GSK

Business Context and Reporting Period

Company: GSK plc
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Full Year 2024 and Fourth Quarter (Q4) 2024
Announcement Date: February 5, 2025

GSK reported strong 2024 performance driven by accelerating momentum in Specialty Medicines, which offset lower Vaccine sales. The company delivered double-digit growth in Core operating profit and Core EPS, despite a significant one-time charge related to Zantac litigation settlements.

Key Financial Metrics

Note: Growth percentages are at Constant Exchange Rates (CER) unless otherwise noted. Total results include a £1.8 billion charge for Zantac litigation.

Material Changes vs. Prior Period

• Revenue Mix: Specialty Medicines sales grew 19% (CER), driven by HIV (+13%), Oncology (+98%), and Respiratory/Immunology (+13%). Conversely, Vaccine sales declined 4% (CER), primarily due to a 51% drop in Arexvy sales following launch-year stocking in 2023 and lower demand.
• Profitability Impact: Total operating profit and EPS declined significantly year-over-year due to a £1.8 billion ($2.3 billion) charge for the settlement of Zantac litigation. Excluding this and other adjusting items, Core operating profit grew 11%.
• Cost Structure: Selling, General, and Administrative (SG&A) costs increased in the full year largely due to the Zantac legal charge. Core SG&A growth was driven by investment in growth assets (e.g., Arexvy, Nucala, Jemperli).
• Debt Reduction: Total net debt decreased by £1.9 billion to £13.1 billion, supported by free cash flow and proceeds from the disposal of the remaining stake in Haleon.

Guidance, Outlook, and Management Commentary

2025 Guidance (at CER)

• Turnover: Expected to increase between 3% and 5%.
• Core Operating Profit: Expected to increase between 6% and 8%.
• Core EPS: Expected to increase between 6% and 8%, including the benefit of the share buyback programme.

Long-Term Outlook

• 2031 Sales Target: Increased to more than £40 billion (previously >£38 billion), reflecting late-stage pipeline progress and the inclusion of Blenrep.
• 2021-2026 CAGR: Sales expected to grow >7%; Core operating profit expected to increase >11%.

Shareholder Returns

• Dividends: Q4 2024 dividend of 16p declared; Full Year 2024 dividend of 61p. Expected 2025 dividend is 64p.
• Buyback: Initiated a £2 billion share buyback programme to be implemented over the next 18 months.

Risks and Contingencies

• Legal Matters: While 93% of Zantac state court cases were resolved in October 2024, less than 1% remain, including trials scheduled for 2026. GSK is also facing patent challenges regarding RSV vaccine technology (Pfizer) and mRNA patents (Acuitas).
• Regulatory: Guidance assumes no material interruptions to supply, no material litigation costs beyond current provisions, and successful regulatory approvals for pipeline assets.

Investor Verification Checklist

• Zantac Litigation Status: Verify the resolution status of the remaining <1% of state court cases and potential exposure from the Mayor & City of Baltimore trial scheduled for June 2026.
• Vaccine Demand Sustainability: Assess the long-term demand trajectory for Arexvy following the significant post-launch decline and the impact of ACIP recommendation changes.
• Pipeline Execution: Monitor Phase III data readouts for key assets including Blenrep (multiple myeloma), depemokimab (asthma/CRSwNP), and camlipixant (chronic cough) to validate the increased 2031 sales outlook.
• Share Buyback Implementation: Track the execution of the £2 billion buyback programme and its impact on share count and EPS accretion.
• Contingent Consideration: Review the sensitivity of the £7.3 billion contingent consideration liability (primarily to Shionogi) to changes in sales forecasts and exchange rates.