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After shedding its oncology business just over a decade ago, GSK is building it back with $10.6 billion deal

Not long ago, it would have been hard to imagine GSK GSK -0.50%decrease; red down pointing triangle doing one of the industry’s biggest deals of 2026.

But the company’s new chief executive, Luke Miels, is taking a starkly different approach from his predecessor, striking a $10.6 billion deal for cancer drugmaker Nuvalent NUVL 39.28%increase; green up pointing triangle on Tuesday, in an attempt to turn the drugmaker into a more formidable competitor in an industry where it had started to fall behind.

GSK missed out on a lot of growth after shedding its oncology business just over a decade ago, a move that many on Wall Street and in the industry thought was a mistake. It was part of a series of transactions, including the spinoff of its consumer-health business, that made GSK smaller and more focused on vaccines and respiratory drugs—not the blockbusters in obesity or cancer that have been driving the rest of the industry’s growth.

Miels, who became CEO of the British drugmaker in January, is looking to change that.

“This shows a bit more confidence in their business-development strategy and a change from previous deals which have all been a lot smaller,” said Naresh Chouhan, principal at Intron Health, a healthcare equity-research firm. “This has higher peak sales potential versus some of the others.”

Miels reiterated the company’s ambitious growth targets—with or without Nuvalent—promising to increase annual sales to more than $53 billion by 2031, up more than 20% from where sales are now.

All deals come with risks, though, particularly in pharma where research success doesn’t always translate into commercial success. Many CEOs have landed big deals and not all have delivered the goods, which can ultimately put more pressure on management.

GSK’s deal for Nuvalent gives it two new lung-cancer drugs expected to hit the market later this year. It is GSK’s biggest acquisition in several years after focusing on deals in the low- to mid-single digit billions. It could also help make up for coming revenue losses when the company’s HIV drugs lose patent protection.

Cancer drugs have been one of the hottest areas for the pharmaceutical industry, generating massive sales and fueling intense competition for deals. Cancer heavyweights such as Merck and Bristol-Myers Squibb have been searching for targets because their blockbusters, Keytruda and Opdivo, face patent expirations that will erode sales for some of the industry’s bestselling drugs.

GSK spun its cancer business off in a 2015 deal with Novartis. By 2018, it was trying to get back into the cancer-drug business, though an early deal in that effort, the 2019 acquisition of Tesaro, disappointed investors because sales of a key drug have been sluggish.

Cancer drugs are a big target for the company’s growth. GSK’s oncology business is small but growing, helped by sales of an immunotherapy called Jemperli. Cancer drugs currently generate about $2.6 billion in annual sales for GSK, or about 6% of total company sales. The company has many additional cancer drugs in development.

“Our strategy has been a brick-by-brick building approach,” Miels said Tuesday on a call with reporters.

It has also been a relatively safe strategy in the risky world of drug development. In recent years, GSK has largely gone after deals for drugs with proven disease targets, rather than novel mechanisms that carry a higher risk of failure.

In April, on his first earnings call as CEO, Miels said he’s looking for drugs that are further along in development and where “there is a clear reason as to why this product could advance care and be an improvement.”

The Nuvalent deal will accelerate those efforts. Nuvalent has developed drugs that target lung cancers with certain genetic mutations, known as ALK and ROS1. The promise is that the drugs could provide a new option for patients whose disease progresses after treatment with older drugs targeting the same mutations, and with more tolerable side effects.

Miels, who was previously GSK’s chief commercial officer before succeeding former CEO Emma Walmsley, said the company’s oncology and business-development teams had been following Nuvalent for more than a year.

At a major cancer-research meeting last week where both Nuvalent and competitors presented clinical trial data for lung-cancer drugs, “I really became convinced that this was a deal that we needed to do,” Miels said.

GSK expects Nuvalent’s two leading lung-cancer drugs to contribute to its revenue growth starting in 2027. The consensus estimate of peak sales of the drugs is around $4 billion a year combined.

“We think this deal makes a ton of sense from both sides of the transaction,” Bernstein strategists wrote in a research note, adding it “puts more of a sure-thing on for GSK’s growing lung cancer portfolio.”