GSK launches $2.5 billion buyback, lifts sales target after stellar Q4

By Yadarisa Shabong

(Reuters) -GSK launched a 2 billion pounds ($2.5 billion) share buyback on Wednesday and lifted its long-term sales target to nearly $50 billion, betting that growing sales of its HIV and cancer drugs will make up for pressures on its vaccines revenue.

GSK's shares were up 6% at 1342 GMT after the British drugmaker's fourth-quarter results also topped expectations.

Since taking the helm in 2017, CEO Emma Walmsley has returned GSK to growth with a focus on cancer and infectious diseases to counter a combination of patent expiries and declining revenue from its best-selling medicines by 2030.

This year, GSK expects five product approvals, including the relaunch of blood cancer drug Blenrep, which it estimates could eventually reach annual sales of more than 3 billion pounds.

"We are increasing and prioritising R&D investment to promising new long-acting and specialty medicines in Respiratory, Immunology & Inflammation, Oncology and HIV," Walmsley said in a statement.

GSK's stock was among the biggest gainers in Europe and on course for its best day since December 2022.

Analysts welcomed the strong earnings, while UBS's Jo Walton said in a note that the 18-month buyback would not impact GSK's ability to fund small deals.

EXTERNAL PRESSURES

Walmsley's bet on blockbuster RSV vaccine Arexvy has hit hurdles in the United States, including changes in public health agency recommendations and prioritisation of other vaccinations such as for COVID-19.

In the U.S., its largest market, GSK has - like other drugmakers - also faced uncertainty over vaccination policy since President Donald Trump nominated Robert F. Kennedy Jr, a prominent voice in the anti-vaccine movement, to lead the Department of Health and Human Services.

Shares in U.S. drugmakers fell further on Tuesday as Kennedy moved closer to securing the top health job after winning a senior Republican senator's backing with pledges to protect existing vaccination programmes.

"The (U.S.) federal government is one of our biggest customers, so we are watching it carefully," Walmsley told journalists, adding it was "great to see" that Kennedy supported vaccines during the Senate hearings.

"We have factored in some of this environmental pressure into our short-term outlooks," Walmsley said.

GSK expects revenue to increase between 3% and 5% in 2025 despite forecasting vaccine sales to fall by a "low single-digit" percentage.

The company lifted its 2031 sales forecast to more than 40 billion pounds, from 38 billion pounds targeted previously.

It reported core earnings per share of 23.2 pence on sales of 8.12 billion pounds for the quarter ended Dec. 31, compared with 19 pence on sales of 7.75 billion pounds expected by analysts in an LSEG poll.

($1 = 0.7985 pounds)

(Reporting by Yadarisa Shabong in Bengaluru. Editing by Emelia Sithole-Matarise and Mark Potter)