UK's biggest drugmakers see surprise profit bump, even as pharma grapples with U.S. policies
AstraZeneca and GSK, the U.K.'s second and ninth most valuable companies, both saw first-quarter profits beat expectations early Wednesday.
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Pharma giants AstraZeneca and GSK, the U.K.'s second and ninth most valuable companies, both saw first-quarter profits beat expectations early Wednesday.
AstraZeneca's core earnings per share came in at $2.58, while analysts polled by FactSet had expected $2.53. GSK's core EPS was £0.47 ($0.63) versus the expected £0.43, as per FactSet.
It comes as an increasing number of pharma CEOs have warned that Europe could see fewer new drugs launched amid a push by U.S. President Donald Trump to lower prices for medicines in America — unless Europe addresses some of the continent's most pressing issues impacting competitiveness.
The CEOs of Novartis, AstraZeneca, Roche, and Boehringer Ingelheim have said that European countries risk missing out on novel medicines, if prices in the lucrative U.S. market are tied to lower prices in comparable countries in Trump's most-favored-nation (MFN) drug pricing policy.
Novartis CEO Vas Narasimhan told CNBC on Tuesday that the "reality of MFN" hadn't kicked in yet, but that it will start having an impact in the next 18 months.
He also said that, while talks with European governments were ongoing, not enough action is being taken.
Pricing regulations developed in the U.S. have complicated an already complex situation, GSK CEO Luke Miels told reporters on Wednesday. "There's no immediate change to our launch sequence or our portfolio decisions based on what we know today," he said, adding that the company needs to focus on what it can control, namely developing medicines.
Outlooks reaffirmed
As AstraZeneca reported earnings on Wednesday, CEO Pascal Soriot flagged a "catalyst-rich" period for the Anglo-Swedish company he has led since 2012. In April, the company said a late-stage trial for a combination treatment with cancer drug Imfinzi demonstrated meaningful improvement in the time before patients with liver cancer worsened.
In late March, it surprised investors with a positive readout from an experimental lung disease medicine that met its target in two late-stage clinical trials, after rivals developing similar treatments had failed.
AstraZeneca and GSK stocks have outperformed wider regional indexes over the past year.
AstraZeneca is on track to achieve its ambition of reaching $80 billion in revenue by 2030, Soriot said. In the first quarter, revenue came in at $15.3 billion, up 8% year-on-year and beating expectations of $14.9 billion, according to FactSet.
AstraZeneca saw strong growth in its oncology portfolio in the first quarter, with sales rising 16% at constant exchange rates from a year ago. It reaffirmed its full-year outlook of revenue growth of mid-to-high single digits and core EPS in the low double digits.
GSK posted revenue in line with expectations of £7.63 billion ($10.3 billion), up 5% year-on-year. The vaccine and HIV medicine maker also reiterated its 2026 guidance of core earnings growth of 7% to 9%, with turnover growth of 3% to 5% at constant exchange rates, as it aims for more than £40 billion in sales by 2031.
London-listed shares of AstraZeneca fell 1.4% while GSK stock dropped 2.5%.
But investors have become increasingly bullish on Britain's two largest drugmakers, which are making strides in developing and acquiring new assets that could help fill a looming revenue hole facing many pharma firms over the next few years as patents expire in key markets.
Citi analysts referred to AstraZeneca as "the fastest growth and best pipeline in the sector," including 11 late-stage clinical trial readouts still to come in 2026.
On GSK, Citi noted that much of the reported EPS beat was driven by one-off legal charges. Citi added that while vaccine sales were strong, including a 20% revenue boost for GSK shingles vaccine Shingrix, this was offset by a weaker performance in general medicines.
GSK will lose exclusivity of its top-selling HIV drug dolutegravir in 2028. CEO Miels, who took the reins in January after previously serving as the company's chief commercial officer, said the firm will continue to look to dealmaking for future revenue boosters.
Both Astra and GSK stocks have far outperformed the Stoxx 600 and FTSE 100 over the past 12 months, with GSK up 42% and AstraZeneca up 30%. That compares to Stoxx 600's 15% rise and FTSE 100's 22% jump over the same period.
