CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

Equity Research; GSK

GSK Q4 and FY2016

Conclusion

GSK is a combine of i) Pharmaceuticals (normally a growth area assuming periodic blockbuster drugs ii) Vaccines (lower margin/ steady growth) and iii) Consumer healthcare (increasingly commoditized and price sensitive). The GSK business mix is far lower risk and less pipeline dependent than its peers. GSK keep open the option of a demerger of consumer healthcare or vaccines at some point.

President Trump has said US pharmaceuticals reform is on his agenda. As elsewhere, we are ahead of precise reform proposals or a legislative agenda. The US is the only major pharmaceutical market with unregulated pricing. The key fight will come when the Trump reforms emerge. Only then can we estimate the timing and revenue hit. For GSK, US derived revenues were £10.2bn in 2016 (36.55% group revenue) so this is a worry going forward.

GSK was a major beneficiary of Brexit’s toxic effect on sterling in FY2016. The reverse holds true, there is earnings risk in FY2017 if sterling rallies, generic Advair arrives early and President Trump starts competitive tenders for drug purchases.

Subscribe to our Award-winning Newsletter

We provide daily market data in the form of our award-winning newsletter, The Morning Call and The Market Close.
You can subscribe to this information at any time to help you make the most of your investment.

Quick Sign-up

Get Started with CSS

Open an Account

Subscribe to our award winning daily newsletter

Voted "Best Market Newsletter" in 2012, 2014, 2015 and 2017 by the City of London Wealth Management Awards

Subscribe to our newsletter (Popup)

By signing up to our free email, you are consenting to receive these promotions. The newsletter is sent up to three times per day during the week and up to once per day over the weekend and is directed at UK residents. The newsletter contains company news, market movements, CSS research and promotions and breaking economic news. Occasionally our newsletter will contain advertisements from trusted partners. However, we will never give, sell or rent your email address to any other companies. If you want to stop receiving our free emails you can unsubscribe at any time by clicking on the link at the bottom of each email. You can read our privacy policy here.

Sending
No, thank you I am already subscribed