Issued:
Wednesday, 28 October 2020, London U.K.
|
GSK delivers resilient performance, strong commercial execution and
further strategic progress in Q3
Sales of £8.6 billion -8% AER, -3% CER (Pro-forma -5%
CER*)
Total EPS 25.0p, -20% AER, -9% CER; Adjusted EPS 35.6p, -8% AER,
+1% CER
|
|
|
Financial and product highlights
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|
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●
|
Reported
Group sales £8.6 billion, -8% AER, -3% CER (Pro-forma -5%
CER*, -3% CER excluding divestments/brands under review).
Pharmaceuticals £4.2 billion, -7% AER, -3% CER; Vaccines
£2.0 billion, -12% AER, -9% CER; Consumer Healthcare £2.4
billion, -4% AER, +2% CER (Pro-forma -6% CER*). Strong performance
from key growth drivers in respiratory, HIV, oncology and Consumer
Healthcare partly offset by expected disruption from
COVID-19
|
●
|
Sales
of new and specialty pharmaceuticals (excluding established
products) £2.5 billion, +8% AER, +12% CER
|
●
|
Respiratory
sales £978 million, +21% AER, +26% CER. Trelegy sales £194 million +40%
AER, +45% CER. Nucala sales
£251 million, +24% AER, +29% CER
|
●
|
HIV
sales £1.2 billion, -4% AER, flat at CER; two-drug regimen
sales £222 million, +87% AER, +94% CER
|
●
|
Oncology
sales £99 million, +55% AER, +58% CER
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●
|
Shingrix sales £374 million, -30% AER, -25% CER. US
prescriptions rates returned to 2019 levels by
quarter-end
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●
|
Total
Group operating margin 21.5%. Adjusted Group operating margin
30.8%. SG&A decline reflecting ongoing and active focus on cost
management. R&D costs down in quarter; expect 2020 full year
R&D costs to rise mid-to-high single digits as we continue to
invest in late-stage pipeline
|
●
|
Total
EPS 25.0p, -20% AER, -9% CER reflecting adverse changes on
contingent consideration liabilities offset by asset disposals and
improved operating performance
|
●
|
Adjusted
EPS 35.6p, -8% AER, +1% CER reflecting operating profit growth
partly offset by higher effective tax rate and non-controlling
interest allocation of Consumer Healthcare profits
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●
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Q3 net
cash flow from operations £0.9 billion. Free cash flow
£(0.2) billion
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●
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19p
dividend declared for the quarter
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|
Guidance
|
|
●
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On
track to deliver full year 2020 Adjusted EPS at the lower end of
the -1% to -4% range at CER
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|
Pipeline highlights
|
|
●
|
Continued
progress in biopharma pipeline with 3 approvals since Q2 results:
FDA and EC approval of Blenrep as first anti-BCMA therapy for
multiple myeloma; FDA approval of Trelegy for asthma; FDA approval of
Nucala as first biologic
treatment for Hypereosinophilic Syndrome (HES)
|
●
|
Positive
European CHMP opinions in HIV for cabotegravir and rilpivirine as
long-acting regimen for HIV treatment and for Zejula as first-line monotherapy
maintenance treatment in ovarian cancer
|
●
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Phase
III trials to start in Q4 and Q1 2021 for RSV vaccines in maternal
and older adults following positive Phase I/II data
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●
|
First
participant vaccinated in Phase III clinical trial of 5-in-1
meningitis ABCWY vaccine candidate
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COVID-19 Solutions update
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●
|
Phase
I/II study of Sanofi-GSK adjuvanted recombinant protein-based
vaccine candidate initiated. Phase III trial expected to start
December 2020
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●
|
Supply
agreements reached with US, EU, UK, Canada for Sanofi-GSK vaccine.
