GSK (GSK) reaffirms 2026 guidance as specialty medicines offset vaccine weakness

GSK reported third-quarter sales of £8.9 billion on 28 October, up 4% at actual exchange rates and 5% at constant exchange rates. Core operating profit rose 5% at constant currencies to £3.1 billion, a core margin of 34.6%, while core earnings per share grew only 1% to 54.6p. The company reaffirmed its 2026 guidance, saying growth in sales and core operating profit should land in the upper half of their ranges, of 3% to 5% and 7% to 9% respectively, but core earnings per share growth in the lower half of its 7% to 9% range.

Specialty Medicines did the work. Segment sales rose 15% to £3.9 billion, and the three franchises within it all grew by double digits. HIV sales increased 10% to £2.1 billion, led by the long-acting injectable Cabenuva, up 35% to £478 million, and Dovato, up 9% to £754 million. Respiratory, immunology and inflammation grew 21%, with Nucala up 18% to £582 million and Benlysta up 17% to £520 million. Oncology rose 23% to £622 million as Jemperli grew 19% and Ojjaara 35%, though Zejula fell 23%, partly because of new US prior authorisation requirements.

Vaccines remain the weak spot. Segment sales fell 2% to £2.6 billion. Shingrix declined 5% to £780 million, a fall GSK attributes mainly to China, and Arexvy, its respiratory syncytial virus vaccine, dropped 24% to £195 million. Meningitis vaccines provided the offset, with record quarterly sales of £599 million, up 12%. General Medicines were stable at £2.4 billion, helped by an 8% rise in Trelegy, which GSK said benefited from both volume and pricing.

The statutory figures are markedly weaker. Total operating profit fell 16% at constant currencies to £2.1 billion and total earnings per share 21% to 38.5p, reflecting £328 million of restructuring charges under the Accelerate Growth programme and a £289 million remeasurement of contingent consideration liabilities. Earlier in the year GSK impaired camlipixant by £1.3 billion and wrote off £371 million of assets from its terminated Alector collaboration. Cash generation was stronger: free cash flow rose to £2.1 billion from £1.2 billion a year earlier. Net debt, however, reached £20.7 billion at the end of September, against £14.5 billion at the end of 2025, after acquisitions including Nuvalent.

The newer launches remain small. Exdensur, the twice-yearly asthma biologic, recorded £27 million across eight countries, Blenrep £50 million, and the lung-cancer drug Jideytro £3 million after its US approval during the quarter. Recent approvals, including Hibsago in chronic hepatitis B and Jemperli in rectal cancer, broaden the portfolio but will take time to contribute. GSK says it is on track to start 22 Phase 3 trials this year, with 18 begun so far, and still targets sales of more than £40 billion by 2031.

That ambition must be met while dolutegravir, the backbone of its HIV business, loses exclusivity between 2028 and 2030, a period through which GSK expects its operating margin to be stable or improving. United States policy is a further variable. The company's agreements with the US administration, including the pricing and tariff arrangements now common across the industry, secure relief from Section 232 tariffs until 20 January 2029, and guidance already includes their expected impact. GSK also cited Medicare benefit changes and pricing pressure among the headwinds in its US business this year.

Chief executive Luke Miels described another strong quarter, with key growth drivers and new launches performing well. On the core measures that is fair, and the quarterly dividend of 17p keeps GSK on course for 70p for the year. The investment question is whether Specialty Medicines can keep growing fast enough to absorb a stagnant vaccines business and the coming HIV patent expiry. The narrowing of core earnings growth relative to operating profit, and the rise in net debt to fund acquisitions, mean that the pipeline will need to deliver commercially, not merely in trials.