GlaxoSmithKline (GSK) sent shockwaves through the UK stock market on Tuesday after announcing its largest oncology acquisition in years—a $10.6 billion deal for US-based cancer drug developer Nuvalent. The move, aimed at bolstering GSK’s lung cancer pipeline and offsetting upcoming patent expirations in its HIV portfolio, failed to win over investors, sending the healthcare giant’s shares down nearly 3% and dragging London’s FTSE 100 index lower.
By 0810 GMT, the blue-chip FTSE 100 had slipped 0.3% to 10,341 points, with GSK emerging as the heaviest weight. The broader FTSE 350 Pharmaceuticals and Biotechnology index slumped 1.6%. In contrast, the mid-cap FTSE 250 edged 0.2% higher, reflecting divergent sentiment. GSK’s cash tender offer of $124 per share for Nasdaq-listed Nuvalent represented a roughly 40% premium to Monday’s close. After accounting for Nuvalent’s cash reserves, the net investment stands at about $9.4 billion.
The deal grants GSK access to two late-stage lung cancer therapy candidates currently under FDA review, with regulatory decisions expected later this year, and an earlier-stage asset. CEO Luke Miels described the strategy as a “brick-by-brick building approach” to reconstruct the oncology business GSK exited in 2015 by swapping assets with Novartis. The company expects the acquisition to boost sales and core operating profit from next year and help cushion the impact of patent losses on its key HIV drug dolutegravir between 2028 and 2030. GSK reiterated its target of surpassing £40 billion ($53.4 billion) in annual revenue by 2031.
Despite the strategic rationale, analysts flagged concerns over the size and risk of the transaction. Russ Mould of AJ Bell noted the “hefty premium” and the uncertainty around the two big lung cancer products still awaiting approval. Victoria Scholar of Interactive Investor called it a “mammoth deal even by GSK’s standards,” highlighting the execution risks. The market’s caution overshadowed other FTSE moves: BP fell 1% on weaker crude oil, while Molten Ventures climbed 9.5% on upbeat results and Fever-Tree Drinks rose 6.4% after raising its buyback. The pound recovered above $1.3350.
Outside the corporate sphere, geopolitical tensions showed signs of easing after Iran and Israel halted attacks following a US appeal, and President Trump hinted at a possible Iran deal within days. Yet inflation concerns lingered, as higher energy costs fueled expectations of a 25-basis-point Bank of England rate hike in September. Meanwhile, UK construction firms reported the sharpest cost inflation since 1997, with the S&P Global Construction PMI input cost gauge hitting 70.5 in March, though the headline PMI remained in contraction for a fifteenth straight month at 45.6. Against this backdrop, the government outlined a £1.1 billion AI computing initiative to boost domestic tech competitiveness.
