GlaxoSmithKline remained under pressure today after so-so results that drew unfavourable comparisons with US rival Pfizer.
The drug giant notched up £1.4 billion of Covid-19 related sales last year, yet profits still fell 22% to £5.4 billion. Overall sales were steady at £34 billion.
Yesterday Pfizer reported $37 billion (£27 billion) of sales from its pandemic vaccine and said its new Covid pill Paxlovid was going well.
That did prompt some complaints that Pfizer is profiteering from the pandemic, an accusation Glaxo has at least avoided.
Glaxo, under pressure from investors to move faster to shake-up its business, warned there will be a “substantially reduced profit contribution” from its Covid antibody drug Sotrovimab due to lower margins.
CEO Emma Walmsley survived a threat to her leadership from Elliott Management, which last summer complained of underperformance and said she should have to reapply for her job. The board backed Walmsley instead.
Today she promised a “step change in growth” this year. Glaxo did beat City expectations for the fourth quarter, and forecast sales will rise between 5% and 7% this year.
It turned down a £50 billion offer from Unilever for its consumer health arm and is working to spin that division off this summer. That business owns top brands such as Panadol and Sensodyne.
Glaxo shares are up nearly 30% this year. They rose 3p to 1635p, which values the business at £83 billion.
Analyst reaction was mostly flat.
Laura Hoy at Hargreaves Lansdown said: “All told the results were little more than a blip on the radar with no major surprises. The market’s waiting for the demerger to complete, or another suitor to arrive, so the rosy results did little to move the dial.”
The pandemic wasn’t entirely a boon for the drugmaker. Sales of Shingrix, its vaccine against shingles, suffered due to pandemic disruption. Glaxo expects those sales to rebound this year.
Glaxo will pay a dividend of 80p a share worth £4 billion. That’s a boost to the many small shareholders who bought the stock in the last two years on the expectation it would flourish during Covid.
That dividend will tumble next year due to the plan to float off the consumer arm. Some in the City think the £50 billion offer from Unilever was a decent deal it may regret turning down.
Walmsley said: "We have ended the year strongly, with another quarter of excellent performance driven by first-class commercial execution, and we enter 2022 with good momentum. This is going to be a landmark year for GSK, with a step-change in growth expected.”
She pledged there would be “catalysts” in research and development this year, with up to seven key drugs in late-stage development.
