About half a year into his tenure as GSK’s CEO, Luke Miels is launching a three-year restructuring to navigate the British pharma through upcoming patent cliffs and achieve over 40 billion pounds sterling in annual sales by 2031.
The three-year initiative is designed to generate 1.9 billion pound sterling ($2.5 billion) in annual cost savings by 2029, against 2.4 billion pound sterling in total one-time costs.
The cost reductions will mainly be pulled from three levers, CEO Luke Miels explained during a media briefing Tuesday. About 45% of the savings will target simpler processes and better procurement across different systems, consultation services and other partners support functions, the CEO said.
Another 40% of the major restructuring is focused on “reallocating resources from our mature portfolio of our mature products to our specialty, novel products,” the CEO said, pointing to how a product targeting general practitioners requires a large commercial field force.
The remaining 15% of the cuts will fall on the supply chain.
The chief executive declined to provide the number of jobs being affected because “I want my team to have the chance to discuss this with our people first.”
The program is the result of an enterprise-wide review of GSK’s cost base looking for ways to improve operations, GSK’s CFO, Julie Brown, said on Tuesday’s media call.
Brown highlighted AI as a tool that GSK is leveraging to streamline processes across the organization and speed up operations.
A small amount of the savings will go to improving operating margins to offset the impact from the upcoming loss of exclusivity for blockbuster HIV drug dolutegravir—used in such drugs as Tivicay, Triumeq and Dovato—between 2028 to 2030.
Nevertheless, Miels stressed that the overhaul is about “reinvesting these savings into the late-stage pipeline, so that we can set the company up for success for the next decade.”
The British pharma on Tuesday also unveiled a plan to initiate 20 phase 3 clinical trials by the end of 2026, doubling the number that the company committed to earlier this year. Following a full portfolio review, GSK has identified opportunities to accelerated development across 18 indications and 25 studies for seven key assets in oncology, respiratory, hematology and vaccines, according to Miels.
GSK unveiled the big savings program alongside 8.4 billion pound sterling ($11.1 billion) in sales for the second quarter, up 5% year over year and 2% ahead of analysts’ expectations. Revenues from specialty medicines of 3.8 billion pounds and vaccines of 2.3 billion pounds beat consensus by 3% and 9%, respectively, according to Jefferies.
As a result of the strong performance, GSK now expects its top line to land at the top end of the 3%-to-5% range at the constant exchange rate. The company also dialed up its estimates for the vaccines department, now expecting sales there to be broadly stable and increase by a low single-digit percentage, versus previous expectations for a decline to broadly stable performance.