GlaxoSmithKline is more optimistic about profits and COVID, investors are not sure about Reuters

© Reuters. File photo: The GlaxoSmithKline (GSK) logo was seen at the GlaxoSmithKline Research Center in Stevenage, UK on November 26, 2019. REUTERS/Peter Nicholls/File Photo

Authors: Pushkala Aripaka and Alistair Smout

(Reuters)-GlaxoSmithKline predicted on Wednesday that its 2021 earnings will be at the better end of its guidance range, thanks to the recovery of regular doctor visits and the sales of its COVID-19 vaccine booster, which helped the pharmaceutical The company exceeded its profit forecast for the second quarter.

But rising debt, the lingering effects of the pandemic, and long-term concerns about the British company’s pharmaceutical pipeline have caused its stock price to give up its initial gains.

Although GlaxoSmithKline is the world’s largest vaccine manufacturer in terms of sales, it has fallen behind some competitors in the fight against COVID-19, focusing on producing an adjuvant to enhance the immune response of others’ injections, rather than its own Production of vaccines.

After a project Sanofi (NASDAQ:) There was no hope last year, and GlaxoSmithKline reported progress in the second quarter, with adjuvant sales of 258 million pounds (358 million US dollars). The two vaccines are currently in an advanced stage of testing, and they hope to get approval before the end of the year.

GSK and US partner Vir also announced an agreement to provide the European Union with antibody-based treatments for COVID-19.

The British company is spinning off its consumer health department to focus on using new funds to improve its pharmaceutical business. The company said it hopes to show positive momentum in the second half of the year and push its full-year earnings to the upper end of the forecast range. .

GlaxoSmithKline has said that it expects adjusted earnings this year to fall by a mid-to-high single-digit percentage, excluding any COVID-related sales.

But some analysts are still worried about future challenges, Hargreaves Nicholas Hyett of Lansdown (LON:) points to “low cash generation” and rising debt.

Although Citi analysts pointed out that the full-year earnings guidance has “upside potential,” they said that their focus is still on GlaxoSmithKline’s new drug pipeline.

After years of poor performance in the pharmaceutical business, Walmsley is under pressure to show sustainable growth. After planning a spin-off next year, GlaxoSmithKline also had a dispute with activist investor Elliott about its future.

GlaxoSmithKline’s share price has fallen by a quarter in 2020. As of 1240 GMT, its share price has fallen about 1% to 1,386.2 pence, after the stock initially rose by as much as 2% due to performance.

Vaccine sales increased 49% to £1.57 billion, and the growth of new drugs helped GlaxoSmithKline’s adjusted quarterly earnings per share of 28.1 pence, exceeding analysts’ expectations of 19.9 pence. The total sales of £8.1 billion are also higher than the consensus of £7.56 billion https://www.gsk.com/en-gb/investors/analyst-consensus/analyst-consensus.

However, GlaxoSmithKline predicts that annual vaccine revenue will be roughly flat, even if some markets such as the United States are open to routine vaccination, because COVID-19 vaccination rates in other parts of the world are lagging behind.

(1 USD = 0.7208 GBP)

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