GlaxoSmithKline PLC (LON:GSK) has upped its full-year earnings guidance on the back of a continued strong performance for its Shingrix shingles vaccine.
Shingrix was approved by US regulators last year and has been shown to be significantly more effective than its predecessor, Zostavax.
READ: GSK releases upbeat HIV treatment results
The injection is seen by the US Centers for Disease Control and Prevention (CDC) as the preferred shingles vaccine, and it has proven so popular that pharmacies have been running out of supplies.
Shingrix sales reached £286mln in the three months ended September 30, and GSK now expects to sell between £700-750mln worth of the drug this year, £100mln more than its previous forecasts.
The vaccine’s strong performance is the primary reason why Glaxo now expects full-year adjusted earnings per share to climb by 8-10% in 2018, while the drugs giant is also guiding for overall full-year performance at the upper end of previous expectations.
HIV drug sales top £1bn
The guidance upgrade came as Glaxo reported its third-quarter results.
Group sales totalled £8.1bn (Q3 17: £7.8bn) in the quarter, while adjusted profits also rose slightly to £2.52bn (Q3 17: £2.47bn), thanks to growth in all three of its divisions: pharmaceuticals, vaccines and consumer healthcare.
Sales of ViiV Healthcare’s – Glaxo owns 76.5% of ViiV – two blockbuster HIV drugs Tivicay and Triumeq were particularly strong, rising 12% year-on-year to £1.1bn
GSK’s Ellipta inhaler also performed well, with sales soaring by a third to £500mln in the three-month period, although growth in the consumer healthcare arm was held back by a decline in sales of Panadol painkillers.
Boss hails “good progress”
“GSK has made further good progress this quarter with constant exchange rate (CER) sales growth in all three businesses, improvements in the group operating margin at CER and adjusted earnings per share growth of 14% (CER),” said chief executive Emma Walmsley.
“Strong commercial execution for key products and new launches, notably Shingrix, together with an effective focus on cost control is driving this improved performance and we now expect 2018 Adjusted EPS growth of 8-10% at CER.”
She added: “Looking further ahead, we remain confident in our ability to deliver the group outlooks for sales and earnings per share growth we previously set for the period 2016-2020.”
‘Won’t get excited by one quarter’
“We are encouraged by this performance, however we aren’t going to get too excited by one quarter,” said Charlie Huggins, manager of the Hargreaves Lansdown’s Select UK Income Shares fund, which holds a stake in Glaxo.
“Confidence in GSK’s drug pipeline is still fairly thin on the ground, especially relative to its UK peer, AstraZeneca, which has recently enjoyed a flurry of new drug approvals.
“GSK is all too aware of the need to reinvigorate the fortunes of its pharmaceutical division. The division is under new leadership and significant cultural changes are taking place with the aim of instilling more focus and commercial rigour into GSK’s R&D efforts.”
Shares were up 1.6% to 1,563p on Wednesday afternoon.
--Updates for share price and fund manager reaction--