GSK beats Q2 estimates, unveils £1.9B cost-cutting plan through 2029

GSK PLC (LSE:GSK, NYSE:GSK) reported second-quarter revenue of £8.4 billion, beating the £8.24 billion consensus, as the drugmaker unveiled a £1.9 billion cost-reduction program to fund late-stage pipeline expansion ahead of a patent cliff on its leading HIV treatment.

"The savings will primarily be reinvested, with some used to improve margins and profitability in the dolutegravir patent expiry period," Chief Executive Officer Luke Miels said in a statement.

Core operating profit reached £2.8 billion, up 7% at constant currency and above the £2.675 billion analyst estimate. Adjusted earnings per share came in at $1.36, topping the $1.27 consensus, while reported profit was $583.6 million, or 29 cents per share. Total operating profit fell 75% after a £1.3 billion impairment charge on camlipixant, a drug GSK abandoned following Phase 3 trial results.

Specialty Medicines led the top line with £3.8 billion in sales, up 14%, driven by HIV revenue of £2.1 billion, which rose 10%. Vaccines contributed £2.3 billion, up 8%, while General Medicines declined 9% to £2.3 billion. GSK shares jumped 4.2% on the results, hitting a three-month high.

The cost program, which will cost £2.4 billion to execute, targets £1.9 billion in annual savings by 2029. GSK now expects to start more than 20 Phase 3 trials in 2026, double its previous target, and identified seven assets for acceleration across 18 indications in oncology, respiratory, hepatology and vaccines. The company also plans a £400 million investment in a new R&D center on the Cambridge Biomedical Campus in England.

The restructuring comes as GSK faces generic competition on dolutegravir, a key HIV drug, between 2028 and 2030. The company reaffirmed its full-year 2026 guidance for turnover growth of 3% to 5% and core operating profit and EPS growth of 7% to 9% each. Its longer-range ambition of surpassing £40 billion in annual revenue by 2031 remains intact.

The guidance raise signals management expects pipeline assets to offset the dolutegravir revenue gap. Investors will watch for Phase 3 trial starts in 2026 as the primary catalyst for pipeline valuation.

This article is for informational purposes only and does not constitute investment advice.