GlaxoSmithKline’s new shingles vaccine is racking up sales well beyond expectations.
It couldn’t come at a better time. The British drug maker is steadily losing revenue from former top seller Advair, the blockbuster asthma inhaler that brought in $8.7 billion in 2013. Demand for price discounts has already cut that by half, and U.S. competition should intensify soon, likely slashing revenue even more.
Meanwhile, sales are dropping for some other older prescription drugs and GSK’s consumer health products.
Sales of the Shingrix vaccine are soaring, hitting $363 million in the first half of 2018, because it’s far more effective than rival Merck’s older vaccine, Zostavax, says Damien Conover, director of health care stock research at investment firm Morningstar.
Conover says it’s unlikely Shingrix sales will fully offset Advair’s decline, but he expects GSK’s popular HIV medicines and several newer respiratory products including Anoro and Trelegy inhalers to boost revenue over time.
He expects GSK shares to rise significantly from their current $39 level.
“We see the stock as undervalued,” says Conover, adding that it offers a strong dividend.
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