Glaxosmi. Pharma

GlaxoSmithKline Pharmaceuticals Limited reported a muted 2% revenue growth for both Q4 FY26 and the full year, primarily due to lingering supply constraints from a CMO incident. Despite this, the company achieved robust profitability, with full year EBITDA growing double digit at 11% and PAT growing double digit at 10.0%. The EBITDA ratio for the full year improved by 290 basis points to 34%, and Q4 EBITDA also saw a 1 percentage point improvement to 35%, driven by better gross margins and cost management.

The company is actively transitioning towards an innovative and specialty-led business model, which contributed 6% to Q4 top-line, up from 2% last year, with a stated intent to reach 10%. This growth was fueled by the respiratory portfolio (Trelegy Ellipta, Nucala) and new oncology launches like Zejula and Jemperli. The recent approval for the Ruby-1 trial for first-line endometrial cancer and the upcoming launch of Belantamab for multiple myeloma are expected to further accelerate growth in this segment.

The vaccines portfolio demonstrated strong performance, achieving double-digit growth for the full year, with pediatric vaccines growing 9% and maintaining market leadership. The adult vaccine segment, particularly Shingrix, had a great quarter, driven by a new cardiovascular metabolic strategy. Management anticipates strong high-double-digit growth for the overall vaccines business in the coming financial year, with Shingrix expected to be 'path-breaking' in the next 12 months.

The company has consistently improved its profitability, with the EBITDA ratio rising from 24% four years ago to 34-35% in the current quarter. This expansion was achieved through a mix shift away from price-controlled products, competitive pricing strategies, and active cost of goods reduction via sourcing changes and forward contracts for NLEM products. Additionally, SG&A efficiencies, including field force productivity and AI-led initiatives, contributed to a ~10 percentage point EBITDA improvement over the last four years.

GSK has 26 ongoing clinical trials and is accelerating the launch of innovative medicines, aiming to reduce launch lag to 6-8 months from the US market. Key upcoming launches include Belantamab for relapsed refractory multiple myeloma (marketing authorization received) and an RSV vaccine (Subject Expert Committee approval received). The company also expects market authorization for Bepirovirsen for chronic hepatitis B within the next six months, a product that showed 25% functional cure in trials, representing a significant medical advancement.

To ensure broad access and affordability for its innovative portfolio, especially in oncology, the company is focusing on both private and public accounts. Patient assistance programs (Project Phoenix) are in place for products like Zejula and Jemperli, with treatment costs ranging from INR10-16 lakhs. Efforts are underway to get proprietary innovative medicines on the GTE exemption list, with progress on public accounts expected in the next 6-8 months, ensuring access to beneficiaries in government schemes.

The supply chain issues stemming from a CMO fire incident, which impacted Q4 top-line by ~3-3.5% and resulted in INR28-30 crores of lost sales, are expected to be fully resolved from Q1 FY27. Management has implemented robust business continuity planning. Approximately 40% of the company's business is covered by the National List of Essential Medicines (NLEM), but management believes they are 'well ring-fenced' against NLEM-related impacts through strategic engagement and sourcing.

While committed to maintaining current margins, the company plans to reinvest in the business, particularly for significant upcoming launches in oncology and adult vaccines, to drive top-line growth. The company ended the year with a healthy cash position of INR2,745 crores. The board declared a final dividend of INR57 per share, reflecting the company's profitable growth trajectory and commitment to shareholder returns.