Analysis
GSK (GlaxoSmithKline) has largely mitigated the financial impact of the U.S. "Liberation Day" and reciprocal tariffs through a voluntary agreement reached with the U.S. Administration on December 19, 2025. This agreement provides GSK and its subsidiary ViiV Healthcare with a three-year exemption from Section 232 tariffs on pharmaceutical products. In exchange for this exemption, GSK committed to lowering drug costs for its respiratory portfolio for patients enrolled in Medicaid, launching new products at "Most Favored Nation" (MFN) pricing, and providing savings of up to 66% on inhaled medicines through a new direct-to-consumer platform.
Prior to this agreement, GSK had anticipated that tariffs introduced in early 2025 would "slightly lower the gross margin" in the second half of the year. However, the company successfully navigated these headwinds, upwardly revising its full-year 2025 guidance in October 2025 due to strong growth in its specialty medicines and vaccine portfolios. The company emphasized that its updated 2025 financial targets were fully inclusive of any enacted or indicated tariff impacts, including a potential 15% duty on certain European imports that was under consideration during the year.
To further insulate itself from trade-related costs, GSK announced a plan to invest $30 billion in U.S. manufacturing and R&D over a five-year period. This includes the construction of a new biologics "flex" factory in Pennsylvania, aimed at strengthening domestic supply chains and aligning with U.S. policy objectives to localize pharmaceutical production. This significant capital commitment was a key lever in securing the tariff exemption and ensuring the company remains positioned as a preferred innovator in its largest market.
As part of its mitigation strategy, GSK recorded core charges of £300 million in the fourth quarter of 2025, split evenly between supply chain and SG&A productivity initiatives. These actions were designed to drive operational efficiencies to offset potential pricing pressures and tariff-related costs. For 2026, the company’s guidance for 3% to 5% sales growth and 7% to 9% core operating profit growth accounts for the expected impacts of the December 2025 agreement, including the MFN pricing requirements and Medicaid discounts.
Data
Unit: GBP millions, except per share data
| Metric | FY2024A | FY2025A | y/y Growth | FY2026E (Guidance) |
|---|---|---|---|---|
| Revenue | £30,328 | £32,667 | 7.7% | 3% – 5% |
| Core Operating Profit | 8,787 | 9,760 | 11.1% | 7% – 9% |
| Core Operating Margin | 29.0% | 29.9% | 90bps | >31.0% |
| Core EPS | 155.1p | 172.0p | 10.9% | 7% – 9% |
Note: FY2025 and FY2026 guidance are inclusive of tariff impacts and mitigation agreements. FY2025 Core Operating Profit includes £300M in productivity charges taken in 4Q.
Source: GSK FY-2025 Results Announcement, 3Q-2025 Interim Report, Marvin Labs
Sources
Our guidance is inclusive of tariffs enacted thus far and indicated potential European tariffs impact of 15%. We are positioned to respond with mitigation actions identified and confirm our guidance towards the top end of the range this year.
Obviously, we have not had any tariffs in the first half. We are anticipating some coming in the second half, and that will lower the gross margin slightly.
In December 2025, GSK entered into an agreement with the US Administration to lower the cost of prescription medicines for American patients. The agreement entered into covers both GSK and ViiV Healthcare and, assuming expected implementation, excludes both companies from s232 tariffs for 3 years.