COLLEGEVILLE, Pa. - Thus far, during the second quarter earnings season, COVID-19 appears to have had significant negative and positive impact on the large pharmaceutical companies with vaccine businesses.
GSK (Glaxo Smith Kline), with facilities in Collegeville and Valley Forge, Pa. is a good example. The company reported a slight decline in sales in the second quarter of 2020 but rather steep declines in adjusted operating profit and earnings per share (EPS).
For the last two quarters taken together, however, the company reported a healthy 8% increase in sales and 2% increase in adjusted operating profit.
The Vaccines business unit was particularly hard hit by COVID-19, suffering a 29% decline in sales for the second quarter and 5% for the half. With consumers around the world locked down in their homes by the coronavirus, no one could see their doctor to get their DTP, Hepatitis, Shingles or Meningitis vaccinations. Sales of GSK’s popular Shingrix vaccine fell by 19%.
On the other hand, GSK’s Consumer Healthcare sales grew 25% for the quarter and 36% for the first half of 2020, largely due to the addition of Pfizer products to its portfolio.
GSK said that it is maintaining its 2020 Adjusted EPS guidance, but there remain notable risks to business performance over the balance of the year. In particular, the company believes the outcome is dependent on the timing of a recovery in vaccination rates, particularly in the US, which it anticipates will happen in the third quarter.
If it were to experience a delay in this recovery, GSK said, it could see a significant impact in 2020. In the case of a three-month delay, for example, the company says the impact on adjusted EPS would be up to 5 percentage points.
Emma Walmsley, GSK chief executive officer, commented, “As expected, our performance this quarter was disrupted by COVID-19, particularly in our Vaccines business, as visits to healthcare professionals were limited due to lockdown measures. Overall, we are seeing good underlying demand for our major products and are confident this will be reflected in future performance when the impact of COVID measures eases.”
Group sales were £7.624 million in the second quarter, down 3% CER (constant exchange rate) and 10% on a pro-forma basis, including now divested lines in vaccines and brands divested or under review.
For the first half of 2020, Group sales were £16.714 million, up 8% compared to 2019.
Pharmaceuticals sales in the quarter were £4.102 million, down 5% CER. Sales of Established Pharmaceuticals declined 17%, to £1.780 million, reflecting destocking and lower demand for antibiotics due to COVID-19.
Vaccines sales in the second quarter declined 29% to £1.133 million.
Reported Consumer Healthcare sales grew 25% to £2.389 million in the quarter, largely driven by the inclusion of the Pfizer portfolio. On a pro-forma basis, sales in Consumer Healthcare declined 6%.
Adjusted operating profit in the quarter was £1.749 million, down 21% on a sales decrease of 3%. Adjusted EPS was 19.2 pence compared with 30.5 pence in 2019, down 38%. This reduction primarily resulted from lower sales and a higher non-controlling interest allocation of Consumer Healthcare profits and a higher effective tax rate.
R & D Pipeline
GSK reported that it has 35 medicines and 15 vaccines in development. It has a COVID-19 vaccine development collaboration with Clover Biopharmaceuticals and began clinical trials with a Phase I study using GSK’s pandemic adjuvant in combination with COVID-19 vaccine candidate SCB-2019.
GSK is working with vaccine producer Sanofi Pasteur, headquartered in Swiftwater, Monroe County to develop a COVID-19 vaccine, combining GSK’s pandemic vaccine adjuvant with Sanofi’s recombinant DNA know-how. GSK announced its intention to produce 1 billion doses of the adjuvant in 2021 to support COVID-19 vaccine collaborations with Sanofi and others. Adjuvants help boost the body’s response to a vaccine. Earlier today, GSK and Sanofi announced an agreement with the UK Government to supply up to 60 million doses of their pending vaccine. Discussions are also underway with the U.S. and European Union.
Walmsley commented, “We continue to believe that multiple options will be needed to prevent and treat COVID-19 and are working at pace with our partners to develop potential adjuvanted vaccines and therapeutics to fight the virus. At the same time, we have made strategic investments in next-generation vaccine and antibody technologies, most recently through our new collaboration with CureVac.
GSK, headquartered in London, U.K., consists of three global businesses that research, develop and manufacture innovative pharmaceutical medicines, vaccines and consumer healthcare products.