Shares in GlaxoSmithKline (LON:GSK) have fallen into the red in today’s session, as the company updated investors on its second-quarter performance, lowering its full-year earnings target. The group’s new chief executive Emma Walmsley meanwhile unveiled plans to streamline drug research at the blue-chip pharmco.
As of 13:45 BST, GSK’s share price had lost 1.55 percent to 1,564.62p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.43 percent higher at 7,466.65 points. The pharmco’s shares have lost more than six percent of their value over the past year, and have been little changed in the year-to-date.
GSK announced in a statement today that its second-quarter turnover had increased 12 percent to £7.3 billion, driven by its Pharmaceuticals and Vaccines business. The group’s adjusted earnings per share meanwhile came in 12 percent higher at 27.2p. Going forward, the blue-chip pharmco expects to deliver adjusted earnings growth of between three and five percent at constant exchange rates. GSK had previously flagged earnings growth of between five percent and seven percent.
The group’s new chief executive Emma Walmsley commented in the statement that GSK was updating its full-year earnings guidance “to reflect the investments we have made to accelerate the review of our new two drug regimen in HIV”. She further unveiled plans to streamline the company’s pharmaceuticals business, with GSK having made decisions to terminate, partner or divest more than 30 pre-clinical and clinical programmes. The blue-chip drugmaker further noted that it had undertaken a strategic review of its Rare Diseases unit and was now considering options for future ownership of these assets.
GSK meanwhile reiterated its outlook until the end of the decade, first provided in 2015, and said that it would extend a cost-cutting programme to deliver an additional £1 billion of annual cost savings by 2020.
“A most impressive start by Emma Walmsley, as she demonstrates her understanding of the key issues and being unafraid of taking unpopular decisions,” Trinity Delta analyst Mick Cooper told Reuters. Proactive Investors meanwhile quoted analysts at Liberum as commenting that in terms of the strategy update, GSK’s dividend now looked safe, “whilst there is an additional £1-billion of cost savings and confirmed long range guidance we continue to believe is conservative and anyway not reflected fully in consensus”.