Despite a mixed fourth-quarter revenue performance, British pharmaceutical giant GSK remains optimistic about its long-term growth prospects, particularly with its ambitious revenue target for 2031. The company has placed a strong emphasis on expanding its cancer drug portfolio and specialty medicines.
However, GSK’s latest financial report comes amid a barrage of lawsuits, including a major investor lawsuit in the United States over alleged violations of federal securities laws.
GSK’s Cancer Drug Sales See Significant Growth
GSK’s oncology sales surged by 98% in 2024, reflecting strong demand for its cancer treatments and potential new product launches or indications. The company highlighted two key drugs, Jemperli (Dostarlimab) and Blenrep (Belantamab mafodotin), as major contributors to this growth.
Additionally, GSK is making strides in developing antibody-drug conjugates (ADCs), with a particular focus on GSK5764227, a B7-H3-targeted ADC. These therapies are designed to attack tumour cells while sparing healthy tissue, enhancing their effectiveness and safety.
In December 2024, GSK5764227 received a Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating relapsed or refractory osteosarcoma. This designation underscores its potential to become a significant player in oncology treatments.
Key Financial Highlights for 2024
GSK reported total sales of £31.4 billion, reflecting a 3% increase at actual exchange rates (AER) and 7% growth at constant exchange rates (CER).
Specialty medicines saw a substantial 19% rise, with notable growth in key therapeutic areas:
- HIV drug sales increased by 13%
- Oncology drug sales soared by 98%
- Respiratory, immunology, and other specialty drug sales grew by 13%
However, vaccine sales declined by 4%, with a modest 1% increase in Shingrix sales but a steep 51% drop in Arexvy sales. Despite this, general medicines sales grew by 6%.
GSK’s operating profit was impacted by approximately £403 million in litigation settlements, primarily related to Zantac product liability cases. The company’s provisions for legal disputes totalled £1.45 billion at the end of 2024, significantly higher than the £267 million recorded the previous year.
GSK’s core earnings per share (EPS) are expected to rise between 6% and 8%, driven by operational efficiencies and other strategic factors. However, ongoing litigation expenses may slightly dampen this growth.
Facing Investor Backlash Over Zantac Scandal
Following its latest financial disclosures, investor rights law firm Bernstein Litowitz Berger & Grossmann LLP (BLB&G) has filed a lawsuit against GSK, alleging that the company misled investors regarding the safety of Zantac, its now-recalled heartburn medication.
The lawsuit claims that GSK was aware for nearly 40 years that Zantac contained NDMA, a cancer-causing substance, yet failed to disclose this risk adequately. Despite recalling the drug in 2019, GSK allegedly reassured investors that there was no proven link between Zantac and cancer, and that any legal liabilities could not be quantified. However, internal documents reportedly indicate that the company was aware of NDMA contamination risks for decades.
Market fears escalated in August 2022 when a Deutsche Bank report suggested GSK could face liabilities ranging from £4.02 billion ($5 billion) to £8.04 billion ($10 billion). Shortly thereafter, GSK acknowledged that its potential legal exposure was indeed within this range, triggering a sharp decline in its share price.
BLB&G stated: ‘In truth, GSK was fully aware of the source of NDMA and had been for nearly 40 years before withdrawing Zantac from the market. Furthermore, Defendants’ representations about their ability to “quantify or reliably estimate the liability” deceived investors, who did not know that GSK had for decades concealed an internal study that implicated the company’s liability to Zantac users.’
Looking Ahead
While GSK remains focused on its ambitious 2031 revenue target, its future growth will likely be shaped by the outcomes of ongoing lawsuits and regulatory scrutiny. Despite strong performance in oncology and specialty medicines, the company faces significant financial risks from Zantac-related litigation.
As legal battles continue, investors and analysts will be closely watching how GSK navigates these challenges while maintaining its growth strategy in the pharmaceutical sector.
