GSK's EPS Miss: A Blip or a Trend?

GSK, the British pharmaceutical giant, reported its full-year 2024 earnings on March 3, 2025, with a disappointing EPS miss that raised concerns among investors. The company's EPS of £0.63 fell short of analysts' expectations by 25%, primarily driven by a £1.8 billion ($2.3 billion) charge relating to the settlement of Zantac litigation. This charge, combined with lower vaccine sales, particularly for Arexvy, contributed to the decline in EPS.

Despite the EPS miss, GSK's revenue for the year was in line with analysts' estimates, with total sales of £31.4 billion, representing a 3.5% increase from the previous year. The company's specialty medicines portfolio performed strongly, with sales growing by 19%. HIV sales increased by 13%, oncology sales surged by 98%, and respiratory/immunology and other sales rose by 13%. However, vaccine sales declined by 4%, with Shingrix sales increasing by 1% and Arexvy sales falling by 51%.

GSK's core operating profit and EPS growth were driven by the strong performance of its specialty medicines portfolio. Core operating profit increased by 11% (with a further positive impact of +2% ex COVID), and core EPS grew by 10% (with a further positive impact of +2% ex COVID). The company's cash generated from operations in the year was £8 billion, with a free cash flow of £3 billion.

Looking ahead, GSK expects 2025 turnover growth of between 3% to 5%, core operating profit growth of between 6% to 8%, and core EPS growth of between 6% to 8%. The company's long-term outlook has been improved, with sales expected to exceed £40 billion by 2031, reflecting the company's late-stage pipeline progress and multiple launch opportunities in the 2025 to 2031 period.



Investors should consider the sustainability and potential for future growth of GSK's primary revenue drivers, such as specialty medicines and general medicines. The company's pipeline progress, business development efforts, market demand, regulatory approvals, and competitive landscape will be crucial factors in assessing the sustainability and potential for future growth of these drivers.

In conclusion, GSK's EPS miss in 2024 was primarily driven by the Zantac litigation charge and lower vaccine sales. While the EPS miss raised concerns, the company's strong specialty medicines portfolio and improved long-term outlook suggest that this may be a temporary setback rather than a trend. Investors should closely monitor GSK's progress in 2025 and beyond to assess the sustainability and potential for future growth of the company's primary revenue drivers.