Statement of Intent signed with COVAX facility to support
successful and equitable access to COVID-19 vaccines
worldwide
|
●
|
Phase
III study underway for Vir-GSK antibody (VIR-7831) for high-risk
outpatients with COVID-19, with initial results potentially
available by the end of 2020
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|
Q3 2020 results
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|||||||||||
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Q3 2020
|
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Growth
|
|
9 months 2020
|
|
Growth
|
||||
|
£m
|
|
£%
|
|
CER%
|
|
£m
|
|
£%
|
|
CER%
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
8,646
|
|
(8)
|
|
(3)
|
|
25,360
|
|
2
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
1,858
|
|
(13)
|
|
(2)
|
|
6,722
|
|
33
|
|
37
|
Total
earnings per share
|
25.0p
|
|
(20)
|
|
(9)
|
|
102.0p
|
|
51
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,665
|
|
(4)
|
|
4
|
|
7,089
|
|
-
|
|
3
|
Adjusted
earnings per share
|
35.6p
|
|
(8)
|
|
1
|
|
92.6p
|
|
(7)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
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Net
cash from operating activities
|
861
|
|
(66)
|
|
|
|
4,586
|
|
-
|
|
|
Free
cash flow
|
(180)
|
|
>(100)
|
|
|
|
2,300
|
|
(7)
|
|
|
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The
Total results are presented under ‘Financial
performance’ on pages 12 and 27 and Adjusted results
reconciliations are presented on pages 23, 24, 38 and 39. Adjusted
results are a non-IFRS measure that may be considered in addition
to, but not as a substitute for, or superior to, information
presented in accordance with IFRS. Adjusted results are defined on
page 10 and £% or AER% growth, CER% growth, free cash flow and
other non-IFRS measures are defined on page 62. GSK provides
guidance on an Adjusted results basis only, for the reasons set out
on page 11. All expectations, guidance and targets regarding future
performance and dividend payments should be read together with
‘Outlook, assumptions and cautionary statements’ on
pages 63 and 64.
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|
*
|
Reported AER and
CER growth rates include one and seven months’ results of
former Pfizer consumer healthcare business. Pro-forma CER growth
rates are calculated as if the equivalent one and seven months of
Pfizer consumer healthcare business results, as reported by Pfizer,
were included in the comparative period of Q3 2019 and 9 months
2019 respectively. See ‘Pro-forma growth’ on page
11.
|
Emma Walmsley, Chief Executive Officer, GSK said:
“GSK
has responded well to a challenging operating environment this year
with disciplined cost control and strong commercial momentum in key
growth products including Nucala, Trelegy, Benlysta, 2 drug-HIV regimens,
Zejula, Shingrix and our priority Consumer
Healthcare brands. This, combined with improving vaccination rates
this quarter, means we are on track to deliver within our earnings
guidance range for 2020. In addition, we continue to make good
progress on our preparations to separate the Group and create two
new companies - in Biopharma and Consumer Health - which we believe
will deliver options for sustainable growth and returns to
shareholders.
“R&D
delivery has continued with three product approvals since Q2
results and presentation of new clinical data to support the start
of Phase III development for our very promising RSV vaccines. We
are also urgently advancing possible COVID-19 Solutions with our
partners, including clinical trials for antibody therapy VIR-7831
and three different adjuvanted vaccines. We expect to see data on
all of these before the end of the year.”
|
2020 guidance
|
At
full-year 2019 results on 5 February 2020 we provided guidance with
respect to expected full-year 2020 Adjusted EPS, being a decline in
the range of -1% to -4% at CER. This guidance reflected our
expectations for growth in key new products, and the start of a
two-year period in which we would continue to increase investment
in these products and in our R&D pipeline, alongside
implementation of our new programme which will prepare the Group
for separation.
Our
2020 guidance was set before the COVID-19 pandemic and did not
include any potential impact on our business from the pandemic. It
also excluded any impact in 2020 from further material divestments
beyond those previously announced.
The
COVID-19 pandemic has impacted Group performance, particularly in
the Vaccines business, during the first nine months of 2020. During
the third quarter we have seen a recovery in vaccination rates,
including adult immunisation rates in the United States returning
to prior year levels in the last month of the quarter.
This
improvement, coupled with strong commercial execution of key growth
products and disciplined cost control, mean we are on track to
deliver within our earnings guidance range, with 2020 Adjusted EPS
now expected to be at the lower end of the -1% to -4% range at CER.
Achieving this guidance is supported by the expectation of
sustained recovery of adult immunisation rates, particularly in
Shingrix.
All
expectations, guidance and targets regarding future performance and
dividend payments should be read together with ‘Outlook,
assumptions and cautionary statements’ on pages 63 and 64. If
exchange rates were to hold at the closing rates on 30 September
2020 ($1.28/£1, €1.10/£1 and Yen 136/£1) for
the rest of 2020, the estimated impact on 2020 Sterling turnover
growth would be negative at around 1% and if exchange gains or
losses were recognised at the same level as in 2019, the estimated
negative impact on 2020 Sterling Adjusted EPS growth would be
around 2%.
|
Results presentation
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A
webcast of the quarterly results presentation hosted by Emma
Walmsley, GSK CEO, will be held at 2pm GMT on 28 October 2020.
Presentation materials will be published on www.gsk.com prior to
the webcast and a transcript of the webcast will be published
subsequently.
