Glaxo expects profit to rise as drugmaker prepares for split

Bloomberg

GlaxoSmithKline Plc expects profit to rise this year as the UK drugmaker prepares to spin off its consumer-health business, its biggest shake-up in more than two decades.
Earnings for the pharma and vaccines businesses are expected to rise 12% to 14% in 2022 on an adjusted basis, Glaxo said on Wednesday. The shares rose as much as 1.4% in London.
Glaxo, which is getting ready to split in two, is seeking to boost the performance of those businesses as Elliott Investment Management puts pressure on CEO Emma Walmsley. The activist investor has raised questions about whether
the company has the right management team in place.
The drugmaker said it’s on track to separately list the consumer arm, which owns brands including Panadol painkillers and Sensodyne toothpaste, in mid-2022. The consumer-health unit is dominating the discussion after Unilever Plc made three bids for the business in recent months. GSK rebuffed the offers, the last of which was 50 billion pounds ($68 billion), and Unilever dropped the pursuit.
Glaxo forecasts sales growth of 5% to 7% this year for the pharma and vaccines business. The company’s guidance includes anticipated income from a settlement with Gilead
Sciences Inc. and excludes contributions from Covid-19 products, which are less than 5% of total revenue.
The company expects revenue for Shingrix, the vaccine against shingles, to rebound after the pandemic disrupted immunizations last year and sees strong double-digit growth and record annual sales based on demand in existing markets and expansion.
Sales of the Xevudy antibody treatment rose to 828 million pounds in the latest quarter. Glaxo said revenue from Covid products should match last year’s level, though profitability will be lower because of an increased contribution of lower-margin Xevudy sales.
Walmsley has sought to narrow the pharma company’s focus on cutting-edge drugs and vaccines. The effort to rejuvenate the pipeline and find the next blockbusters will be led by Tony Wood starting later this year following the announcement last month that Hal Barron would step down.