GSK Share Price Climbs to £20 on Back of Strong 2025 Performance
The GSK share price has seen a significant acceleration, rising from £14 a year ago to over £20 on Wednesday. This surge follows the company's announcement of a strong financial performance for 2025, marking a notable milestone for the pharmaceutical giant.
A Long-Awaited Return to Form
It has taken a quarter of a century for GSK's share price to return to the level it started at after the merger of Glaxo Wellcome and SmithKline Beecham. Back in 2000, the newly formed company was touted as a potential "Microsoft of the pharmaceutical world," with ambitious promises of rapid drug development. However, the initial years were marred by challenges, including expiring patents, internal conflicts, and unmet expectations, leading to a share price that halved early on.
Eclipsed by AstraZeneca and a Legacy of Underperformance
Throughout much of its history, GSK struggled to keep pace with rivals, particularly AstraZeneca. Under the leadership of Sir Pascal Soriot, AstraZeneca emerged as a science-driven powerhouse, consistently hitting revenue targets and acquiring promising drugs from biotech firms. Today, AstraZeneca's market value is more than double that of GSK, a stark contrast to predictions made at the turn of the century. This legacy has left investors deeply sceptical of GSK's financial promises, having witnessed numerous false dawns over the years.
Signs of a Turnaround Under New Leadership
Despite past disappointments, there is a growing sense that GSK is finally on the path to fulfilling its potential. The recent share price jump, including a 7% rise to £20.80 on Wednesday, reflects this optimism. Former CEO Emma Walmsley played a key role in this shift by making tough decisions, such as demerging the consumer goods division as Haleon in 2022 and cutting an unsustainable dividend to boost research and development spending. She also set an ambitious long-term revenue target of over £40 billion by 2031, exceeding City forecasts.
Luke Miels Steps Up with Confidence
The 2025 financial results served as the first major test for new CEO Luke Miels, who took over at the end of last year. In his debut outing, Miels expressed full confidence in GSK's strategy and the £40 billion-plus revenue target, despite sector analysts suggesting a more realistic figure of £35 billion due to upcoming patent expirations. Drawing inspiration from his mentor Sir Pascal Soriot, Miels emphasised "scientific courage" and agility, aiming to instil market nous into the company's operations.
Looking Ahead with Cautious Optimism
While bullish rhetoric from leadership is a positive start, the true test for GSK will be in the long-term execution of its strategy. Pharma is inherently a slow-burn industry, and Miels is well aware of the perils of overpromising. However, with a humbler approach and renewed focus, GSK appears to be sounding healthier than it has in years. Investors will be watching closely to see if this marks the beginning of a sustained recovery for the beleaguered pharmaceutical firm.
