AstraZeneca and GSK slide on Trump threats but analysts see positive catalysts ahead

Shares of AstraZeneca and GSK declined over 1% on Friday, primarily due to renewed Trump tariff threats and concerns over potential US drug pricing reform. Despite these headwinds, Shore Capital analysts maintain a positive outlook, citing significant upcoming catalysts for both pharmaceutical giants. For GSK, a key focus is the potential US regulatory approval of its blood cancer therapy Blenrep by July 23rd, with analysts projecting peak sales substantially above current consensus estimates, alongside continued strength in its Specialty Medicines portfolio. AstraZeneca anticipates ten key clinical readouts in the second half of the year, including the pivotal AVANZAR Phase III trial, despite higher R&D expenditure. Both companies are viewed as long-term buys, underpinned by robust pipelines and strong commercial execution, with GSK offering greater near-term upside.

Analysis

Shares in AstraZeneca (AZN) and GSK plc (GSK) declined over 1% due to renewed political overhang from the US, specifically from scaled-up tariff rhetoric by Donald Trump and the revival of the “Most Favoured Nation” drug pricing policy. This macro pressure is compounded by weaker-than-expected UK GDP data for May, in which the pharmaceutical sector was cited as a driver of weakness. Despite these headwinds, Shore Capital analysts identify the pullback as a buying opportunity, pointing to significant company-specific catalysts. For GSK, a pivotal near-term event is the upcoming US regulatory decision on its blood cancer therapy, Blenrep, with a potential approval by July 23. Analysts project Blenrep could achieve peak sales near £5 billion, substantially exceeding the £1.5 billion consensus. For AstraZeneca, while higher R&D spend guided to approximately 23% of revenue may temper near-term results, the outlook is supported by at least ten key clinical readouts in the second half of the year. A key focus will be the AVANZAR Phase III trial, which has the potential to establish a new first-line treatment standard in non-small cell lung cancer. Shore Capital concludes that while both companies possess strong pipelines, GSK offers greater near-term upside potential.

Key Decisions for Investors

• Investors should weigh the significant political risks from potential US tariffs and drug pricing reforms against the strong underlying pipelines of both AstraZeneca and GSK.
• Consider GSK for potential near-term upside, driven by the imminent Blenrep regulatory decision by July 23 and an analyst sales forecast that is more than triple the current consensus.
• For AstraZeneca, focus on the H2 2025 clinical data pipeline, particularly the AVANZAR trial results, as the primary long-term value driver, while monitoring the impact of increased R&D spending on Q2 margins.
• Monitor the upcoming Q2 earnings calls at the end of July for management commentary on the potential impact of US political policy and foreign exchange effects on future guidance.