ii view: GSK makes biggest acquisition in over a decade

Acquisition of US biotech company Nuvalent for $10.6 billion (£7.95 billion)

Chief Executive Luke Miels said: 

“Today's acquisition is a multi-product deal, consistent with our approach to acquire assets that have clinically proven targets and meaningfully address an efficacy and/or tolerability gap.

“The two lead products are potential best-in-class assets that could launch this year if approved by the Food and Drug Administration (FDA) and offer significant new treatment options to patients with two forms of non-small cell lung cancer.”

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ii round-up:

GSK (LSE:GSK) today detailed its biggest acquisition in more than a decade, with the UK headquartered drug maker expanding its cabinet of potential cancer treatments.  

GSK announced the $10.6 billion (£7.95 billion) acquisition of US biotech Nuvalent Inc Class A (NASDAQ:NUVL) for $124 a share. That’s a 40% premium to Nuvalent’s previous closing price. Nuvalent’s treatments include neladalki, a therapy targeting certain types of lung cancer that's currently undergoing a US government regulatory review.

Shares in GSK fell 3% in UK trading having come into this latest news up by around a quarter over the last year. That’s similar to fellow UK drugs giant AstraZeneca (LSE:AZN). The FTSE 100 index is up by closer to a fifth over that time.

Luke Miels, former commercial director, replaced Emma Walmsley as chief executive on 1 January. GSK medicines include HIV treatments and vaccines to prevent respiratory conditions and shingles. Cancer treatment sales accounted for just 6% of 2025 revenues compared to over 40% at AstraZeneca.

GSK left 2026 sales and profit estimates unchanged, although the Nuvalent acquisition is expected by management to prove sales and operating profit accretive in 2027, then add to core earnings per share by 2029.

GSK’s cancer, or oncology sales totalled close to $2 billion in 2025, with Nuvalent’s core treatments expected by analysts to potentially add close to an additional $1 billion of cancer sales come 2029.  

GSK continues to target 2031 sales of over £40 billion versus £32.7 billion in 2025. Full-year sales for 2026 are forecast to grow by up to 5%, driving core EPS growth of up to 9% on a constant currency basis.

Second-quarter results are scheduled for 28 July.

ii view:

Formed in 2000 via a merger of Glaxo Welcome and SmithKline Beecham, GSK today employs over 65,000 people. Speciality drugs including those for HIV and cancer generated most sales in 2025 at 41%. That was followed by General Medicines and including those for Respiratory conditions at 31%, with Vaccines and including Shingles and Meningitis the balance of 28%.

Geographically, the US made most sales in 2025 at 52%, with Europe at 23%, and the rest of the world the balance of 25%.

For investors, acquisitions are not without risk, with US government approval for Nuvalent’s therapies not guaranteed. Patent loss for its shingles vaccine could occur come 2029, and there's the need to replenish patented and successfully selling drugs. Drug development remains a risky and expensive business, while litigations for side-effects and government investigations are now common for the pharma industry.  

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On the upside, this latest acquisition is expected to prove profit accretive in 2027 and adds to its earlier year purchase of food allergy treatment developer RAPT for $2.2 billion. Drug development projects at the year end 2025 included 29 for Respiratory, Immunology & Inflammation (RI&I) and cancer diseases. A deal with the US government regarding drug costs and trade tariffs was previously agreed, while developments in AI could reduce costs and speed up development of potential new drug treatments.  

For now, and despite ongoing risks, an ambition to exceed £40 billion of annual sales by 2031 and a forecast dividend yield of around 3.7% are likely to keep fans of this UK pharma giant supportive.

Positives

• Defensive qualities. Consumers need medicines even in a recession
• Artificial Intelligence or AI could favourably impact future drug development

Negatives

• Generic competition
• Currency movements can hinder

The average rating of stock market analysts:

Hold