The Times - UK (2022-04-28)

36 2GM Thursday April 28 2022 | the times

Business

Drug Administration suspended au-

thorisation of Xevudy after data sug-

gested it was unlikely to be effective

against the dominant Omicron sub-

variant in the US.

GSK said it would “continue to dis-

cuss future opportunities to support

governments, healthcare systems and

patients whereby our Covid-19 solu-

tions can address the emergence of any

new variant of concern”.

GSK also continued to partner on the

development of three Covid vaccines,

using its adjuvant technology; one of

them, its venture with Medicago, has

been approved in Canada.

Walmsley said that as global vaccine

supply was now “very strong”, GSK was

also targeting the “endemic market”.

Shares in GSK, which have risen

13 per cent this year, closed up by 42½p,

or 2.4 per cent, at £17.97.

GSK, based in Brentford, west

London, is one of Britain’s two big drugs

groups and is worth about £90 billion

on the London Stock Exchange. It op-

erates consumer healthcare, vaccines

and pharmaceuticals divisions.

July’s demerger of Haleon, a joint

venture with Pfizer, is the centrepiece

of Walmsley’s strategy. It is designed to

boost GSK’s financial firepower and

focus on its core pharmaceuticals and

vaccines divisions.

Sales in its consumer business rose

14 per cent to £2.6 billion, reflecting a

1

Rishi Sunak told the cabinet

that interest rates are expected

to rise to 2.5 per cent over the

next year as he warned against

borrowing more to fund public

spending. The chancellor told

colleagues on Tuesday that

homeowners could see their

mortgage payments rise by more

than £1,000 if they were not on

fixed-rate deals. Pages 4-5

2

Ministers are preparing to

abandon the introduction of

routine post-Brexit border

inspections on food entering

Britain from the EU in an attempt

to avoid exacerbating supply chain

problems and potentially raising

the cost of imported food. Page 5

3

Rishi Sunak’s £1.1 billion

Future Fund scheme was

meant to help start-ups and

innovative companies with the

potential to “transform UK

industry” and “strengthen our

position as a science superpower”,

according to the chancellor. But at

least 34 companies that benefited

from the funding are in the process

of being wound up, a Times

investigation has found. Page 18

4

Meta Platforms, owner of

Facebook and Instagram,

reported its slowest sales

growth in a decade as advertisers

cut back their spending plans amid

economic uncertainty. Page 35

5

Coal-fired power stations are

in line to receive tens of

millions of pounds of

subsidies from consumers to stay

open next winter after the

government asked them to delay

plans to close this year because of

the energy crisis. Ministers have

requested that EDF, Drax and

Uniper consider extending the life

of coal plants due to shut in

September amid fears of a Europe-

wide gas shortage if Russian

supplies are reduced. Page 35

6

The Serious Fraud Office has

intensified its inquiry into the

business empire of the metals

magnate Sanjeev Gupta, which

includes Liberty Steel, after its

investigators raided sites across his

GFG Alliance to obtain

documents. Page 35

7

Supplies of a Covid antibody

treatment and a recovery in

sales of a blockbuster shingles

vaccine helped to lift quarterly

sales at GlaxoSmithKline by a

third, boosting its shares before the

break-up of the group this summer.

8

The government should

abandon attempts to

“reindustrialise” the British

economy and focus on enhancing

the country’s status as a global

services powerhouse, according to

a report from the Resolution

Foundation think tank. Page 38

9

Lloyds Banking Group has

warned of the uncertainty

facing Britain’s economy from

soaring inflation despite posting a

smaller than expected fall in

quarterly profits and raising its

forecasts for the year. Page 40

10

John Foley, the chief

executive of M&G, is to

leave the group,

announcing his departure only six

weeks after the arrival of a new

chairman at the fund manager and

one week before a new finance

director joins. Page 41

Need to know

Glaxo sales get boost from

Covid and shingles therapy

Supplies of a Covid antibody treatment

and a recovery in sales of a blockbuster

shingles vaccine helped to lift quarterly

sales at GlaxoSmithKline by a third,

boosting its shares before the break-up

of the drugs group this summer.

Sales rebounded by 32 per cent to

almost £9.8 billion and adjusted operat-

ing profit by 39 per cent to £2.6 billion,

ahead of City forecasts and helped by a

favourable comparison with last year

when the pandemic disrupted trading.

Dame Emma Walmsley, the chief ex-

ecutive, said it was a strong first quarter

in a “landmark year” for GSK.