Information
available on GSK’s website does not form part of, and is not
incorporated by reference into, this Results
Announcement.
|
Operating performance – Q3 2020
|
Turnover
|
Q3 2020
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,192
|
|
(7)
|
|
(3)
|
|
(3)
|
Vaccines
|
2,032
|
|
(12)
|
|
(9)
|
|
(9)
|
Consumer
Healthcare
|
2,422
|
|
(4)
|
|
2
|
|
(6)
|
|
|
|
|
|
|
|
|
|
8,646
|
|
(8)
|
|
(3)
|
|
(5)
|
|
|
|
|
|
|
|
|
Corporate
and other unallocated turnover
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
turnover
|
8,646
|
|
(8)
|
|
(3)
|
|
(5)
|
|
|
|
|
|
|
|
|
Group turnover was £8,646 million in the quarter, down 8% AER,
3% CER and 5% CER on a pro-forma basis. On a pro-forma basis,
excluding the impact of divestments in Vaccines and brands divested
or under review in Consumer Healthcare, Group turnover was down 3%
CER.
Pharmaceuticals
turnover in the quarter was £4,192 million, down 7% AER, 3%
CER. HIV sales were down 4% AER, flat at CER, to £1,216
million, with growth in Juluca and Dovato offset by declines in
Tivicay and Triumeq. Respiratory sales were up 21%
AER, 26% CER, to £978 million, on growth of Trelegy and Nucala. Sales of Established
Pharmaceuticals declined 23% AER, 18% CER, to £1,706
million.
Vaccines turnover declined 12% AER, 9% CER to £2,032 million,
largely driven by the adverse impact of the COVID-19 pandemic
on Shingrix, Established vaccines and Meningitis. This
decline was partly offset by strong demand and lower expected
returns for Influenza vaccine in the US.
Reported Consumer Healthcare sales declined 4% AER, but grew 2% CER
to £2,422 million in the quarter reflecting a full quarter of
sales of legacy Pfizer brands compared to two months in the third
quarter of 2019. On a pro-forma basis, sales declined 6% CER but
grew 3% CER, excluding brands divested/under review. Growth in Oral
health and Vitamins, minerals and supplements brands was offset by
weaker performance in Respiratory health and Pain
relief.
Operating profit
Total operating profit was £1,858 million in Q3 2020 compared
with £2,147 million in Q3 2019. The total operating margin was
21.5%. Adjusted operating profit was £2,665 million, 4% lower
than Q3 2019 at AER but 4% higher at CER on a turnover decrease of
3% CER. The Adjusted operating margin was 30.8%. On a pro-forma
basis, Adjusted operating profit was 2% higher at CER on a turnover
decrease of 5% CER, reflecting SG&A -10% CER and R&D costs
-7% CER. The Adjusted pro-forma operating margin was
30.8%.
The decrease in Total operating profit reflected higher
re-measurement charges on the contingent consideration liabilities
and an adverse comparison to an increase in value of shares in
Hindustan Unilever Limited in Q3 2019, partly offset by higher
asset disposals.
The increase in pro-forma Adjusted operating profit benefited from
continued restructuring across the business including a one-off
benefit in the quarter from restructuring of post-retirement
benefits, a favourable comparison to increased costs for a number
of legal settlements in Q3 2019, a benefit in the quarter from
recognition of pre-launch inventory on approval of
Blenrep, and tight control of ongoing costs including
reduced promotional and variable spending across all three
businesses as a result of the COVID-19
lockdowns.
Earnings per share
Total
EPS was 25.0p, compared with 31.4p in Q3 2019. The reduction in EPS
primarily reflected higher re-measurement charges on the contingent
consideration liabilities and an adverse comparison to an increase
in value of shares in Hindustan Unilever Limited in Q3 2019, partly
offset by higher asset disposals and improved operating
performance.
Adjusted
EPS was 35.6p compared with 38.6p in Q3 2019, down 8% AER, but up
1% CER, on a 4% CER increase in Adjusted operating profit. This
reflected a higher effective tax rate and a higher non-controlling
interest allocation of Consumer Healthcare profits.
