By Natalie Grover and Maggie Fick
LONDON (Reuters) -GSK began 2023 with a quarterly performance that beat analyst expectations and extended a series of positive results following strong sales of its roster of vaccines as well as HIV and respiratory medicines.
It reaffirmed its guidance for 2023, saying it expected adjusted operating profit growth to be higher in the second half, but lower in the first half of the year when expected drug launches will increase costs.
The British drugmaker carved out its consumer health business Haleon last year and has in recent quarters begun to reverse years of underperformance relative to its peers and from largely missing out on the market for COVID-19 vaccines.
Even after stripping out one-time contributions, the underlying revenue and earnings beat are a respectable 3% and 4% respectively, Citi analyst Andrew Baum wrote in a note.
He added there was little material risk to GSK’s near-term earnings, although investors are nervous ahead of a trial in California for Zantac, a discontinued heartburn drug that claimants say is linked to cancer.
Some of those fears were quashed in December after a U.S. judge dismissed about 50,000 claims in federal court.
That does not directly affect tens of thousands of similar cases pending in state courts and a trial in July will be the first test of how Zantac cancer claims fare before a jury.
Investors are also concerned about the company’s long-term prospects, given the pending loss of patent protection of one of GSK’s HIV compounds and setbacks in its marketed oncology portfolio.
To compensate, the company has announced a number of buyout deals, including Bellus Health, Affinivax and Sierra Oncology.
GSK is also relying in part on its potential blockbuster vaccine for RSV, which leads to thousands of hospitalisations and deaths each year.
It anticipates launching the vaccine later this year in the U.S. and Europe, pending regulatory approval, as does rival Pfizer.
($1 = 0.8039 pounds)
(Reporting by Maggie Fick and Natalie Grover in London, Editing by Louise Heavens and Barbara Lewis)