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GSK Key Drugs & Vaccines Help Stock Outperform Industry YTD
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GSK plc (GSK - Free Report) 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.
The spin-off of the Consumer unit in 2022 has allowed it to focus on drug development. In July 2022, GSK de-merged its Consumer Healthcare (CHC) segment into a standalone company. GSK owned a controlling stake of 68% in the Consumer Healthcare joint venture, while partner Pfizer (PFE - Free Report) held 32%. The independent Consumer Healthcare company has been named Haleon (HLN - Free Report) . GSK shareholders own 54.5% stake in Haleon while 6% is held by GSK. Certain Scottish limited partnerships (SLPs) hold 7.5%. Pfizer holds a 32% stake in Haleon but plans to sell it soon. The company changed its name to GSK plc from GlaxoSmithKline plc in mid-May 2022.
GSK enjoys a strong position in HIV and Vaccines therapeutic areas. Vaccines and Specialty Medicines now represent more than 65% of GSK’s sales compared with 46% in 2017.
GSK’s stock has risen 1.9% so far this year against a decline of 22.9% for the industry.
Image Source: Zacks Investment Research
Here, we discuss a few reasons why GSK’s stock has outperformed the industry.
Specialty Products & New Drugs to Drive Growth: GSK’s specialty products like Dovato, Nucala, Shingrix and Juluca are doing well and have become key drivers of top-line growth.
It has some promising new products in Specialty Medicines and Vaccines areas like RSV vaccine, Arexvy and Ojjaara (momelotinib) for myelofibrosis with anemia. Arexvy has been successfully launched in the third quarter of 2023 and it, along with Shingrix, was a key driver of 10% growth in the Vaccines unit in the third quarter.
Other new drugs approved/launched recently are Jesduvroq/ Duvroq (daprodustat) for anemia due to chronic kidney disease (CKD) in adults on dialysis in the United States and Apretude, a long-acting injectable form of cabotegravir drug for the prevention of HIV infection, also called pre-exposure prophylaxis or PrEP. In fact, new products launched since 2017 have contributed sales of £7.8 billion in the first nine months 2023. All these new products are expected to drive growth in the future quarters.
Management expects sales of Specialty Medicines to increase at a low double-digit percentage compared to a high single-digit percentage at CER in 2023.
Strong Vaccines Portfolio: GSK boasts a broad vaccine portfolio that targets infectious diseases like meningitis, shingles, flu, polio and many more. GSK has more than 20 marketed vaccines in its portfolio. The company achieved strong vaccine growth of 11% at CER in 2022, driven by record sales of its shingles vaccine, and continued geographic expansion of its meningitis vaccine.
Sales of shingles vaccine, Shingrix grew 60% at CER in 2022 and 15% in the first nine months of 2023 supported by the post-pandemic rebound and strong uptake and new market launches. Around half of Shingrix’s growth came from outside U.S. markets. GSK is also focusing on accelerating the vaccine pipeline, particularly the expanded use of the RSV vaccine, pentavalent vaccine and the 5-in-1 meningococcal vaccine, MenABCWY to drive long-term growth. It has a leading suite of vaccine platform technologies, including next-generation mRNA, multiple antigens presenting system, or MAPS as well as adjuvant systems.
Management expects vaccine sales to increase around 20% at CER in 2023.
Strong Pipeline: GSK has 67 assets in clinical development, with two-thirds to prevent and treat infectious diseases and HIV.
Promising candidates in late-stage development include gepotidacin (uncomplicated urinary tract infection [UTI]– regulatory filings in the United States and EU are expected in 2024; urogenital gonorrhoea), bepirovirsen (chronic hepatitis B), depemokimab (severe eosinophilic asthma, eosinophilic granulomatosis with polyangiitis, hypereosinophilic syndrome and chronic rhinosinusitis with nasal polyps), tebipenem (complicated UTIs), camlipixant (refractory chronic cough) and pentavalent MenABCWY meningococcal vaccine (regulatory submissions in 2024).
GSK is also working on expanding the label of marketed products into additional indications.
Zejula is being evaluated for additional ovarian cancer stages as well as for non-small cell lung cancer and endometrial cancer. Key phase III studies in first-line advanced NSCLC maintenance and first-line ovarian cancer maintenance are ongoing.
Some label expansion studies are ongoing on Jemperli, with other oncology compounds in earlier-stage endometrial cancer and advanced NSCLC. Overall, in oncology, GSK plans to prioritize the development of novel medicines to treat blood and women's cancers.
GSK is also focused on developing innovative ultra-long-acting HIVE regimens for treatment and prevention, which can extend the dosing intervals of the injections.
Conclusion
GSK has its share of problems. Competitive pressure on HIV and respiratory drugs has risen. The dolutegravir HIV franchise patent expires in the 2028-2029 period and U.S. sales of Shingrix are slowing down. GSK needs to invest in R&D to strengthen its pipeline. Nonetheless, continued sales growth of its specialty drugs and vaccines like Shingrix and Arexvy, contribution from new products and positive pipeline updates should drive the stock in the future quarters.
In the past 30 days, estimates for Gilead Sciences’ 2023 earnings per share have risen from $6.64 per share to $6.75 per share. During the same period, earnings per share estimates for 2024 have risen from $7.39 to $7.44. Year to date, shares of Gilead Sciences have declined 12.2%.
Earnings of Gilead Sciences beat estimates in two of the last four quarters, while missing in the other two, delivering a negative earnings surprise of 0.24% on average.
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GSK Key Drugs & Vaccines Help Stock Outperform Industry YTD
GSK plc (GSK - Free Report) 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.
