GlaxoSmithKline is aiming for £33bn in sales by 2031 as part of a ten-year strategy revealed in an investor update yesterday.
GSK’s chief executive officer (CEO) Walmsley has come under increasing pressure to improve GSK’s performance ahead of a planned split of the company’s consumer health and pharma divisions that is ‘well underway’.
The split, which was initially announced in 2018, will result in GSK being separated into two companies – one focusing on speciality pharma and the other focusing on consumer healthcare.
Those pressures were exacerbated after it was reported earlier this year that activist hedge fund Elliott Management had built up a sizeable stake in the British drugmaker.
To quell investors’ concerns, Walmsley laid out the plans for a ‘new’ GSK – one with a renewed focus on its vaccines and speciality medicines businesses.
That includes four core therapeutic areas – infectious diseases, HIV, oncology and immunology/respiratory.
In a statement, GSK highlighted its current pipeline of 20 vaccines and 42 medicines, many of which it says have the potential to be best or first-in-class assets.
Following the split of its consumer health business, GSK will also have more cash to spare – the cash generated from operations for the ‘new’ GSK is expected to exceed £10bn.
The company will use these funds to strengthen its pipeline, invest in successful product launches, enhance the sustainability of its operations and underpin its ‘progressive’ dividend policy.
With this new strategy in mind, GSK is expecting to deliver sales growth of more than 5% and adjusted operating profit growth of more than 10% over the next five-year period.
Much of that growth, according to GSK, will be underpinned by new vaccines and speciality medicines, although these financial outlooks exclude any contributions from COVID-19 related sales.
By 2031, GSK is expecting product sales to reach £33bn ($46bn) – almost the same as the £34bn the company brought in last year, although the ten-year target will not have any contributions from the consumer healthcare business following the planned split this year.
“The benefits of the huge transformation we have driven since 2017 are now clear. We have strengthened our R&D and commercial execution, and transformed our group structure and capital allocation, while driving a profound cultural change with new leadership,” said Walmsley (pictured right).
“Together, we are now ready to deliver a step-change in growth for a new GSK and unlock the value of Consumer Healthcare. With world-class capabilities across prevention and treatment of disease, The new GSK is exceptionally well positioned to positively impact people’s health and to deliver strong performance and value to shareholders through the decade,” she added.