5 Reasons GSK Looks Good: A Resilient Play in the Pharma Sector

GSK (GlaxoSmithKline), a global leader in pharmaceuticals and vaccines, has emerged as a compelling investment opportunity in 2025. With a robust pipeline, strategic initiatives, and a focus on shareholder returns, the company is positioned to navigate industry challenges while capitalizing on growth opportunities. Below are five reasons why GSK warrants attention from investors.

1. Strong Financial Performance and Growth Prospects

GSK’s financial resilience is evident in its 2024 results, which reported £31.4 billion in total sales, a 7% increase at constant exchange rates (CER). While vaccines faced headwinds (a 4% decline due to slumping sales of Arexvy), Specialty Medicines surged by 19% CER, driven by HIV, oncology, and respiratory therapies. Core operating profit rose 11% AER to £9.1 billion, and core EPS increased 10% to 159.3p, signaling operational strength.

For 2025, GSK has reaffirmed guidance of 3-5% sales growth, with upgraded long-term targets of exceeding £40 billion in sales by 2031 (up from £38 billion). This confidence stems from its expanding pipeline and strategic focus on high-margin treatments.

2. Robust R&D Pipeline and Strategic Partnerships

GSK’s pipeline is its crown jewel. In 2025, the company expects five major approvals, including Blenrep (multiple myeloma) and depemokimab (asthma and nasal polyps). Phase III readouts for camlipixant (chronic cough) and tebipenem (urinary tract infections) are also on deck. These therapies target large, underserved markets, with depemokimab alone addressing a $10 billion asthma market.

Strategic partnerships further bolster growth. Acquisitions like Aiolos Bio (asthma therapies) and IDRx, Inc. (GI oncology) enhance R&D depth, while a collaboration with Flagship Pioneering advances Respiratory/Immunology innovations. These moves underscore GSK’s shift toward specialty biopharmaceuticals, reducing reliance on declining vaccine sales.

3. Attractive Dividend and Buyback Program

Investors seeking income will find GSK compelling. The company maintains a £60p dividend per share for 2025, yielding ~4%, well above the FTSE 100 average. A £2 billion share buyback program, launched in early 2025, aims to enhance equity returns over 18 months.

With a P/E ratio of 8.90 (vs. the sector average of ~12), GSK is undervalued relative to peers like Pfizer (PFE) or Merck (MRK). This valuation gap, coupled with its strong cash flow (£8 billion from operations in 2024), suggests upside potential.

4. Resilient Specialty Medicines Division

The Specialty Medicines division is GSK’s growth engine. In Q1 2025, it grew 17% CER, outpacing the vaccines division’s 6% decline. Flagship products like Jemperli (endometrial cancer) and Cabenuva (HIV) are key drivers. GSK’s focus on Ultra-Long-Acting (ULA) HIV therapies also positions it to capture a $40 billion market, with annual patient savings and improved adherence.

5. Undervalued Stock with Long-Term Potential

Despite its strong fundamentals, GSK’s stock trades at a discount to its peers. Analysts estimate a 17.4% upside to its GF Value target of £45.75 (vs. a recent price of £42.50). Risks, such as the U.S. Inflation Reduction Act’s pricing pressures, are mitigated by GSK’s operational efficiency and geographic diversification.

Conclusion: A Solid Bet on Pharma’s Future

GSK’s combination of strong financials, a breakthrough pipeline, shareholder-friendly policies, and an undervalued stock makes it a compelling investment. With Specialty Medicines leading growth and strategic partnerships expanding its reach, the company is well-positioned to achieve its £40 billion sales target by 2031.

Key data points reinforce this thesis:
- Q1 2025 EPS rose 56% to £0.40, surpassing expectations.
- Free cash flow of £0.7 billion supports buybacks and R&D.
- Analysts’ consensus rating of “Hold” reflects undervaluation, with upside potential as pipeline approvals materialize.

While risks like regulatory hurdles exist, GSK’s diversified portfolio and financial discipline make it a resilient play in the pharmaceutical sector. For income investors and long-term growth seekers, GSK offers a rare blend of stability and innovation.