GlaxoSmithKline (GSK, Financial) has been underperforming among major European pharmaceutical stocks. The company is facing challenges with upcoming patent expirations, including for its HIV treatment dolutegravir, and declining vaccine sales. Since spinning off its consumer healthcare segment in 2022, GSK's stock has dropped about 17%, raising concerns among analysts.
Analysts are particularly worried about GSK's long-term growth prospects and lack of innovation, despite recent progress in oncology drug development. The company has also been burdened by lawsuits related to its old heartburn medication, Zantac, which resulted in a $2.2 billion settlement last year.
Fund managers and analysts suggest that GSK might attract activist investors who could push for strategic changes, such as mergers and acquisitions or divesting its vaccine business. Activist investors like Elliott Investment Management and Bluebell Capital Partners have previously pressured GSK, questioning CEO Emma Walmsley's leadership. Despite this, she remains at the helm.
GSK's annualized total return under Walmsley has been about 3%, lagging behind competitors like AstraZeneca (AZN), which boasts higher returns. GSK's current price-to-earnings ratio is approximately 8.6, compared to AstraZeneca's 16.
Some analysts remain optimistic, citing GSK's increased sales forecast for 2031 and the potential reintroduction of its blood cancer drug, Blenrep. The company has also announced a £2 billion share buyback plan, its first in over a decade, and expects double-digit revenue growth from specialty drugs, including cancer and HIV medications.
