GSK's vaccines—especially Shingrix—typically drive growth. Amid COVID-19, they're a drag

shingrix
GSK's Shingrix performance has suffered amid the pandemic as adult doctor visits fell in the U.S. over the summer, exec said. (GSK)

GlaxoSmithKline isn't alone in facing a slowdown amid the COVID-19 pandemic, but its big vaccines business is making 2020 particularly tough for the British drugmaker.

The pandemic has brought “short term pressures,” especially in vaccines, CEO Emma Walmsley said on Wednesday’s analyst call. Still, she said the drugmaker is “firmly on track” to deliver on its long-term goals, and GSK expects its vaccines portfolio and pipeline will “drive growth for years to come."

That's the future, though. Right now, sales have been on the decline, and perhaps the company’s most notable laggard is Shingrix, its fast-launching shingles vaccine. The vaccine posted third-quarter sales of £374 million, a decline of 25% at constant exchange rates, as Americans avoided doctor visits in July and August, CFO Iain Mackay said on Wednesday’s call.  

By the end of the third quarter, though, Shingrix vaccination rates reached pre-COVID levels, Mackay said. The company has seen encouraging trends through October, and GSK is hoping to ride those trends through the end of the year to meet its overall 2020 guidance. 

Before the pandemic, Shingrix demand outpaced supply and there were shortages. Now, GSK says supply has recovered, and execs are counting on the med to deliver strong sales once demand fully recovers, too.

The pandemic’s effect wasn’t limited to Shingrix, of course. A “disrupted” back to school season hurt meningitis B vaccine Bexsero, Mackay said. In all, GSK’s meningitis vaccine sales were up 1% versus the same period last year to £363 million.

RELATED: Sanofi, GSK to provide 200M coronavirus vaccines to COVAX for equitable distribution 

On the flip side, flu vaccines posted a 21% sales increase for the quarter to £445 million thanks to the company’s “strong execution” on producing, selling and distributing vaccines for the important vaccination season, Mackay said on the call. And a strong “consumer focus on personal health” boosted the company’s consumer sales performance in oral health, vitamins, minerals and supplements. 

In all, GSK’s sales fell 3% during the third quarter. Vaccines, typically a reliable growth driver, posted the biggest decline at 9%; consumer health sales fell 6% and pharma sales fell 3%. Despite the tough quarter, GSK has posted 4% revenue growth for the first 9 months of the year and expects to hit its prior earnings guidance.

RELATED: GSK's Shingrix supply recovers thanks to drop in vaccinations, uninterrupted production 

Looking forward, Jefferies analyst Peter Welford sees sentiment around the company "set to improve."

The company's high dividend provides "near-term downside support" during a "transition period" of 2020 and 2021, Welford said in a Wednesday investor note. Down the line, the analyst sees PARP inhibitor Zejula, COPD drug Trelegy, asthma med Nucala and Shingrix driving growth.

And over time, "we see clinical news kickstarting belief in the steadily reinvigorated pipeline," he added.