Cash flow
The net cash inflow from operating activities for the quarter was
£861 million (Q3 2019: £2,515 million) and free cash
outflow was £180 million (Q3 2019: £1,939 million
inflow). The reduction primarily reflected increased trade
receivables following lower collections from lower sales in Q2
2020, increased inventory primarily in Vaccines, adverse timing of
payments for returns and rebates and taxes, adverse exchange rate
impacts, higher dividends to non-controlling interests and
increased purchases of intangible assets, partly offset by
increased operating profits.
|
Operating performance – nine months 2020
|
Turnover
|
9 months 2020
|
|||||||
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
12,690
|
|
(2)
|
|
(1)
|
|
(1)
|
|
Vaccines
|
4,970
|
|
(8)
|
|
(7)
|
|
(7)
|
|
Consumer
Healthcare
|
7,673
|
|
19
|
|
23
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
25,333
|
|
2
|
|
4
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Corporate
and other unallocated turnover
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
turnover
|
25,360
|
|
2
|
|
4
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Group turnover was £25,360 million in the nine months, up 2%
AER, 4% CER but down 2% CER on a pro-forma basis. On a pro-forma
basis, Group turnover was down 2% CER, but flat at CER excluding
the impact of divestments in Vaccines and brands divested or under
review in Consumer Healthcare.
Pharmaceuticals
turnover in the nine months was £12,690 million, down 2% AER,
1% CER. HIV sales were flat at AER and up 1% CER, to £3,608
million, with growth in Juluca and Dovato partly offset by declines in
Tivicay and Triumeq. Respiratory sales were up 25%
AER, 26% CER, to £2,732 million, on growth of Trelegy, Nucala and Relvar/Breo. Sales of Established
Pharmaceuticals declined 16% AER, 14% CER to £5,572
million.
Vaccines turnover declined 8% AER, 7% CER to £4,970 million,
primarily driven by the adverse impact of the COVID-19 pandemic on
Hepatitis, DTPa-containing, Shingrix and Meningitis vaccines, together with the
Rabipur
and Encepur divestment. This decline was partly offset by
higher sales of Influenza vaccines in the US.
Reported Consumer Healthcare sales grew 19% AER, 23% CER to
£7,673 million in the nine months, largely driven by the
inclusion of the Pfizer portfolio, partly offset by brands
divested/under review. On a pro-forma basis, sales were flat at
CER, but grew 6% CER excluding brands divested/under review. This
reflected the continued momentum of our Vitamins, minerals and
supplements brands as well as continued strong performance in Oral
health.
Operating profit
Total operating profit was £6,722 million in the nine months
compared with £5,059 million in 2019. The Adjusted operating
profit was £7,089 million, flat compared with 2019 at AER and
3% higher at CER on a turnover increase of 4% CER. The Adjusted
operating margin of 28.0% was 0.7 percentage points lower at AER,
and 0.4 percentage points lower on a CER basis than in 2019. The
pro-forma Adjusted operating margin was 28.0%.
The
increase in total operating profit reflected the profit on disposal
of the Horlicks and other
Consumer Healthcare brands and resultant sale of shares in
Hindustan Unilever as well as increased income from asset
disposals. This was partly offset by higher re-measurement charges
on the contingent consideration liabilities.
The
reduction in pro-forma Adjusted operating profit primarily
reflected the adverse impact from the reduction in sales in
Vaccines as a result of the COVID-19 pandemic, continuing price
pressure, particularly in Respiratory, investment in R&D, and
investments in promotional product support, particularly for new
launches in Vaccines, HIV and Respiratory. This was partly offset
by reduced promotional and variable spending across all three
businesses as a result of the COVID-19 lockdowns, the continuing
benefit of restructuring in Pharmaceuticals and Consumer Healthcare
and the tight control of ongoing costs, particularly in
non-promotional spending across all three businesses.
Earnings per share
Total
EPS was 102.0p, compared with 67.7p in 2019. The increase in EPS
primarily reflected the net profit on disposal of Horlicks and other Consumer Healthcare
brands as well as increased income from asset disposals, partly
offset by higher re-measurement charges on the contingent
consideration liabilities and a one-off benefit in 2019 from
increased share of after tax profits of the associate
Innoviva.
Adjusted
EPS was 92.6p compared with 99.2p in 2019, down 7% AER, 4% CER, on
a 3% CER increase in Adjusted operating profit. The reduction
primarily resulted from a higher non-controlling interest
allocation of Consumer Healthcare profits, reduced share of after
tax profits of associates resulting from a non-recurring income tax
benefit in Innoviva and partly offset by a reduced effective tax
rate.
