GSK shares slide 7% as vaccine weakness and £318m charges rattle investors

GSK shares fell as much as 7% on Wednesday, making Britain's second-biggest drugmaker the worst performer on the FTSE 100 — despite quarterly results that beat expectations.

The selloff wasn't about the headline numbers. Pre-tax profit dropped 19% to £1.9bn in the July-to-September quarter, but turnover rose 5% at constant currency to £8.9bn, lifted by strong sales of HIV, cancer and lupus medications. Investors focused instead on what's deteriorating: vaccine revenue, restructuring costs and the patent clock on the company's biggest HIV drug.

What went wrong with the vaccines?

Vaccine sales dipped 2% to £2.6bn. The shingles shot Shingrix fell 5%, and the RSV vaccine Arexvy dropped 24%. Meningitis vaccines were the lone bright spot, up 12%.

That's a painful mix for a company that has leaned on vaccines as a growth pillar. GSK also booked £318m of restructuring charges in the quarter, and more are coming.

CEO Luke Miels, who took over from Emma Walmsley in January, is pushing through a major cost-saving programme announced in July alongside a string of acquisitions — including a £7.9bn deal for a US cancer specialist.

How deep does the restructuring go?

The programme targets £1.9bn in annual savings over three years, and Miels says the company is slightly ahead of plan. The catch: getting there costs £2.4bn, with most of those charges landing this year and next.

In the UK, the impact is "relatively limited," Miels said — some job cuts in support roles at the central London headquarters. "You never want headquarters to be too big; I want people on the bench in the lab."

Belgium takes the bigger hit. GSK is reorganising its vaccine business there, with digital tools and automation expected to cost about 1,200 jobs. The country will still produce the bulk of GSK's vaccines. For context, the company had nearly 67,000 employees globally at the end of last year, so the Belgium cuts amount to roughly 1.8% of the workforce.

What does the patent cliff mean for investors?

The market's other worry is dolutegravir, GSK's blockbuster HIV drug. It loses patent protection towards the end of the decade, opening the door to cheaper generic rivals. That's why the pipeline matters so much right now.

GSK stuck to its annual forecasts, with R&D spending set to grow faster than sales. It expects to start 22 late-stage studies of new medications by the end of the year — 18 are already under way — focused on specialty medicines and vaccines.

The company has set a target of more than £40bn in total annual revenue by 2031 as it rebuilds its cancer business.

Can Shingrix turn itself around?

Miels' answer is yes. Shingrix has the "potential to grow next year," he said, calling it "a remarkable product."

The bet rests on two large studies: one testing whether the vaccine reduces dementia risk, the other examining its effect on major adverse cardiovascular events such as heart attacks and strokes. First data arrives in 2029 and 2027 respectively. Both studies could be "transformative" for the shingles vaccine, Miels said.

There's already demand-side evidence. Britain's high street chemists have reported rising demand for the shingles vaccine after studies showed a correlation with reduced dementia risk, with the strongest effects in women. "We've got a lot of studies that show a correlation. We're trying to demonstrate causation," Miels said.

That distinction — correlation versus causation — is the whole game for Shingrix's second act. If the 2027 cardiovascular data lands well, GSK gets a growth story to offset the HIV patent cliff. Until then, investors are pricing in the gap.