GlaxoSmithKline (GSK) expects the revenues of its Vaccines segment to grow with the addition of meningitis and other vaccines from Novartis (NVS) and the growing demand in European markets. Meningitis vaccines Bexsero and Menveo are expected to drive the revenue growth for 2Q16.
The above chart shows revenues for the Vaccines segment over the last few quarters.
GSK’s global vaccines business
For 2Q16, the Novartis acquisition is expected to be the growth driver for the Vaccines segment, driven by the sales of meningitis vaccines Bexsero in Europe and Menveo in the United States. Apart from meningitis vaccines, the vaccines Fluarix and FluLaval, used for the treatment of flu, are expected to perform well in 2Q16.
During 1Q16, US markets reported a 13% operational growth in revenues, driven by purchases by the Centers for Disease Control and Prevention and a larger market share of some vaccines. European markets reported a 48% growth during 1Q16, while the pro forma growth was 33% at constant exchange rates, driven by Bexsero, Menveo, Boostrix, and hepatitis A vaccine sales. International market sales increased 10% on a reported basis, while the pro forma growth was 3% at constant exchange rates, driven by meningitis products. They were partially offset by the declining sales of Cervarix and hepatitis A vaccines due to supply constraints.
Major competitors for GSK’s meningitis products are Pfizer’s (PFE) Trumenba and Sanofi Pasteur’s (SNY) Menactra. To divest risk, investors could consider the Vanguard FTSE All-World ex-US ETF (VEU), which has a ~0.6% exposure to GlaxoSmithKline.