Pharmaceutical giant GSK found in a strong position to manage new tariffs imposed on the sector in the US market
GSK seems to be in a tough spot, facing potential financial implications from any new US tariffs on pharmaceutical imports, as stated on Wednesday.
President Donald Trump slapped a 10% tariff on all imported goods earlier this month, but temporarily excluded pharma products. However, the US government quickly started investigations into pharma imports to assess their effects on national security. A recent Ernst & Young study suggested a 25% tax on US pharma imports could hike drug costs for Americans by nearly $51 billion.
Being a business that derives half of its revenue from the US, a massive tariff could significantly impact GSK's overall performance as an FTSE 100 firm. Despite this potential threat, GSK asserted it was "well-positioned to respond to the potential financial impact of sector-specific tariffs, should they be implemented, with mitigation options identified in the supply chain and productivity initiatives."
Concurrently, GSK reaffirmed its guidance for core operating profit and core earnings per share to expand by 6 to 8 percent this year following a robust first-quarter result. The company reported a 2% increase in turnover to £7.5 billion in the three months ending March, primarily due to strong demand for specialty medicines.
Oncology drug sales soared by over half to £415 million, bolstered by purchases of endometrial cancer medicine Jemperli and myelofibrosis treatment Ojjaara. Meanwhile, turnover from meningitis vaccines climbed by 17% to £350 million, even though total vaccine sales slipped by 8% to £2.1 billion.
GSK further saw double-digit revenue growth from the lupus drug Benlysta and asthma treatment Nucala, with its core operating profit and core earnings both expanding by 4% to £2.5 billion and 44.9 pence per share, respectively.
All in all, GSK appears strong and resilient, demonstrating the quality, strength, and adaptability of its portfolio. However, the potential tariffs could shake things up, necessitating appropriate supply chain adjustments and robust advocacy for industry interests.
- GSK's business operations could be affected significantly due to potential financial implications from tariffs on pharmaceutical imports, as the company earns half of its revenue from the US.
- Investing in stocks like GSK might face uncertainty due to tariffs, as the company is exploring mitigation options in its supply chain and productivity initiatives to tackle sector-specific tariffs.
- The US government's investigations into pharma imports could lead to tariffs being implemented, which could cost American consumers nearly $51 billion in increased drug costs, as suggested by a recent Ernst & Young study.
- Despite the potential threats from tariffs, GSK reported a robust first-quarter result, with a 2% increase in turnover to £7.5 billion, largely due to strong demand for specialty medicines like Jemperli for endometrial cancer and Ojjaara for myelofibrosis.
- GSK's oncology drug sales soared by over half to £415 million, while its core operating profit and core earnings both expanded by 4%, underscoring the quality, strength, and adaptability of its portfolio in health-and-wellness and medical-conditions sectors.
- The finance and business community should closely monitor the tariff situation, as it could reshape markets, impact health-and-wellness and medical-conditions industries, and require appropriate supply chain adjustments for companies like GSK in the pharma sector.
