BackGSK bets on specialty drugs, jabs for growth after drab Q1
GSK’s growth in revenues was led by dermatology, anti-infectives and analgesics but beyond this, sales were low
PremiumGlaxoSmithKline Pharmaceuticals Ltd’s (GSK’s) shares have been an underperformer. Shares had dropped almost 9% from January to mid-June, while the healthcare index gained more than 14% during the same period.
However, the share price has since rebounded by more than 5%. The strong rebound in Indian pharma market growth with improving acute therapy sales has boosted street sentiments. GSK’s June-quarter results did not impress, but the company has announced a focused strategy to drive growth that has vaccines and a specialty portfolio as its priority. The 22% year-on-year (y-o-y) growth in revenues led by dermatology, anti-infectives and analgesics did help sentiments. Beyond this, though, the vaccine sales that were down 14.5% y-o-y disappointed. Vaccine sales were 15% of overall sales.
Further, the company is prioritizing fresh launches in specialty products and vaccines to support growth, it said. GSK plans to change its product mix with higher contributions from these segments. It is expecting a double-digit compound annual growth rate (CAGR) in specialty drugs over FY21-26, which is also to be supported by the parent’s pipeline.
Apart from the already launched biologic Nucala and to be launched Benlysta, the company will target more new launches over the next three-four years, especially in oncology therapy and also a covid treatment drug, analysts at Motilal Oswal Financial Services Ltd pointed out in a note. In the vaccine segment, the firm expects a high single-digit CAGR over FY21-26, supported by new product introductions helped by the parent. After soft vaccine sales during FY21, it is targeting 10% growth in FY22, said analysts. The Glaxo’s parent is developing two covid vaccines, one with Sanofi and another with Curevac and this could also be considered for India
The prospects for GSK’s main brands are firm and its top 10 brands recorded 14.7% y-o-y growth during July, (as per Indian Pharmaceutical Market data). This is a marked pick-up in sales growth from 8.5% y-o-y in June. The firm, however, is selling ‘Iodex’ and ‘Ostocalcium’ brands in India to GlaxoSmithKline Asia for ₹1,650 crore. Analysts at Centrum Stock Broking Ltd said that the divestment of two brands has come at much better valuation and the management’s focus on improving cost efficiency should be earnings accretive.
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