GSK’s second quarter sales grew 5% to £8.4bn when ignoring currency moves, slightly ahead of forecasts. Growth in Speciality Medicines and Vaccines more than offset a 9% decline in General Medicines.
Core operating profit increased by 7% to £2.8bn, with revenue growth and a favourable shift in its sales mix more than offsetting increased expenditure on product launches and R&D.
The quarterly dividend was increased by 6% to 17p per share, with the £2bn buyback programme now complete.
Sales and core-operating profit are now expected to land at the upper end of their respective 2026 guidance ranges of 3-5% and 7-9%.
GSK also announced plans to accelerate its investment in R&D alongside a new cost-saving programme.
The shares were up 1.6% following the announcement.
Our view
GSK’s second-quarter results were decent enough, but it’s the step up in Research and Development plans that caught our attention. Markets warmed to the renewed focus on growth investment, while funding concerns were eased by new efficiency plans and strong cash flow.
We’re also supportive of the growth plan and encouraged by the robust outlook for the rest of 2026. That’s being driven by strong anti-cancer medicine sales and better-than-expected vaccine demand, helped by the global expansion of Arexvy and the need to tackle meningitis outbreaks. Penmenvy’s approval last year also broadened GSK’s meningitis portfolio and could help smooth revenues as demand shifts between outbreak-led and routine vaccination.
Turning back to development, the surge in activity builds on recent pipeline progress, with a sharper focus on late-stage programmes helping to de-risk the growth story. GSK now expects more than 20 Phase III starts in 2026, double the original target. Focusing those trials on just seven assets should bring development and future commercial synergies, though higher trial throughput also means more chances for disappointment.
Speciality Medicines remain the main growth engine, helped by continued momentum in HIV and a faster-growing cancer portfolio. Oncology is still small in the mix, but recent launches are starting to land, with sales up strongly in the latest quarter. Management wants Speciality Medicines to be more than 50% of group sales by 2031, which should support margins and help offset the eventual loss of exclusivity on dolutegravir-based HIV medicines, currently GSK’s biggest revenue generator, toward the end of the decade.
The efficiency program should help fund the step-up in clinical investment, with management targeting £1.9bn of annual cost savings by 2029, most of which will be reinvested into R&D and the late-stage pipeline.
Acquisition activity has pushed net debt towards 2x cash profit (EBITDA). That still looks manageable, and GSK offers an attractive dividend yield. But it adds pressure to stay disciplined, could limit further buybacks, and no returns are guaranteed. Further business development looks likely, so we’ll be watching to ensure deals are genuinely additive to GSK’s 2031 sales target of over £40bn, not just a route to getting there.
GSK’s steady financial and clinical progress has driven a sharp re-rating in recent years. But simply meeting expectations in 2026 hasn’t been enough to sustain momentum, and the valuation now looks broadly reflective of market forecasts. We still see longer-term upside if the group delivers closer to its own ambitions than current consensus implies. GSK is pulling out the stops to get there, but as ever in pharma, trial outcomes, regulatory decisions and launch execution remain key risks.
Environmental, social and governance (ESG) risk
The pharmaceuticals sector is relatively high-risk in terms of ESG. Product governance, particularly with safety and marketing, and affordable access to treatment are the key risk drivers. Labour relations, business ethics and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, GSK's overall management of material ESG issues is strong.
There's an independent, board-level, corporate responsibility committee focused on ESG performance and framework and 10% of executive pay is tied to ESG metrics. It's ranked first on both the Access to Medicine Index and Access to Vaccines Index thanks to industry-leading efforts to ensure medicines and vaccines are provided to patients in need. Management practices concerning the transparency of clinical trials are strong, and it's committed to international standards. But despite a strong product safety programme, GSK lacks external quality management certification at its manufacturing sites.
GSK key facts
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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