GSK raises profit forecast after shingles vaccine sales boost

(Reuters) - GlaxoSmithKline GSK.L on Wednesday raised its annual profit forecast for the second time this year as sales of its shingles vaccine beat expectations and older medicines, including HIV treatments, continued to sell well.

FILE PHOTO: The GlaxoSmithKline (GSK) logo on top of GSK Asia House is seen through vertical louvres in Singapore, March 21, 2018. REUTERS/Loriene Perera

The British drugmaker’s shares rose as much as 3% to a more than a six-year high after the company said it now expected profit to be roughly flat at constant currency for the year, compared with a previous forecast of a fall of 3% to 5%.

CEO Emma Walmsley has embarked on a plan to rejuvenate GSK, which has included the spin off or sale of a number of businesses since she took over in 2017. The company has formed a joint venture with Pfizer's PFE.N consumer health division for over the counter products, which include Sensodyne toothpaste and Panadol painkillers.

GSK’s leaner structure has also helped the company focus more on its pharmaceuticals business and build a newer pool of treatments, including its shingles vaccine, Shingrix.

Walmsley said she was delighted with the vaccine’s performance, which had exceeded the drugmaker’s expectations.

“Shingrix will be a material contributor to the company’s growth for some time,” she told reporters.

GSK has at times struggled to keep up with demand.

“Obviously it (Shingrix) has performed ahead of our initial expectations, which is why we have been working extremely hard on improving and accelerating our supply,” Walmsley said.

Sales of the vaccine, launched in 2017, jumped 76% to £535 million, zooming past analysts’ estimate of £464 million, driven by sales in the United States where doctors are recommending immunisation more often for patients.

That performance helped sales at GSK’s vaccines business to increase 15% to £2.31 billion in the third quarter, above consensus.

Shingrix sales have already reached £1.24 billion in the first nine months of this year and it looks on course to exceed analysts’ £1.52 billion sales forecast for 2019.

(For an interactive graphic on Shingrix, click here

The company said its new profit forecast also reflected operating performance, increased investment in research and development as well as a lower expected effective tax rate of around 17% for the year.

GSK’s joint venture with Pfizer reported sales of £2.53 billion, boosted by U.S. drugmaker Pfizer’s older brands.

On Brexit, the British drugmaker said it had been preparing for a no-deal divorce between Britain and the European Union for some time now.

“Any difference between the preparation for the risk of a no-deal scenario and an ordered planned one in January is de minimis because that all happened over the last couple of years,” Walmsley said.

Total group sales of £9.39 billion surpassed a company-compiled consensus here of £9.02 billion. This is the drugmaker's sixth consecutive quarterly sales beat, according to Refinitiv Eikon data.

GSK shares were up 1.7% at 1,769 pence at 1317 GMT.

Reporting by Pushkala Aripaka and Ankur Banerjee in Bengaluru; Additional reporting by Aakash Jagadeesh Babu; Editing by Tomasz Janowski and Jane Merriman