GlaxoSmithKline PLC (GSK.US) reported fourth-quarter profits that surpassed market expectations, primarily fueled by the strong performance of its HIV treatments and an asthma medication recently approved for a lung disease.

The pharmaceutical giant posted quarterly revenue of £8.62 billion, marking a 6.3% year-over-year increase and exceeding forecasts by £170 million; adjusted earnings per share reached 25.5 pence (approximately 35 cents), also beating analyst projections.

The company reaffirmed its full-year profit growth guidance of 7% to 9%, while some analysts had anticipated a slightly more conservative outlook of 6% to 8% EPS growth, as new CEO Luke Mills sets an ambitious target that could potentially be exceeded, with cancer drug Blenrep expected to contribute significantly to revenue.

GlaxoSmithKline forecasts 3% to 5% turnover growth for 2026, alongside core operating profit and core earnings per share both anticipated to increase between 7% and 9%, with the company projecting sales exceeding £40 billion by 2031.

It generated £8.9 billion in cash from operating activities and £4 billion in free cash flow, demonstrating robust financial health.

The company currently confronts a significant "patent cliff" for its top-selling HIV medication, posing a future revenue challenge.

It anticipates low double-digit revenue growth this year from its specialty medicines portfolio, which comprises HIV and cancer treatments alongside drugs like Nucala, recently approved in the US for chronic obstructive pulmonary disease (COPD), a serious lung condition.

Conversely, the other two segments of its business—vaccines and general medicines—are expected to experience a decline in revenue.

Shifting sentiments in the US, particularly during the tenure of Health Secretary Robert F. Kennedy Jr., are exerting pressure on the vaccine division.

Nevertheless, the vaccines unit performed better than expected last quarter, largely due to increased demand outside the US, notably boosted by stronger sales of GlaxoSmithKline's shingles vaccine in China.

Under the previous leadership of CEO Walmsley, the company spun off its consumer health division, Haleon, and pursued strategic acquisitions to bolster its drug development pipeline.

Despite these efforts, CEO Mills still faces the task of convincing investors that the company can achieve its ambitious revenue targets for the end of the decade and beyond.

Last month, GlaxoSmithKline agreed to acquire US-based biotechnology firm Rapt Therapeutics for $2.2 billion, a company focused on developing therapies for patients with inflammatory and immune system disorders.