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Bull vs Bear: GSK’s big oncology bet just got bigger
Key points
- GSK’s new CEO is making a splash with a big acquisition of US cancer biotech Nuvalent
- The $10.6bn all-cash deal sees GSK place an increasingly big bet on oncology to build $40bn in annual revenues by 2031
- Shares have flatlined this year but are still +23% over the last 12 months
More than a decade on from exiting the oncology business GSK is placing a large bet that the business of researching and developing cancer drugs will help propel its revenue growth and secure its product pipeline for years to come.
Whilst GSK first re-entered the oncology field under previous CEO Emma Walmsley, having exited the field in 2014, her successor is going further in rebuilding the group’s cancer business with a $10.6bn acquisition of a US biotech company that promises to deliver blockbuster lung cancer treatments that are due final FDA approval this year.
Luke Miels, who took over from Walmsley at the start of the year, said the acquisition of Nuvalent will provide GSK with “immediate new sales growth opportunities” and improve profits from 2027.
GSK is paying up to acquire these treatments – the $124-a-share bid is a 40% premium to Nuvalent’s undisturbed closing price yesterday. GSK said it will be earnings accretive from next year and offset some of the hit to core operating profit from the loss of exclusivity from its dolutegravir family of antiviral medicines, which start to go off patent from 2028, with the full impact by 2030. Management also said the deal would be accretive to core EPS from 2029 and that there was no change to its 2026 full-year guidance range of 7-9% core operating profit and core earnings per share growth.
Whilst GSK first re-entered the oncology field under previous CEO Emma Walmsley, having exited the field in 2014, her successor is going further in rebuilding the group’s cancer business with a $10.6bn acquisition of a US biotech company that promises to deliver blockbuster lung cancer treatments that are due final FDA approval this year.
Luke Miels, who took over from Walmsley at the start of the year, said the acquisition of Nuvalent will provide GSK with “immediate new sales growth opportunities” and improve profits from 2027.
GSK is paying up to acquire these treatments – the $124-a-share bid is a 40% premium to Nuvalent’s undisturbed closing price yesterday. GSK said it will be earnings accretive from next year and offset some of the hit to core operating profit from the loss of exclusivity from its dolutegravir family of antiviral medicines, which start to go off patent from 2028, with the full impact by 2030. Management also said the deal would be accretive to core EPS from 2029 and that there was no change to its 2026 full-year guidance range of 7-9% core operating profit and core earnings per share growth.
The deal is central to GSK’s target of achieving $40bn in annual revenues by 2031. The loss of exclusivity from the Dolutegravir family has been an important driver for action. In 2025 these drugs generated $5.65bn in sales – about one-sixth of total revenues. Replacing these volumes won’t be easy, while GSK also faces headwinds from its vaccines business, which make up close to a third of sales, from Trump administration pushback.
But oncology is growing – sales rose 43% last year to £2bn and is set to grow further, potentially accounting for as much as half of its largest division, speciality medicines.
As I noted in February, this makes acquisitions important. GSK recently acquired RAPT Therapeutics for $2.2bn billion, which provides access to the growing market of food allergy sufferers. Last year it bought a liver drug from Boston Pharmaceuticals.
And there was the $1.2bn acquisition of cancer biotech IDRx. There have been more deals besides focused on oncology – the $1.9bn deal for Sierra Oncology and a $1.5bn licensing deal with China’s Hansoh Pharma. And then 2025’s $12bn deal with China’s Hengrui Pharma which sees GSK develop 12 drugs across various areas of medicine including cancer.
There are already positive signs from the acquisition strategy – for instance positive results in trials for Hansoh’s Mo-Rez and Riz-rez drugs. Investment bank Jefferies thinks GSK’s oncology pipeline is underappreciated – last week it reiterated its buy rating and 2,500p price target on the stock, noting that oncology is on track to make a significant contribution to sales by 2031. Jefferies estimates Nuvalent could add $5-7bn in peak sales.
GSK has over 50 products in its pipeline, with two major approvals expected this year. The company also had 5 major FDA approvals in the last year, including the blood cancer drug Blenrep and Exdensur, a twice-yearly drug for treating severe asthma. Each of these are seen generating peak annual sales of $3bn; 2026 was always going a test of how the business can commercialise and execute these drugs, and now it's increasingly about how much the market buys into the push into oncology.
Analyst consensus is Hold on GSK stock.
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