Cash flow
The net cash inflow from operating activities for the nine months
was £4,586 million (2019: £4,567 million) and free cash
flow was £2,300 million (2019: £2,474 million). The
reduction primarily reflected higher dividends to non-controlling
interests and adverse exchange impacts, partly offset by a lower
seasonal increase in trade receivables, beneficial timing of
payments for returns and rebates, higher proceeds from disposals of
intangible assets and improved operating profits.
|
R&D pipeline
|
Pipeline news flow highlights since Q2 2020
|
40 medicines in development, 18 Vaccines
|
Vaccine collaborations
|
|
●
|
Sanofi
and GSK signed a statement of intent to support the COVAX Facility
with 200 million doses of adjuvanted, recombinant protein-based
COVID-19 vaccine. COVAX is a global collaboration co-led by Gavi,
the WHO, and CEPI, and aims to secure successful and equitable
access to COVID-19 vaccines worldwide.
|
●
|
Sanofi
and GSK initiated a Phase I/II clinical trial of COVID-19
adjuvanted recombinant protein-based vaccine candidate. If data are
positive, Sanofi and GSK aim to move into a Phase III trial by the
end of 2020.
|
●
|
Agreement
signed with the Government of Canada to supply up to 72 million
doses of GSK’s pandemic adjuvant for use in a COVID-19
vaccine, beginning in 2021.
|
●
|
Sanofi
and GSK confirmed agreement with the European Union to supply up to
300 million doses of adjuvanted COVID-19 vaccine, once the vaccine
is approved.
|
●
|
Sanofi
and GSK selected for Operation Warp Speed to supply United States
Government with 100 million doses of COVID-19 vaccine.
|
VIR-7831/GSK4182136
|
|
●
|
The
COMET-ICE study of VIR-7831 (GSK’136) expanded to a global
Phase III study following positive evaluation of safety and
tolerability data from the Phase II lead-in by an Independent Data
Monitoring Committee. Initial Phase III results may be available as
early as the end of 2020, results for the primary endpoint are
expected Q1 2021.
|
●
|
The
first patient was dosed in the Phase II/III COMET-ICE study of
VIR-7831 (GSK’136), a fully humanised anti-SARS-CoV-2
monoclonal antibody, for the early treatment of COVID-19 in
patients who are at high risk of hospitalisation.
|
Oncology
|
Zejula
(niraparib, PARP inhibitor)
|
|
●
|
The
EMA’s Committee for Medicinal Products for Human Use issued a
positive opinion recommending approval of Zejula as first-line monotherapy
maintenance treatment for women with platinum-responsive advanced
ovarian cancer regardless of biomarker status.
|
Blenrep
(GSK2857916, BCMA immunoconjugate)
|
|
●
|
The
first patient was dosed in the pivotal second line multiple myeloma
study, DREAMM-8, of Blenrep
in combination with pomalidomide and dexamethasone.
|
●
|
The
European Commission approved Blenrep for the treatment of patients
with relapsed and refractory multiple myeloma.
|
●
|
The US
FDA approved Blenrep for
the treatment of patients with relapsed and refractory multiple myeloma.
|
Dostarlimab (TSR-042, PD-1)
|
|
●
|
New
data from the GARNET study of dostarlimab in patients with advanced
or recurrent DNA mismatch repair deficient (dMMR) or proficient
(MMRp) endometrial cancer were presented at ESMO 2020 as a
late-breaking presentation.
|
Bintrafusp alfa (TGF beta trap/ anti-PDL1)
|
|
●
|
Merck
KGaA announced on 20 October 2020 that an interim analysis
including review by an independent data monitoring committee (IDMC)
had previously taken place for the INTR@PID Lung 037 study of
bintrafusp alfa vs pembrolizumab. The results of this analysis will
not be made public nor will data be published. The study will
continue as planned and recruitment has closed at approximately 300
study participants. Having passed futility, the study continues
with event-driven PFS and OS analyses.
|
Bintrafusp alfa (TGF beta trap/
anti-PDL1)/cont.
|
|
●
|
Three-year
follow-up data for first-in-class bifunctional immunotherapy
bintrafusp alfa targeting TGF-b/PD-L1, in second-line NSCLC, were
shared at ESMO 2020.
|
●
|
Twenty-eight
month follow-up data for bintrafusp alfa in patients with
pre-treated biliary tract cancer were shared at ESMO
2020.
|
GSK3359609 (ICOS receptor agonist)
|
|
●
|
The
first patient was dosed in the INDUCE-4 Phase II/III gated study of
GSK’609 in combination with pembrolizumab and chemotherapy in
patients with recurrent or metastatic head and neck squamous cell
carcinoma.
|
Letetresgene-autoleucel (GSK3377794, NY-ESO-1
TCR)
|
|
●
|
First
subject first apheresis for the pivotal study of
letetresgene-autoleucel in patients with synovial sarcoma was
achieved.
|
GSK3901961 (NY-ESO-1 CD8 TCR)
|
|
●
|
Generation
2 NY-ESO-1 CD8 TCR was transitioned from pre-clinical to clinical
development.
