GlaxoSmithKline share price down 2% despite shingles vaccine boosting earnings over estimates

GlaxoSmithKline (GSK) recorded a great start to the new year on Wednesday, with the pharmaceutical company’s Q1 earnings exceeding analysts’ estimates, driven by strong sales growth of its shingles vaccine Shingrix.

‘We have made a strong start to 2019, which is an important year of execution for GSK, with growth in sales, operating margins and earnings per share in Q1, in line with our expectations,’ GSK CEO Emma Walmsley said.

‘Strengthening our pipeline remains our number one priority and we reported positive data for several potential new medicines in HIV and Oncology during the quarter.’

Shingrix launched back in 2017, with the vaccine becoming a major provider of growth for the drug maker in the wake of largescale restructuring at the company that saw it spin off and sell several units.

‘Shingrix has delivered another fantastic performance in the quarter,’ Walmsley told journalists on a GSK results call.

In fact, the vaccine has sold so well that GSK forecasts sales to exceed £1 billion in 2019, with it bringing in £357 million in Q1, representing a 61.5% increase over the previous quarter.

Sales of the vaccine were driven primarily by the US, but strong growth was also recorded in Canada and in Germany.

GSK results: key figures

Overall, pharmaceutical sales climbed 4% over the same period last year to £4.2 billion, while vaccines rose 23% to £1.5 billion and consumer healthcare edged 1% higher to £2 billion.

Total earnings per share doubled to 16.8p a share, with net cash flow from operations at £663 million.

GSK also declared a 19p dividend for the quarter and expects to deliver an 80p pay-out to shareholders for the full-year 2019.

Further M&A activity on the horizon for GSK

GSK will look at further inorganic growth opportunities this year, but any deals it does pursue will likely be smaller in scale to those completed in the past, with a focus on businesses in immunology, genetics and new technologies, Walmsey said on a call with reporters.

The company is also interested in cell and gene therapies for its pipeline, with the drug maker looking to improve its manufacturing operations too, she added.

The statement comes amid plans to create a consumer health joint venture with rival Pfizer, with the CEO reporting that integration is going well, with the transaction scheduled for completion in the second half of the year, subject to regulatory approval.