GlaxoSmithKline (GSK) forecast that 2019 sales of its shingles vaccine would be more than £1bn (€1.1bn) but the drugmaker’s shares slipped on concerns about its pharmaceutical business and free cash flow.
Shingrix, the shingles vaccine launched in 2017, is an important source of growth for chief executive Emma Walmsley, as she strives to improve GSK’s commercial performance after streamlining its operations and spinning off or selling units.
“Shingrix has delivered another fantastic performance in the quarter,” Ms Walmsley said on a media call.
The company said it expected sales of the vaccine to be “significantly” more than £1bn in 2019.
GSK employs around 1,700 people in Dungarvan, Cork and Dublin, but is in the process of closing s site in Sligo.
The strength in its vaccines unit, whose sales rose 20% in the quarter to the end of March, comes at a time when some of GSK’s major drugs face generic competition.
Ms Walmsley, who took over as CEO of GSK in 2017, has been looking to reenergise the drugmaker’s pharmaceutical business, its biggest unit, buying US cancer specialist Tesaro for $5.1bn (€4.5bn) and giving it a presence in the oncology market.
“They are really refocusing into oncology and that’s going to take some time — to make that transition — so I think its going to be a difficult time for the pharma business,” said John Rountree, a partner at Novasecta, a biopharma consulting firm, adding that the vaccine business is growing.
GSK shares closed almost 1% lower, with traders pointing to the company’s respiratory drug sales, which came in at £631m, below analysts’ estimate of £651m.
Also, weighing on the stock was a 50% drop in free cash flow.