|
GSK3845097 (NY-ESO-1 TGFbR2 TCR)
|
|
●
|
Generation
2 NY-ESO-1 TGFb TCR was transitioned from pre-clinical to clinical
development.
|
HIV/Infectious diseases
|
Dovato
(dolutegravir + lamivudine)
|
|
●
|
Long-term
safety and efficacy data, GEMINI 144-week and TANGO 96-week, for
2-drug regimen Dovato were
presented at HIV Glasgow 2020 congress, reinforcing the potential
to shift the treatment paradigm to 2-drug regimens for people
living with HIV.
|
Cabotegravir + rilpivirine
|
|
●
|
Positive
findings from two studies of investigational, long-acting
cabotegravir and rilpivirine, including five-year data showing
long-term durability, efficacy, safety and tolerability were
presented at IDWeek 2020.
|
●
|
The
EMAs Committee for Medicinal Products for Human Use issued a
positive opinion recommending approval of Vocabria (cabotegravir injection) used
in combination with Johnson & Johnson’s Rekambys (rilpivirine injection) for
the treatment of HIV.
|
●
|
Implementation
science study initiated to identify and evaluate approaches to
integrating investigational, every-two-month, injectable HIV
treatment in European healthcare practices.
|
Cabotegravir (long acting integrase inhibitor)
|
|
●
|
The
first patient was dosed in a Phase I study of cabotegravir 400, an
every-three-month, injectable regimen, for the treatment of
HIV.
|
GSK3739937 (maturation inhibitor)
|
|
●
|
The
first patient was dosed in a Phase I study of GSK’937 for the
treatment of HIV.
|
GSK3228836 (HBV ASO)
|
|
●
|
Phase
IIa data were presented at The Digital International Liver Congress
which suggests the potential of investigational drug GSK’836
to suppress hepatitis B virus after four weeks of
treatment.
|
●
|
The
first patient was dosed in the B-Clear monotherapy Phase IIb study
of GSK’836 for the treatment of hepatitis B.
|
GSK3882347
(FimH antagonist)
|
|
●
|
The
first patient was dosed in a Phase I study of GSK’347 for the
treatment of uncomplicated urinary tract infection.
|
GSK3494245 (proteasome inhibitor)
|
|
●
|
The
first patient was dosed in a Phase I study of GSK’245 for the
treatment of visceral leishmaniasis.
|
Immuno-inflammation
|
Benlysta
(belimumab)
|
|
●
|
The US
FDA confirmed the lupus nephritis submission for Benlysta was accepted and granted
Priority Review. Regulatory decision expected before the end of
2020.
|
●
|
Results
from BLISS-LN, the largest controlled Phase III study in patients
with active lupus nephritis ever conducted, were published in the
New England Journal of Medicine. The study met all primary and key
secondary endpoints.
|
GSK2982772 (RIP1-kinase)
|
|
●
|
The
first patient was dosed in a Phase Ib study of GSK’772 for
psoriasis.
|
Respiratory
|
Trelegy Ellipta
(fluticasone furoate / umeclidinium /
vilanterol)
|
|
●
|
The US
FDA approved Trelegy
Ellipta for asthma, becoming the first once-daily single
inhaler triple therapy for the treatment of both asthma and COPD in
the US.
|
●
|
Results
from the CAPTAIN study, showing the benefit of Trelegy Ellipta for patients with
asthma, were published in The Lancet Respiratory Medicine
journal.
|
●
|
A
complete response letter was received from the US FDA for the
inclusion of data on all-cause mortality in the labelling for
Trelegy Ellipta in
COPD.
|
Nucala
(mepolizumab)
|
|
●
|
The US
FDA approved Nucala as the
first and only biologic treatment for Hypereosinophilic Syndrome
(HES).
|
●
|
A
regulatory submission was made to the US FDA for Nucala for the treatment of Chronic
Rhinosinusitis with Nasal Polyps. Regulatory decision expected in
2021.
|
●
|
A
regulatory submission was made to the EMA for Nucala for Chronic Rhinosinusitis with
Nasal Polyps, Eosinophilic Granulomatosis with Polyangiitis and
Hypereosinophilic Syndrome. Regulatory decisions expected in
2021.
|
GSK3772847 (IL33r antagonist)
|
|
●
|
GSK’874
for moderately severe asthma was terminated due to portfolio
prioritisation.
|
GSK3923868 (PI4K- inhibitor
|
|
●
|
First
patient first visit was achieved in a Phase I first time in human
study of GSK’868 for the prevention and treatment of
viral-induced COPD exacerbations.
