* GSK now sees rise in FY pharmaceutical sales
* Vaccines sales hit by surge in Delta variant
* Consumer health split on track
* GSK shares hit 7-week highs
(Adds analyst quote, background on CEO, product sales)
By Pushkala Aripaka and Ludwig Burger
Oct 27 (Reuters) - Britain's GSK raised its annual
profit outlook on Wednesday after better-than-expected
third-quarter results on strong sales of key drugs and cost
cutting ahead of a planned split next year, in a boost to its
shares.
GSK's outperformance buys CEO Emma Walmsley space as she
faces questions from two activist investors over her ability to
manage the separation and reinvigorate the drug development
pipeline. Walmsley has stood her ground, saying the vast
majority of investors were behind her strategy.
The drugmaker now expects 2021 adjusted earnings per share
to fall by between 2% and 4% at constant exchange rates,
excluding any boost from its COVID-19 offerings. It had
previously expected a mid-to-high single digit percentage drop.
The results and outlook sent GSK's London-listed shares up
by as much was 3.6%. At 1248 GMT, the stock was up 1.3%, poised
to close at a seven-week high, while the STOXX Europe 600 Health
Care index slipped 0.1%.
GSK's improved outlook rests on expected pharmaceuticals
sales growth, despite a forecast for lower vaccine sales as a
surge in the coronavirus Delta variant delayed an expected
recovery, including for its key shingles shot.
However, Shingrix sales grew 34% to 502 million pounds,
exceeding expectations, while in another key outperformance,
revenues of inhalable asthma drug Trelegy jumped 68% to 326
million pounds in the quarter.
"As people didn't want to go out and leave their houses and
(health systems) were really prioritising mass scale
vaccination, that was the main hit. These are deferred and not
lost sales for sure and it's good to see us firmly on the
recovery track," Walmsley said on a results call.
'PIPELINE PAINS'
Turnover at the world's biggest vaccine maker by sales rose
5% to 9.1 billion pounds ($12.5 billion) for the three months to
Sept. 30, while adjusted earnings were up 3% to 36.6 pence per
share.
Analysts had expected third-quarter earnings of 29.4 pence
per share on sales of 8.73 billion pounds, a company-compiled
consensus https://www.gsk.com/en-gb/investors/analyst-consensus/analyst-consensus
showed.
GSK said it was sticking with its plan to spin off consumer
health in a mid-2022 stock market flotation, after a report the
business could attract bids from private equity firms.
Activist investors Elliott and Bluebell have called for a
sale of the unit, among other proposals for the remaining
pharmaceuticals and vaccines business, which will retain the GSK
name, including leadership changes.
In a recent development setback for Walmsley, GSK and
Germany's Merck KGaA last month ended their
collaboration on cancer treatment bintrafusp alfa, once seen as
holding great promise, on disappointing trial data.
"Despite a quarter in which pipeline pains have persisted
and activist investors continued to question (Walmsley's)
suitability as CEO, GSK has improved full year EPS guidance,"
Sebastian Skeet, healthcare analyst at Third Bridge, said.
In preparation for splitting the company, a new chair of the
consumer healthcare business, a joint venture between GSK and
Pfizer, is expected to be announced before the end of
the year, GSK said.
In July, the unit's Chief Executive Brian McNamara was
appointed to stay at the helm after its independence.
($1 = 0.7272 pounds)
(Reporting by Pushkala Aripaka in Bengaluru and Ludwig Burger
in Frankfurt; writing by Josephine Mason; Editing by Jason Neely
and Alexander Smith)