GSK (GSK.L) started off 2023 with a quarterly performance that was better than what analysts had expected. This continued a string of good results that were made possible by strong sales of its vaccines and HIV and respiratory drugs.
The company stuck to its plan for 2023, saying that it expects adjusted operating profit growth to be higher in the second half of the year and lower in the first half, when costs will go up because new drugs will be coming out.
Since separating its consumer health business into Haleon (HLN.L) last year, the British company has started to make up for years of underperformance compared to its peers and bounce back after missing out on the market for COVID-19 vaccines.
Citi analyst Andrew Baum wrote in a note that underlying revenue and earnings beat estimates by a respectable 3% and 4% when one-time contributions were taken out.
Lucy Coutts, who is in charge of investments at the wealth management company JM Finn, which owns GSK shares, said that these are good results for GSK investors.
Baum also said that there wasn’t much risk to GSK’s earnings in the near future. However, investors are worried about a study in California for Zantac, a drug that was taken off the market because it was linked to cancer.
Some of these fears were put to rest in December when a U.S. judge in federal court threw out about 50,000 claims.
That doesn’t directly affect the tens of thousands of similar cases that are still being heard in state courts, and a trial in July will be the first time that cancer claims about Zantac will be put to a jury.
Investors are also worried about the company’s long-term chances because one of GSK’s HIV compounds is about to lose its patent protection and the company’s oncology portfolio has had some setbacks.
To make up for this, the company has revealed buyout deals with Bellus Health, Affinivax, and Sierra Oncology, among others.
CEO Emma Walmsley said on a call after earnings that the company plans to keep looking for more deals.
GSK is also counting on its possible blockbuster vaccine for RSV, which causes thousands of people to be hospitalised and die every year.
It plans to release the vaccine this year in the U.S. and Europe, as does competitor Pfizer (PFE.N) with its own RSV vaccine, pending regulatory clearance.
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