|
Vaccines
|
Shingrix
|
|
●
|
Approval
in EU of Shingrix broadened
indication for prevention of herpes zoster in adults aged 18 years
and older at increased risk of HZ. Regulatory submission was made
to the US FDA.
|
MenABCWY candidate vaccine
|
|
●
|
The
first patient was dosed in the pivotal Phase III study of 5-in-1
meningitis ABCWY vaccine candidate compared to licensed
meningococcal vaccines, Bexsero and Menveo.
|
RSV older adults candidate vaccine
|
|
●
|
Positive
data from the Phase I/II older adults RSV candidate vaccine were
presented at ID week 2020. Phase III programme expected to start in
early 2021.
|
RSV maternal candidate vaccine
|
|
●
|
Positive
data from the Phase I/II maternal RSV candidate vaccine in
non-pregnant women were shared at ID week 2020. Phase III trial
expected to start by end 2020.
|
Contents
|
Page
|
|
|
Total
and Adjusted results
|
10
|
Financial
performance – Q3 2020
|
12
|
Financial
performance – nine months ended 30 September
2020
|
27
|
Cash
generation
|
43
|
Returns
to shareholders
|
44
|
|
|
Income
statements
|
46
|
Statement
of comprehensive income – three months ended 30 September
2020
|
47
|
Statement
of comprehensive income – nine months ended 30 September
2020
|
48
|
Pharmaceuticals
turnover – three months ended 30 September 2020
|
49
|
Pharmaceuticals
turnover – nine months ended 30 September 2020
|
50
|
Vaccines
turnover – three months ended 30 September 2020
|
51
|
Vaccines
turnover – nine months ended 30 September 2020
|
52
|
Balance
sheet
|
53
|
Statement
of changes in equity
|
54
|
Cash
flow statement – nine months ended 30 September
2020
|
55
|
Segment
information
|
56
|
Legal
matters
|
58
|
Additional
information
|
59
|
Reconciliation
of cash flow to movements in net debt
|
61
|
Net
debt analysis
|
61
|
Free
cash flow reconciliation
|
61
|
Reporting
definitions
|
62
|
Outlook,
assumptions and cautionary statements
|
63
|
Independent
review report
|
65
|
Contacts
|
GSK –
one of the world’s leading research-based pharmaceutical and
healthcare companies – is committed to improving the quality
of human life by enabling people to do more, feel better and live
longer. For further information please visit www.gsk.com.
|
GSK enquiries:
|
|
|
|
Media
enquiries:
|
Simon
Steel
|
+44 (0)
20 8047 5502
|
(London)
|
|
Tim
Foley
|
+44 (0)
20 8047 5502
|
(London)
|
|
Mary
Hinks-Edwards
|
+44 (0)
20 8047 5502
|
(London)
|
|
Kristen
Neese
|
+1 215
751 3335
|
(Philadelphia)
|
|
Kathleen
Quinn
|
+1 202
603 5003
|
(Washington)
|
|
|
|
|
Analyst/Investor
enquiries:
|
Sarah
Elton-Farr
|
+44 (0)
20 8047 5194
|
(London)
|
|
Sonya
Ghobrial
|
+44 (0)
7392 784784
|
(Consumer)
|
|
James
Dodwell
|
+44 (0)
20 8047 2406
|
(London)
|
|
Danielle
Morris
|
+44 (0)
20 8047 7562
|
(London)
|
|
Jeff
McLaughlin
|
+1 215
751 7002
|
(Philadelphia)
|
|
Frannie
DeFranco
|
+1 215
751 4855
|
(Philadelphia)
|
Registered in England & Wales:
No. 3888792
|
|
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
|
Total and Adjusted results
|
Total
reported results represent the Group’s overall
performance.
GSK
also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS
measures may be considered in addition to, but not as a substitute
for or superior to, information presented in accordance with IFRS.
Adjusted results are defined below and pro-forma growth and other
non-IFRS measures are defined on page 62.
GSK
believes that Adjusted results, when considered together with Total
results, provide investors, analysts and other stakeholders with
helpful complementary information to understand better the
financial performance and position of the Group from period to
period, and allow the Group’s performance to be more easily
compared against the majority of its peer companies. These measures
are also used by management for planning and reporting purposes.
They may not be directly comparable with similarly described
measures used by other companies.
GSK
encourages investors and analysts not to rely on any single
financial measure but to review GSK’s quarterly results
announcements, including the financial statements and notes, in
their entirety.
GSK is
committed to continuously improving its financial reporting, in
line with evolving regulatory requirements and best practice. In
line with this practice, GSK expects to continue to review and
refine its reporting framework.