Walmsley, 52, said GSK remained on

course to spin off Haleon, the new

name given to its consumer healthcare

business, on the London Stock Ex-

change in July, which would kickstart a

“new period of sustained growth”.

Despite the strong quarter, GSK re-

iterated its forecasts for the year of sales

growth of 5 per cent to 7 per cent and

growth in adjusted operating profit of

between 12 per cent to 14 per cent. It

declared a dividend of 14p per share.

The 2022 guidance excludes any con-

tribution from Covid product sales,

which is mainly accounted for by Xevu-

dy, a monoclonal antibody for the early

treatment of Covid-19 developed in

partnership with Vir Biotechnology.

GSK said it expected, based on gov-

ernment agreements, that Covid solu-

tions sales would be similar to last year’s

£1.4 billion, but at a “substantially

reduced profit contribution due to the

increased proportion of lower margin

Xevudy sales”, and that the “over-

whelming majority” of expected sales

were made in the first quarter.

It generated £1.3 billion of sales in the

period, ahead of analysts’ expectations

of £1.1 billion. This month the Food and

strong return of the cough and cold

season and the benefit of stocking

ahead of the demerger.

GSK’s key new drugs include Shin-

grix, which returned to sales growth

and delivered its best quarter, generat-

ing £698 million. GSK is seeking to

double Shingrix revenues by 2026.

Morgan Stanley analysts said the vac-

cine’s better than expected sales were

“boosted by a strong performance in

Germany because of channel restock-

ing and strong US retail orders ahead of

an anticipated price increase”.

Shingrix helped GSK’s overall vacci-

nes division increase sales by 36 per

cent to almost £1.7 billion.

Morgan Stanley said that if the posi-

tive trends continued with Shingrix, it

expected full-year operating perform-

ance at the top end of its guidance

range. The broker said there was

“limited upside potential” for Xevudy

revenues, given the FDA suspension,

but pandemic adjuvant sales could be

supported by authorisation of the Med-

icago vaccine and if GSK’s vaccine with

Sanofi receives regulatory approval.

GSK remains on the lookout for fur-

ther bolt-on acquisitions that fit with its

focus on the immune system, genetics

and new technologies.

A fortnight ago it agreed to acquire

Sierra Oncology, a California-based

rare blood cancer specialist, for £1.5 bil-

lion as it moved to bolster its drugs

pipeline before the separation.

GSK remains under pressure from

Elliott Management, the US activist

hedge fund, which has been highly crit-

ical of its research and development in-

vestments, shareholder returns and

management. Elliott has also encour-

aged GSK to pursue a sale of Haleon,

but GSK rejected a £50 billion ap-

proach from Unilever, the FTSE 100

consumer goods group, in December.

Alex Ralph

Healthcare

spin-off is

on course

W

ith

Glaxo

Smith

Kline

having

entered the last

quarter before the

formal creation of

Haleon in the biggest

demerger in Europe

in the past 20 years,

the drugs group is in

“full countdown

mode” (Alex Ralph

writes).

Since a capital

markets day in

February, bosses at

Haleon, GSK’s

consumer healthcare

division, have raised

about $10 billion in

debt and appointed

six members to

Haleon’s designate

board following the

appointment of Sir

Dave Lewis, the

former chief executive

of Tesco, as chairman

designate in

December.

The process of

separating internal

systems has been

completed in what

Brian McNamara,

the head of GSK’s

consumer business,

called a “significant

milestone”.

McNamara, 56, said

Haleon remained

focused on the

separation in July and

was preparing the

next steps, including

the publication of its

equity prospectus for

investors in June and

a shareholder vote the

following month.

“I think people

really see the

uniqueness of this

proposition,” he said.

“They see the world-

class portfolio brands

[which include

Sensodyne, Panadol

and Centrum]... and I

think people have

reacted well to the

guidance we have

made around 4 per

cent to 6 per cent

growth, moderate

margin expansion,

cashflow and paying

down debt over time.”

S

potify

Technology has

insisted that its

business is

“vastly

different” to Netflix

as modest forecasts

from the company

failed to impress

investors (Callum

Jones writes).

Shares in the audio

streaming group closed

down $13.90 at $96.51

after it projected a

slowdown in user

growth that it

attributed, in part, to

the closure of its

business in Russia after

the Ukraine invasion.

Its base of monthly

active users grew to a

record 422 million in

the first quarter, up by

19 per cent on an

annual basis, but the

company cautioned

that this was inflated

by a service outage

that involuntarily

logged out some users.

This added 3 million

additional monthly

active users, according

to its estimates. By the

Investors turn down volume

on Spotify as growth slows