Examining GlaxoSmithKline’s pipeline and R&D outlook
The Interview started with a look at GSK’s R&D spend in Q3, which was low due to delayed trials, among other factors. However, we heard there is significant momentum in the pipeline, with “very large programmes” planned for Q4 2020 and Q1 2021.
Further disruption to trials is unlikely, but there could be “some management of expenses” if Q4 sales are lacklustre. “They don’t have a lot of choice, especially for the COVID trials, they have to go full bore now while the opportunity still exists,” the specialist said. Another area of focus was how capital allocation across pharmaceutical versus vaccine R&D might change in future, with “big unknowns” also discussed.
GSK’s dividend structure, which, according to the specialist, is “very unsustainable”, was also placed under the microscope. He noted that the divestiture of the consumer healthcare (CHC) unit “may happen sooner [rather] than later” so that the company can target different investor bases and bolster its pharma efforts.
The Interview also covered GSK’s pipeline, with treatments for certain cancers and autoimmune disorders highlighted as among the biggest areas of opportunity. Thinking ahead to 2022, the specialist anticipated advancements in DREAMM trials supporting Blenrep, along with several other COVID-19 assets.
GSK’s M&A outlook was also on the agenda. Based on its balance sheet, the company could afford a USD 5bn-10bn bolt-on buy, we heard. However, given the forthcoming CHC spin-off, the bar is high and the company is unlikely to make a move that could jeopardise the success of that.
To access all the human insights in Third Bridge Forum’s GSK – Q3 2020 analysis & 2021 outlook Interview, click here to view the full transcript.
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