Wednesday 29 April 2020 2:26 pm

GSK beats expectations with strong first quarter performance

Pharmaceuticals giant Glaxosmithkline (GSK) beat analysts’ expectations with its first quarter results today, and said it remained on course to fulfil its 2020 guidance.

The performance, which the firm labelled “strong”, was founded on high demand for its shingles treatment shingrix and higher sales of pain medications during the coronavirus crisis.

Read more: Astrazeneca retains guidance after strong first quarter performance

GSK shares were flat today.

The figures

The drugs’ giant profit hit £2.01bn in the first three months of the year, up 41 per cent on the same period last year.

Turnover also rose 19 per cent, climbing to £9.09bn, whilst earnings per share gained 25 per cent to rise to 37.7p.

Shingrix sales were nearly a quarter higher than forecast, at £647m, whilst consumer health profits beat expectations at £2.9bn.

Despite the impressive performance, GSK is sticking with its full year guidance of a one to four per cent fall in profit.

Why it’s interesting

GSK’s results came after rival pharma firm Astrazeneca also announced it had beaten expectations for its first quarter results.

Both firms seem to have benefited from the pandemic, which has seen demand for some of their products increase.

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Hargreaves Lansdown analyst Nicholas Hyett said: “The coronavirus outbreak has provided a modest tailwind to GSK’s sales, and together with recent drug launches and good cost control, that’s done wonders for profits.

“That’s made the group, and indeed the sector, a safe harbour for income investors in the current crisis. Given both Astrazeneca and Glaxo are large contributors to the total UK stock market dividend yield that’s very welcome”.

The two firms are playing a big role in tackling the coronavirus crisis, with GSK joining forces with French drugmaker Sanofi to develop a vaccine for the disease.

It is also working with Astrazeneca to help the government hit its target of 100,000 coronavirus tests a day, with a special test centre in Cambridge with the capacity for 30,000 tests a day.

What GSK said

Chief executive Emma Walmsley said: “Our business performed strongly in the quarter with growth in sales and earnings reflecting good underlying performance and increased demand, including stock-building, for many of our products. 

“Looking ahead, we clearly face a period of considerable uncertainty, but we remain confident in the resilience and sustainability of GSK’s business .

Read more: GSK partners with Sanofi to develop coronavirus vaccine

“Responding to the Covid-19 pandemic is at the heart of our purpose as a company and GSK’s portfolio is both highly relevant and needed. 

“Our primary aim is to develop multiple adjuvanted Covid-19 vaccines, and we are working with companies and institutions across the world to do so”.