World news – Will GlaxoSmithKline shares rebound with new HIV and Covid-19 drugs?

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GlaxoSmithKline shares rose briefly yesterday after a new HIV drug was approved in the EU. However, given the delays in manufacturing the first Covid-19 vaccine and declining sales, analysts remain bearish on GSK shares.

GlaxoSmithKline (GSK.L) shares rose nearly 1% on Monday from 12, £ 77 to £ 12.87. The mini revival was short-lived, however, as shares opened at £ 12.68 on February 9th. The positive step in an otherwise negative trend was due to ViiV Healthcare getting approval for its HIV drug Rukobia.

GSK is instrumental in ViiV, and the news is that it will soon lead the way in treating HIV patients who are « multi-resistant ». Hopefully the breakthrough will be one of many over the next five years. According to GSK’s latest earnings report, there are 20 pipeline drugs in late-stage clinical trials.

In addition to continued success with the shingles drug Shingrix, GSK hopes to deal with the myeloma therapy drug Blenrep, the monoclonal antibody Otilimab and the Asthma therapeutic anti-IL-5 to make a name for itself. The company also plans to part ways over the next two years. One arm will focus on drug development and the other on consumer health care. The split is part of a tightening measure to improve efficiency and increase profitability.

Despite the positive noise, analysts see the company’s long-term prospects bearish. GSK’s total sales rose 1% to £ 34.1 billion in 2020, but fourth quarter (Q4) sales fell 2% due to Covid-19 restrictions. With fewer patients seeking and receiving treatment for other diseases, sales have suffered. Delays in getting a Covid-19 vaccine to market have also harmed GSK.

The collaboration with Sanofi (SASY.PA) has not shown any significant effects in recent studies over the past 50 years. As such, it lags behind Pfizer (PFE.N) in the race to suppress Covid-19. This has continued to have a negative impact on GSK shares over the past few months. In fact, the impact of Covid-19 was so great that Deutsche Bank analysts downgraded their forecast for the GSK share price to « sell » after last week’s earnings report.

However, hope may be emerging in the form of a new one Vaccine. In addition to 20 pipeline drugs and a business restructuring, GSK has announced that it will launch a next-generation mRNA Covid-19 vaccine.1 Although the company has not yet perfected its initial response to the virus, executives are confident it can is to publish a more effective mRNA vaccine by 2022. The project is being carried out in collaboration with CureVac (CVAC.O). The goal is to produce 100 million doses as soon as possible.

Given that Covid-19 appears to be around for many years to come, new vaccines will be vital. GSK may have missed the initial spike, but future efforts could pay off. Does that mean that the GSK share price could rise in the long term? Or do these recent slip-ups mean that analysts are right to be bearish about the future of this company?

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