GSK launches $3.7 billion restructuring ahead of $7.5 billion HIV drug patent expirations

GSK is launching a large-scale cost-cutting plan worth 3.75 trillion won ($2.5 billion) to prepare for the expiration of patents on its leading HIV treatments.

According to BioPharma Dive on the 28th (local time), GSK disclosed a restructuring plan in its recent quarterly earnings report to cut approximately £1.9 billion (about 3.75 trillion won) annually over the next three years. The plan aims to simplify the organization and reallocate capital and resources to specialty medicines.

A GSK spokesperson confirmed by email that the plan will include workforce reductions. The company did not disclose the specific number of job cuts, but added that it will also hire for priority research projects. GSK plans to reduce costs by adopting artificial intelligence (AI) technology and streamlining its supply chain and support services.

The restructuring is intended to address the patent cliff facing GSK’s HIV treatment franchise, a core source of revenue. Patents on dolutegravir, an HIV treatment ingredient that generated more than $5 billion (about 7.5 trillion won) in sales last year, are expected to expire between 2028 and 2030.

Luke Mills, who became GSK’s chief executive officer (CEO) earlier this year after Emma Walmsley, is targeting annual revenue of £40 billion by 2031. GSK has recently pursued aggressive mergers and acquisitions (M&A) to fill the revenue gap. Over the past year, it acquired cancer drug developer Nuvalent for approximately $11 billion (about 16.5 trillion won) and immune disease treatment developer Rapt Therapeutics for $2.2 billion (about 3.3 trillion won).

Through these M&A and business development activities, GSK now has 62 drugs in clinical development and 19 in late-stage clinical development. The company plans to begin more than 20 phase 3 clinical trials this year, and the Nuvalent acquisition has already resulted in the approval of a lung cancer treatment.

GSK’s plan is considered larger than market expectations. Michael Leuchten, an analyst at Jefferies, described it as “a strong and unexpected move, twice the size of expectations.” GSK shares rose approximately 4% intraday on the day of the announcement.