The spin-off of the Consumer unit in 2022 has allowed it to focus on drug development. In July 2022, GSK de-merged its Consumer Healthcare (CHC) segment into a standalone company. GSK owned a controlling stake of 68% in the Consumer Healthcare joint venture, while partner Pfizer (PFE - Free Report) held 32%. The independent Consumer Healthcare company has been named Haleon (HLN - Free Report) . GSK shareholders own 54.5% stake in Haleon while 6% is held by GSK. Certain Scottish limited partnerships (SLPs) hold 7.5%. Pfizer holds a 32% stake in Haleon but plans to sell it soon. The company changed its name to GSK plc from GlaxoSmithKline plc in mid-May 2022.
GSK enjoys a strong position in HIV and Vaccines therapeutic areas. Vaccines and Specialty Medicines now represent more than 65% of GSK’s sales compared with 46% in 2017.
GSK’s stock has risen 1.9% so far this year against a decline of 22.9% for the industry.
Image Source: Zacks Investment Research
Here, we discuss a few reasons why GSK’s stock has outperformed the industry.
Specialty Products & New Drugs to Drive Growth: GSK’s specialty products like Dovato, Nucala, Shingrix and Juluca are doing well and have become key drivers of top-line growth.
It has some promising new products in Specialty Medicines and Vaccines areas like RSV vaccine, Arexvy and Ojjaara (momelotinib) for myelofibrosis with anemia. Arexvy has been successfully launched in the third quarter of 2023 and it, along with Shingrix, was a key driver of 10% growth in the Vaccines unit in the third quarter.
Other new drugs approved/launched recently are Jesduvroq/ Duvroq (daprodustat) for anemia due to chronic kidney disease (CKD) in adults on dialysis in the United States and Apretude, a long-acting injectable form of cabotegravir drug for the prevention of HIV infection, also called pre-exposure prophylaxis or PrEP. In fact, new products launched since 2017 have contributed sales of £7.8 billion in the first nine months 2023. All these new products are expected to drive growth in the future quarters.
Management expects sales of Specialty Medicines to increase at a low double-digit percentage compared to a high single-digit percentage at CER in 2023.
Strong Vaccines Portfolio: GSK boasts a broad vaccine portfolio that targets infectious diseases like meningitis, shingles, flu, polio and many more. GSK has more than 20 marketed vaccines in its portfolio. The company achieved strong vaccine growth of 11% at CER in 2022, driven by record sales of its shingles vaccine, and continued geographic expansion of its meningitis vaccine.
Sales of shingles vaccine, Shingrix grew 60% at CER in 2022 and 15% in the first nine months of 2023 supported by the post-pandemic rebound and strong uptake and new market launches. Around half of Shingrix’s growth came from outside U.S. markets. GSK is also focusing on accelerating the vaccine pipeline, particularly the expanded use of the RSV vaccine, pentavalent vaccine and the 5-in-1 meningococcal vaccine, MenABCWY to drive long-term growth. It has a leading suite of vaccine platform technologies, including next-generation mRNA, multiple antigens presenting system, or MAPS as well as adjuvant systems.
Management expects vaccine sales to increase around 20% at CER in 2023.
Strong Pipeline: GSK has 67 assets in clinical development, with two-thirds to prevent and treat infectious diseases and HIV.
Promising candidates in late-stage development include gepotidacin (uncomplicated urinary tract infection [UTI]– regulatory filings in the United States and EU are expected in 2024; urogenital gonorrhoea), bepirovirsen (chronic hepatitis B), depemokimab (severe eosinophilic asthma, eosinophilic granulomatosis with polyangiitis, hypereosinophilic syndrome and chronic rhinosinusitis with nasal polyps), tebipenem (complicated UTIs), camlipixant (refractory chronic cough) and pentavalent MenABCWY meningococcal vaccine (regulatory submissions in 2024).
GSK is also working on expanding the label of marketed products into additional indications.
Zejula is being evaluated for additional ovarian cancer stages as well as for non-small cell lung cancer and endometrial cancer. Key phase III studies in first-line advanced NSCLC maintenance and first-line ovarian cancer maintenance are ongoing.
Some label expansion studies are ongoing on Jemperli, with other oncology compounds in earlier-stage endometrial cancer and advanced NSCLC. Overall, in oncology, GSK plans to prioritize the development of novel medicines to treat blood and women's cancers.
GSK is also focused on developing innovative ultra-long-acting HIVE regimens for treatment and prevention, which can extend the dosing intervals of the injections.
Conclusion
GSK has its share of problems. Competitive pressure on HIV and respiratory drugs has risen. The dolutegravir HIV franchise patent expires in the 2028-2029 period and U.S. sales of Shingrix are slowing down. GSK needs to invest in R&D to strengthen its pipeline. Nonetheless, continued sales growth of its specialty drugs and vaccines like Shingrix and Arexvy, contribution from new products and positive pipeline updates should drive the stock in the future quarters.
Zacks Rank & Stock to Consider
GSK currently has a Zacks Rank #3 (Hold). A better-ranked large biotech is Gilead Sciences (GILD - Free Report) , which has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GSK PLC Sponsored ADR Price and Consensus
GSK PLC Sponsored ADR price-consensus-chart | GSK PLC Sponsored ADR Quote
In the past 30 days, estimates for Gilead Sciences’ 2023 earnings per share have risen from $6.64 per share to $6.75 per share. During the same period, earnings per share estimates for 2024 have risen from $7.39 to $7.44. Year to date, shares of Gilead Sciences have declined 12.2%.
Earnings of Gilead Sciences beat estimates in two of the last four quarters, while missing in the other two, delivering a negative earnings surprise of 0.24% on average.