GSK (GSK) Q1 2026 earnings review
Specialty Medicines Drive Growth While Vaccines Falter
GSK delivered a solid Q1 2026, with turnover up 5% (CER) to £7.63B and Core EPS rising 9% (CER) to 46.5p. The growth narrative is intensely concentrated in the Specialty Medicines segment (+14% CER), which successfully masked a worrying 18% decline in the RSV vaccine Arexvy and a 6% drop in General Medicines. Strong operational discipline expanded Core Operating Margin by 1.0 percentage point to 34.7%. Management reaffirmed full-year guidance of 3-5% turnover growth and 7-9% Core EPS growth, supported by a newly commenced £2B share buyback program. However, with the vaccine portfolio showing decelerating momentum in the US, GSK's reliance on its oncology and HIV pipelines has never been higher.
🐂 Bull Case
Specialty Medicines grew 14% CER to £3.22B, now accounting for 42% of total turnover. Oncology (+28%) and Respiratory/Immunology (+16%) are delivering exceptional volume-driven growth.
Core operating profit outpaced revenue growth (+10% CER), driving margins to 34.7%. Cash generation remains robust, funding a £2B buyback and a 17p quarterly dividend.
🐻 Bear Case
Arexvy sales reversed, plunging 18% CER YoY to £65M. Slower market demand and weak out-of-season uptake in the US highlight the difficulty of sustaining growth post-launch.
The General Medicines segment declined 6% CER. A broadly stable performance by Trelegy could not offset continued generic erosion across the rest of the respiratory portfolio.
⚖️ Verdict: ⚪
Cautiously Bullish. GSK is executing well on profitability and its Specialty pipeline. However, the sudden deceleration in the Vaccine segment—specifically Arexvy—narrows the company's growth pillars and adds pressure on Oncology to deliver.
Key Themes
Oncology and HIV Propel Specialty Portfolio
Specialty Medicines is accelerating. Oncology grew 28% CER (£512M), primarily driven by Jemperli (+40% CER) and Ojjaara (+34% CER) as patient uptake increased across the US and Europe. The HIV franchise remained a reliable engine, up 10% CER (£1.82B), anchored by the continued transition to Long-Acting Injectables like Cabenuva (+31% CER), which now account for a massive share of the segment's growth.
Arexvy Reversing Amid US Market Softness
RSV vaccine Arexvy was a major disappointment, with sales dropping 18% CER to £65M. Management cited 'low out of season uptake' and 'slower market demand' in the US. While some seasonality is expected, a YoY contraction indicates that the 'low-hanging fruit' of eager initial adopters has been exhausted, raising concerns about the long-term TAM for RSV vaccines.
Shingrix Saved by Europe
While the US Shingrix market is saturating (45% cumulative immunization rate), International and European markets are stepping up. Shingrix sales jumped 20% CER to £1.02B, its highest Q1 ever. European sales surged 51% CER, driven by expanded public funding and the launch of a pre-filled syringe. This successfully offsets the decelerating US market.
R&D Investment Accelerating via ADCs
Core R&D spending rose 12% CER to £1.49B (19.6% of sales). The increase was directly tied to the acceleration of the Oncology pipeline, specifically Antibody-Drug Conjugates (ADCs) like Ris-Rez and Mo-Rez, and the integration of velzatinib. GSK is aggressively investing to build an Oncology moat ahead of the impending dolutegravir (HIV) patent cliff.
Looming US Tariff Risk
GSK explicitly acknowledged the macro threat of US tariffs. While the company signed an agreement with the US Government providing relief from the 100% Section 232 tariff until 2029 (via the Generous Model program), the mere presence of this dynamic introduces long-term political and margin risk, especially considering the US accounts for nearly 50% of GSK's total turnover.
Other KPIs
Accelerating. Up 17% from £697 million in 25Q1. The increase was driven by a $250M special dividend from the ViiV shareholding restructure and higher operating cash flows, offset slightly by higher standard distributions to non-controlling interests. Free cash flow conversion stood at a healthy 47%.
Increasing. Up £1.16 billion since December 2025. The primary driver was the $1.9B (£1.4B) net cash acquisition of RAPT Therapeutics, alongside £643M in dividends and £326M in share buybacks. The balance sheet remains sufficiently strong to support ongoing M&A.
Decelerating. Down 6% CER. Trelegy remained flat (£646M) as volume growth was completely offset by US channel mix pressures and Medicare benefit design changes. The rest of the respiratory portfolio declined 4% CER due to generic erosion.
Guidance
Stable. The 26Q1 result of +5% CER sits at the very top of this range, suggesting that management expects tougher comparables or macro headwinds to slightly moderate growth in the back half of the year.
Stable. Q1 came in at +10% CER. The guidance implies operating leverage will continue, driven by the higher-margin Specialty Medicines mix, though this will be partially offset by accelerating R&D spend.
Stable. Q1 came in at +9% CER. This factors in higher interest charges and an elevated tax rate (~17.5%), which will be neutralized by the £2B share buyback program executing through Q2 2026.
Accelerating. The 14% CER growth in Q1 provides a very strong foundation to hit this target, acting as the sole growth pillar for the overall business.
Decelerating. Q1 grew 4% CER, largely due to Shingrix timing. The guidance implies management expects Arexvy weakness and US market saturation to drag the segment negative in the coming quarters.
Key Questions
Arexvy Recovery Path
Arexvy sales declined 18% in Q1. Is this purely a seasonal timing issue, or are we seeing a structural ceiling in the US RSV market now that the most eager demographic has already been vaccinated?
Shingrix European Runway
Shingrix saw 51% growth in Europe this quarter. How much of this is a one-time bolus from new public funding and the pre-filled syringe launch, and how long can Europe offset the slowing US penetration rate?
US Tariff Exemption Durability
The company secured an exemption from the 100% Section 232 tariffs until 2029. What specific requirements must GSK meet under the 'Generous Model' program to maintain this exemption, and what is the contingency plan if those terms change?