GSK plans £2 billion share buyback, boosts long-term outlook

GSK plans to buy back £2 billion (S$3.4 billion) of shares as it raised its long-term growth outlook on optimism around its drug pipeline.

The British drugmaker boosted its 2031 sales forecast to over £40 billion, up from the more than £38 billion it previously expected. GSK said this reflected progress in its late stage pipeline, including several oncology medicines.

The buyback comes after GSK saw earnings per share, excluding some items, at 23.2 pence in the fourth quarter, higher than the 20 pence estimated by analysts surveyed by Bloomberg.

The better-than-expected numbers were offset by concern over vaccine sales. The company now expects vaccines to decrease by a low single-digit percentage in turnover this year. Meanwhile, its speciality medicines, which include cancer and HIV drugs, are anticipated to increase by a low double-digit percentage.

US health officials have recommended restricting RSV vaccination to people who are older and more at risk, reducing the potential size of a market for GSK’s RSV shot Arexvy. It also faces competition from Pfizer and Moderna.

The company’s shares have been held back by concern over the pipeline and what is seen as few near-term catalysts that could boost the stock. They’re down 17 per cent since 12 months ago through Tuesday’s close.

Still, the drugmaker is optimistic about its prospects for the potential re-launch of its blood cancer drug Blenrep this year. Following positive results on the previously withdrawn medicine, GSK thinks Blenrep could be a blockbuster.

GSK is also hoping its bet on cancer drugs will pay off, agreeing in January to buy cancer biotech IDRx for as much as US$1.15 billion. The return to oncology is part of a strategic shift as it grows its speciality medicines portfolio, chief executive officer Emma Walmsley told Bloomberg TV last month.

Its share buyback will be implemented over the next 18 months. BLOOMBERG