GSK bets on blockbuster RSV jab to power recovery

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

GSK is expected to achieve blockbuster status for its months-old RSV vaccine this week, stealing a march on rival Pfizer and begin allaying long-standing investor concerns about its pipeline.

More than a fifth of adults over 60 in the US have received a vaccine for respiratory syncytial virus — an infection with cold-like symptoms — in the months since GSK and US rival Pfizer rolled out the first vaccines across the US.

GSK’s vaccine generated £709mn of sales in the third quarter of 2023. Analysts have predicted that it hit the $1bn milestone at which drugs become “blockbusters” in the final quarter of the year. GSK will disclose sales figures when it reports full-year results on Wednesday.

Under Emma Walmsley, chief executive since 2017, GSK has struggled to deliver blockbusters: something that has weighed on the £63bn company’s share price. While rival AstraZeneca’s share price has soared almost 90 per cent over the past 5 years, GSK’s stands only 3 per cent higher.

Uptake of GSK’s Arexvy jab has far outstripped Pfizer’s Abrysvo so far, raising hopes that the rollout could mark a shift in fortunes for the UK company.

Although the 21.1 per cent uptake of the GSK and Pfizer jabs is comfortably ahead of the 18 per cent forecast by health data provider Airfinity, GSK’s Arexvy jab has accounted for more than two-thirds of doses given.

“I believe Arexvy and the launch there is a major step forward to show how we can perform,” said Rob Truckenmiller, GSK’s senior vice-president for US vaccines.

GSK has long been a frontrunner in vaccine development, with its shingles jab Shingrix providing £3bn in revenues in 2022. However, its failure to produce a Covid-19 jab ahead of rivals with less expertise in vaccines dealt it a reputational blow.

“The company has been disappointing in its execution for a very long time so this is not unimportant,” said Andrew Baum, a healthcare analyst at Citigroup.

GSK secured approval for Arexvy from the US Food and Drug Administration at the start of May, almost a month before Pfizer’s Abrysvo. Its launch was aided by a “tridemic” of respiratory illnesses comprising RSV, Covid-19 and flu which has put US and European hospitals under pressure this year.

US hospitalisations for RSV during the winter of 2022-23 were the highest since before the pandemic, as Covid-19 lockdowns reduced immunity to the disease.

“We were the first to market in an area of high unmet need where there hasn’t been any products for patients,” said Truckenmiller. Increased awareness of the virus and a strong distribution network also boosted uptake, analysts said.

The FDA will decide this year on recommending the vaccine for use by 50 to 59-year-olds, which — along with rollouts across Europe and Japan — will help the company towards reaching a long-term target of generating £3bn per year from the jab.

But with a HIV patent set to expire in 2028, a fifth of GSK’s sales were exposed to patent cliffs by the end of 2030, according to Bank of America analyst Graham Parry.

Historic problems also continue to dog GSK. In Ireland, it has declined to compensate people given experimental vaccines as children by its predecessor companies in the country’s notorious mother and baby homes.

Ongoing lawsuits in Delaware over heartburn product Zantac, accused by plaintiffs of causing cancer, continue to drag on GSK’s share price.

“The late-stage pipeline is on the thinner side relative to other companies,” said Alessandro Valentini at Causeway Capital, a top 25 investor with a 1 per cent stake. “It’s still uncertain but [Arexvy] shows that they can innovate. They’ve brought it to the market first. The R&D is alive and well there.”

Truckenmiller said the vaccine’s US launch should soothe concerns about the company’s broader pipeline of drugs.

“When you see [GSK’s] two-thirds market share, really taking on not just the market leadership position but a dominant market leadership position, I wouldn’t call that ‘a bit thin’,” said Truckenmiller. “Yes we did not have a Covid vaccine, but if you look where we’re moving forward, [vaccines] are the opportunity.”