 percentage points at CER to the Specialty Medicines segment growth. However, the drug negatively impacted adjusted margins due to its higher cost of sales.
GSK developed Xevudy in collaboration with Vir Biotechnology (VIR - Free Report) . The monoclonal antibody treatment from GSK and Vir Biotechnology was granted emergency use authorization (EUA) for patients at risk of hospitalization in the United States in May 2021. However, the FDA withdrew this EUA in April when data showed that it was unlikely for Xevudy to be effective against the Omicron variant, which is the dominating COVID-19 variant in the United States as well as Europe. The Vir Biotechnology-partnered drug received conditional marketing authorization in Europe in December 2021.
HIV sales increased 14% year over year on a reported basis and 7% at CER. Sales growth of new HIV drugs — Juluca, Dovato, Cabenuva, Rukobia and Arpetude — and favorable pricing mix in the United States were partially offset by weaker sales of Triumeq. It is worth mentioning that GSK markets Juluca in collaboration with J&J (JNJ - Free Report) .
GSK generates the majority of its HIV sales from its dolutegravir franchise, comprising three-drug regimens — Triumeq and Tivicay — and two-drug regimens — Dovato and J&J-partnered Juluca. The launch of the two-drug regimens has been eroding sales and market share of the three-drug regimens following their launch. During the second quarter, GSK and J&J’s Juluca and Dovato generated 33% of total HIV sales, up from 25.6% in the year-ago quarter. The company added a single-drug regimen — Rukobia — and the long-acting drug — Cabenuva — to its HIV franchise in 2020 and 2021, respectively. The company launched the first injectable treatment for HIV pre-exposure prevention, Apretude, approved in December last year.
Sales of the dolutegravir franchise were up 5% at CER in the U.S. market and 16% in Europe. In International markets, sales were down 30% at CER.
Sales of Triumeq declined 7% at CER while Tivicay sales slumped 21% at CER. The combined sales of Dovato and J&J-partnered Juluca gained 41% at CER. Sales of Rukobia, Cabenuva and Apretude also contributed to growth. Overall, the new HIV drugs gained 63% at CER.
Sales of the immuno-inflammation drug, Benlysta, were up 29% in the quarter, reflecting growth across all regions.
Sales of the respiratory drug, Nucala, were up 19% at CER during the quarter, driven by growth in all markets.
Oncology sales were up 23% year over year, mainly driven by Zejula. Sales of Zejula rose 16% in the quarter. Sales of the drug, Blenrep, gained 33% during the quarter. The recently-launched Jemperli added £4 million to the top line in the second quarter.
Sales of General Medicines, which includes the Established Pharmaceuticals portfolio, were up 2%. Loss of sales from established drugs due to generic competition was offset by the strong sales growth of Trelegy Ellipta as well as the post-pandemic recovery of Augmentin sales. A few established drugs like Arnuity Ellipta, Avamys, Flixotide and Ventolin also demonstrated sales growth.
Trelegy Ellipta sales surged 50% year over year, driven by strong growth in all regions. Sales of Anoro Ellipta decreased 16% at CER during the second quarter. Key established drugs Advair/Seretide sales declined 27% year over year due to generic competition in all markets. Sales on Revlar/Breo Ellipta declined 4% at CER year over year.
Vaccine Sales Rise
GSK’s second-quarter vaccine sales gained 3% at CER, mainly driven by the recovery in Shingrix sales.
Shingrix sales more than doubled at CER during the quarter due to strong demand in the United States and Germany. During first-quarter 2022, GSK launched the product in four new countries, which also contributed to the sales growth.
In Meningitis vaccines, Bexsero sales fell 3%, while sales of Menveo were up 10%. Sales of the influenza vaccine, Fluarix, decline 9% at CER. Sales of Established vaccines were down 9% year over year.
Operating Expenses
Selling, general and administration (SG&A) costs increased 16% year over year at CER to £1.96 billion. The increase in SG&A costs was due to the launch of products in the Specialty Medicines and Vaccines segments.
Research and development (R&D) expenses remained stable year over year at CER to reach £1.16 billion.
2022 Guidance
GSK raised its guidance for 2022. The company expects sales of the new GSK to increase 6% to 8% in 2022, up from the previously guided range of 5% to 7%. The guidance excludes any revenues from its COVID-related products.
GSK expects sales of specialty drugs to increase approximately 10% at CER in 2022, while vaccine sales are expected to grow in low to mid-teens percentage at CER for this year. The company expects strong double-digit growth for Shingrix in 2022. GSK expects a slight decline in the sales for the General Medicines segment due to increased generic erosion of respiratory drugs.
Compared to the first half of the year, GSK expects to record slightly lower sales in the second half of 2022 due to some channel stocking in the United States during the first half of 2022.
The company expects operating profit growth to now increase between 13% to 15% at CER, up from the previous guidance of 12% to 14%. Adjusted EPS is anticipated to grow around 1% lower than operating profits.
GSK plc Price
GSK plc price | GSK plc Quote
Zacks Rank
GSK currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.