By Bhanvi Satija and Raechel Thankam Job
LONDON, July 28 (Reuters) – GSK launched a £1.9 billion ($2.52 billion) cost-savings effort on Tuesday to help fund the British drugmaker’s expanded late-stage study roster, as CEO Luke Miels works to deliver on his promise of faster drug development.
Its shares were up 6% by 1354 GMT after it also beat second-quarter profit and sales expectations and said it would invest £400 million in the UK.
Under Miels, GSK has stepped up acquisitions, including a record deal for Nuvalent in June, as it rebuilds its cancer business and eyes faster drug development ahead of patent losses for HIV medicine dolutegravir from 2028.
“With over double the number of Phase 3 trial initiations expected in 2026 to 20+, reinvestment will be part of it but this is a strong and unexpected move,” Jefferies analyst Michael Leuchten said in a note.
Analysts view GSK’s recent deals as crucial drivers as its CEO seeks to convince investors it can top £40 billion in annual revenue by 2031, a target the drugmaker said it was on track for on Tuesday.
GSK did not provide details of which or how many jobs would be affected by cost-cutting.
“We’re not going to give a number today … And that’s because I want the chance, and I want my team to have the chance, to discuss this with our people first,” Miels said on a call with journalists.
The majority of the savings would be used to fund the late-stage programmes as well as a new R&D lab in Cambridge, UK, he said.
Barclays analysts said the cost-savings plan and improved operating margin outlook were the key positives from Tuesday’s results announcement and would help offset the lack of new sales growth targets some investors had hoped for.
LOOKING FOR THE NEXT GROWTH DRIVERS
Investors and analysts are looking beyond the second-quarter numbers for indications of which drugs will drive future growth. When it announced the Nuvalent deal, GSK had said some programmes were being scaled back.
It said it now expects to start more than 20 late-stage studies in 2026, up from a previous target of 10, after identifying pipeline accelerations across 18 indications for seven experimental medicines in oncology, respiratory, hepatology and vaccines.
It expects to incur costs of £2.4 billion linked to the plan, with savings coming from AI-led technology shifts, streamlining of support services and supply chains, and reallocation of resources to specialty medicines.
GSK reported second-quarter revenue of £8.41 billion and core profit of 50.5 pence per share, beating expectations of £8.24 billion and 47.1 pence in company-compiled consensus.
The results also included a one-time impairment charge of £1.33 billion related to stopping development of its experimental chronic cough drug, camliplixant, which failed in a key study last week.
It maintained its full-year forecast ranges of 3% to 5% for sales growth and earnings per share between 7% and 9%, but said turnover would be towards the upper half with profit towards the lower half.
($1 = £0.7532)
(Reporting by Raechel Thankam Job and Sri Hari N S in Bengaluru, and Bhanvi Satija in London; Editing by Sherry Jacob-Phillips, Vijay Kishore and Joe Bavier)
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