GSK plc (GSK) Q4 2025 earnings review
Specialty Medicines Power a Strong Finish; 2026 Outlook Solid
GSK closed 2025 with strong momentum, delivering 8% CER revenue growth and 18% Core Operating Profit growth in Q4. The thesis is shifting decisively towards Specialty Medicines (HIV, Oncology, Respiratory), which grew 18% and now comprise over 40% of sales. While the headline numbers beat expectations, the composition was mixed: excellent pipeline execution (5 major FDA approvals in 2025) and Oncology growth (+43%) masked a sharp 17% decline in US Shingrix sales as the market saturates. Management issued confident 2026 guidance calling for 7-9% profit growth, signaling that operating leverage remains intact despite vaccine headwinds.
🐂 Bull Case
GSK secured 5 major FDA approvals in 2025, including Blenrep and Nucala for COPD. Oncology sales surged 43% in Q4, validating the R&D pivots.
Core Operating Margin expanded +110bps in FY25 to 29.9% and is guided to expand further in 2026, driven by a favorable mix shift toward high-margin Specialty Medicines.
🐻 Bear Case
US Shingrix sales fell 17% in 2025 as the company hit the 'harder-to-activate' consumer wall. US cumulative immunization rate is 44%, suggesting the easy growth is gone.
General Medicines sales declined 1% in 2025 and are guided to decline further in 2026, creating a persistent headwind that Specialty growth must constantly offset.
⚖️ Verdict: 🟢
Bullish. GSK is successfully executing its transition to a specialty biopharma. The rapid growth in Oncology and HIV offsets the maturity of the Shingrix franchise. With a P/E significantly below peers and 7-9% earnings growth guided, the risk/reward is favorable.
Key Themes
Specialty Medicines: The New Engine
Specialty Medicines (HIV, Oncology, Respiratory/Immunology) grew 18% CER in Q4, significantly outpacing the group. This segment generated £13.5bn in FY25 (+17%). Within this, Oncology was the standout, growing 42% in Q4 driven by Jemperli (+79%) and Ojjaara (+37%). This mix shift is structurally accretive to margins.
US Shingrix Wall
Shingrix US sales dropped 17% in FY25. While International markets grew 13%, they cannot fully replace the high-margin US volume. Management noted US immunization rates reached 44%, and penetration has slowed to 2-4% per year. The growth narrative for Vaccines now relies heavily on Arexvy and international expansion.
HIV Long-Acting Portfolio Dominance
HIV sales grew 11% in Q4, defying fears of competitive pressure. Crucially, growth is driven by Long-Acting Injectables (Cabenuva +37% Q4, Apretude +63% Q4), which now account for ~30% of US HIV sales. This creates a high-barrier-to-entry moat against oral competitors.
Margin Expansion via Mix Shift
Core Operating Profit grew 18% in Q4 on just 8% revenue growth. This significant operating leverage is driven by the shift to high-margin Specialty products and 'returns-based' SG&A spending. FY25 Core Operating Margin reached 29.9%, up 110bps YoY.
Zantac Cash Flow Impact
While the litigation risk is receding, the cash impact is real. FY25 Free Cash Flow was £4.0bn, but cash generated from operations included £1.2bn in Zantac settlement payments. While manageable, this drags on near-term cash conversion.
Accelerated Pipeline Output
2025 saw 5 major FDA approvals (Blenrep, Exdensur, Nucala COPD, Penmenvy, Blujepa). Looking ahead to 2026, GSK expects 2 new major product approvals and 10 pivotal trial starts. The R&D engine is productive, helping to fill the gap left by mature product declines.
Other KPIs
Accelerating. Up 12% CER vs FY24. Growth outpaced revenue (+7%) and operating profit (+11%), aided by the share buyback program (£1.4bn executed).
Accelerating. Up significantly from £2.86bn in FY24, primarily due to higher operating profits and lower tax payments, despite the £1.2bn Zantac settlement outflow.
Stable. Increased from £13.1bn in FY24 due to acquisition costs (IDRx, BP Asset IX) and shareholder returns, but leverage remains comfortable at 1.3x Net Debt/Core EBITDA.
Guidance
Decelerating from 7% in 2025. This reflects the continued drag from General Medicines and slower Vaccines growth, partially offsetting double-digit Specialty growth.
Decelerating slightly from 11% in 2025, but still growing faster than revenue (positive operating leverage). Management cites continued product mix benefits and efficiencies.
Decelerating from 17% in 2025, but remains the primary growth driver.
Reversing. After growing 2% in 2025, the Vaccines segment is expected to struggle against US headwinds. This is a notable downgrade in momentum for what was previously a key growth pillar.
Decelerating from 12% in 2025. Includes expected benefits from the share buyback program but offset by a rising tax rate (expected ~17.5%) and higher interest charges.
Key Questions
Vaccines Growth Reset
Guidance for Vaccines in 2026 is 'decline low single-digit to stable.' Given that Shingrix is saturating in the US, what gives you confidence this segment can return to growth in 2027 and beyond? Is the mid-term Vaccines outlook comprised?
Phasing of 2026 Profit
You noted 2026 operating profit growth will be 'significantly H2 weighted.' What are the specific drivers of this skew—is it launch timing of new assets like Blenrep/Exdensur, or comparator effects?
General Medicines Erosion
General Medicines are guided to decline 'low single-digit to stable' in 2026. With Trelegy growing well (+13% in 2025), what specific products are dragging this segment down, and when do those headwinds annualize?