Key Takeaways
- New GSK CEO Luke Miels has wasted no time in seeking to strengthen the company’s pipeline through a flurry of acquisitions, including a USD 10.6 billion deal for Nuvalent.
- The market has greeted Miels ’ tenure warmly so far, with shares up 7% since the start of the year.
- Analysts say the stock’s biggest headwind is an upcoming patent cliff, which could contribute over £4 billion in sales declines by 2030.
The stock market’s verdict on new GSK GSK CEO Luke Miels has been positive so far, with the company’s stock up some 7% since he took the reins at the start of 2026. But while investors appear to approve of the firm’s acquisition spree under his leadership, analysts say the outlook hinges on whether he can deliver long-term growth.
In January, Miels unveiled a USD 2.2 billion purchase of RAPT Therapeutics, and in April, GSK completed a USD 950 million purchase of 35Pharma. Then in early June, GSK announced a USD 10.6 billion purchase of cancer drug maker Nuvalent NUVL, its largest acquisition in 12 years.
To some degree, Miels’ leadership simply sparked an acceleration in the company’s strategy rather than a full reset, according to analysts. The firm is seeking to address a significant upcoming patent cliff in its older respiratory and HIV portfolios, which Morningstar analysts forecast to contribute over £4 billion in sales declines by 2030.
“The emphasis has sharpened around the key areas of specialty medicines, oncology, and late-stage business development and commercial execution, but there has not been a huge step change in direction,” says Isabel Fairlie, equity analyst at Raymond James.
It’s been enough to impress investors. With this year’s rally, GSK shares are up 37% over the last 12 months. “In terms of my discussions with investors, it’s very clear Luke is well-liked,” says Kerry Holford, head of global pharmaceutical equity research at Berenberg. “Most people are intrigued by where he’s going and see what the path forward is, but they are awaiting delivery.”
Key Morningstar Metrics for GSK
- Morningstar Rating: ★★★★
- Economic Moat: Wide
- Forward Dividend Yield: 3.49%
- Fair Value Estimate: £22.00
- Morningstar Uncertainty Rating: Medium
How Is the New CEO Rebuilding GSK’s Pipeline?
Miels took over GSK following a period of intense change for the drugmaker during Emma Walmsley’s eight years as CEO. Her tenure saw the spinoff of GSK’s consumer health division in 2022, which became Haleon HLN, while she stepped up spending on developing specialty medicines in areas such as respiratory and cancer, as well as vaccines.
Morningstar senior analyst Jay Lee says Miels has been instrumental in building GSK’s specialty medicines portfolio, including in respiratory and cancer, since joining the firm from rival AstraZeneca in 2017. “These therapeutic areas have been the pillars of GSK’s efforts to become an innovative drugmaker, and we think Miels’ designation as CEO fits GSK’s ongoing transformation,” he says.
Following the pivot to focus on specialty medicines, one of the key issues Miels and GSK now face is a raft of upcoming patent expiries. Pharma companies receive patent protection when developing new treatments, which grants them exclusivity to the product. Once that expires, generic drugmakers can produce similar products based on the initial research, which often causes profits for the original drug to plummet.
Morningstar’s Lee says GSK has shifted its pipeline from its historical strategy of targeting slight enhancements toward true innovation and is focusing more on its oncology and immunology division. Recent launches, such as respiratory drug Exdensur and HIV drugs Cabenuva and Apretude, should also help mitigate the drop in revenues from the patent cliff.
“The benefits of these strategies are showing up in GSK’s pipeline and new drug launches,” says Lee. “We expect this focus will improve approval rates and pricing power. In contrast to respiratory drugs, treatments for cancer indications carry much stronger pricing power with payers.”
Still, Raymond James’s Fairlie says the HIV patent cliff remains the company’s clearest medium-term headwind. She highlights HIV drug Dolutegravir, which loses exclusivity between 2028 and 2030, putting pressure on one of GSK’s most profitable franchises. “The market will want evidence that the replacements are large and timely enough,” she says. “In my view, GSK is addressing this on several fronts, by extending the HIV franchise through long-acting regimens, leaning on vaccines and respiratory/immunology for durability, rebuilding oncology through launches such as [cancer drugs] Blenrep and Jemperli, and adding late-stage assets through business development.”
What the Nuvalent Acquisition Means for GSK Stock
The deal for Nuvalent is the largest purchase GSK has made since a USD 21 billion asset swap with Novartis in 2014. Shares dipped as much as 3% in the day’s trading after the Nuvalent announcement, which analysts say may have been due to concerns over the size of the acquisition. Shares quickly recovered, while the deal gives access to late-stage drugs for non-small cell lung cancer, zidesamtinib and neladalkib, which are under review by the US Food and Drug Administration. If they gain approval, the drugs could launch later this year, further adding to the GSK pipeline.
“There was a degree of caution in the market because GSK and oncology do not sit particularly well with most investors,” says Berenberg’s Holford on the deal. “That is essentially because the track record is not well established. This is a company that largely exited oncology through the deal that was done with Novartis and has since made a return. Investors have been somewhat skeptical, understandably, because GSK is yet to really prove itself in that area.”
Holford continues: “I think the therapeutic area of focus in general, plus a relatively larger deal price tag than we’ve seen so far, initially made investors a little concerned. But I think it is a good deal to make. I suspect investors will come to appreciate that.”
Are GSK Shares a Buy Now?
Despite shares rallying this year, Morningstar’s Lee rates the stock as 4 stars, meaning he thinks it’s undervalued. He adds that GSK’s diversified product lineup and patents create a wide economic moat (a durable competitive advantage). “As one of the largest pharmaceutical and vaccine companies, GSK has used its vast resources to create the next generation of healthcare treatments,” he says.
Berenberg’s Holford, who rates GSK as a hold, is also optimistic that the firm can navigate the expiring patents and continue to grow earnings. “For a company the size of GSK, you really only need one or two megabuster products. It’s not like a Novartis, which is huge in terms of its baseline sales, where creating growth is challenging,” she says. “GSK is starting from a much smaller position now. I think that makes it quite intriguing to think about what moves the needle. Not all of their products have to be blockbuster assets for us to find upside.”
Meanwhile, a clearer management narrative under Miels and a greater sense of urgency around late-stage business development are clear drivers for the stock, according to Raymond James’s Fairlie. “With the valuation still undemanding, there is room for sentiment to improve, but only if execution keeps pace with the strategy,” she says.