Adjusted
results exclude the following items from Total results, together
with the tax effects of all of these items:
|
●
|
amortisation
of intangible assets (excluding computer software)
|
●
|
impairment
of intangible assets (excluding computer software) and
goodwill
|
●
|
Major
restructuring costs, which include impairments of tangible assets
and computer software, (under specific Board approved programmes
that are structural, of a significant scale and where the costs of
individual or related projects exceed £25 million), including
integration costs following material acquisitions
|
●
|
transaction-related
accounting or other adjustments related to significant
acquisitions
|
●
|
proceeds
and costs of disposal of associates, products and businesses;
significant legal charges (net of insurance recoveries) and
expenses on the settlement of litigation and government
investigations; other operating income other than royalty income,
and other items
|
●
|
separation
costs
|
Costs
for all other ordinary course smaller scale restructuring and legal
charges and expenses are retained within both Total and Adjusted
results.
As
Adjusted results include the benefits of Major restructuring
programmes but exclude significant costs (such as significant
legal, major restructuring and transaction items) they should not
be regarded as a complete picture of the Group’s financial
performance, which is presented in Total results. The exclusion of
other Adjusting items may result in Adjusted earnings being
materially higher or lower than Total earnings. In particular, when
significant impairments, restructuring charges and legal costs are
excluded, Adjusted earnings will be higher than Total
earnings.
GSK has
undertaken a number of Major restructuring programmes in response
to significant changes in the Group’s trading environment or
overall strategy, or following material acquisitions. Costs, both
cash and non-cash, of these programmes are provided for as
individual elements are approved and meet the accounting
recognition criteria. As a result, charges may be incurred over a
number of years following the initiation of a Major restructuring
programme.
Significant
legal charges and expenses are those arising from the settlement of
litigation or government investigations that are not in the normal
course and materially larger than more regularly occurring
individual matters. They also include certain major legacy
matters.
Reconciliations
between Total and Adjusted results, providing further information
on the key Adjusting items, are set out on pages 23, 24, 38 and
39.
GSK
provides earnings guidance to the investor community on the basis
of Adjusted results. This is in line with peer companies and
expectations of the investor community, supporting easier
comparison of the Group’s performance with its peers. GSK is
not able to give guidance for Total results as it cannot reliably
forecast certain material elements of the Total results,
particularly the future fair value movements on contingent
consideration and put options that can and have given rise to
significant adjustments driven by external factors such as currency
and other movements in capital markets.
|
Pro-forma growth
The
acquisition of the Pfizer consumer healthcare business completed on
31 July 2019 and so GSK’s reported results for Q3 2020
include three months of results of the former Pfizer consumer
healthcare business from 1 July 2020.
The
Group has presented pro-forma growth rates at CER for turnover,
Adjusted operating profit and operating profit by business taking
account of this transaction. Pro-forma growth rates for the quarter
are calculated comparing reported results for Q3 2020, calculated
applying the exchange rates used in the comparative period, with
the results for Q3 2019 adjusted to include the equivalent one
month of results of the former Pfizer consumer healthcare business
during July 2019, as consolidated (in US$) and included in
Pfizer’s US GAAP results. Similarly, pro-forma growth rates
at CER for the nine months to 30 September 2020 are calculated
comparing reported results for the nine months to 30 September
2020, calculated applying the exchange rates used in the
comparative period, with the results for the nine months to 30
September 2019, adjusted to include the equivalent seven months of
results to 31 July 2019 of the former Pfizer consumer healthcare
business, as consolidated (in US$) and included in Pfizer’s
US GAAP results.
ViiV Healthcare
ViiV
Healthcare is a subsidiary of the Group and 100% of its operating
results (turnover, operating profit, profit after tax) are included
within the Group income statement.
Earnings
are allocated to the three shareholders of ViiV Healthcare on the
basis of their respective equity shareholdings (GSK 78.3%, Pfizer
11.7% and Shionogi 10%) and their entitlement to preferential
dividends, which are determined by the performance of certain
products that each shareholder contributed. As the relative
performance of these products changes over time, the proportion of
the overall earnings allocated to each shareholder also changes. In
particular, the increasing proportion of sales of
dolutegravir-containing products has a favourable impact on the
proportion of the preferential dividends that is allocated to GSK.
Adjusting items are allocated to shareholders based on their equity
interests. GSK was entitled to approximately 85% of the Total
earnings and 82% of the Adjusted earnings of ViiV Healthcare for
2019.
As
consideration for the acquisition of Shionogi’s interest in
the former Shionogi-ViiV Healthcare joint venture in 2012, Shionogi
received the 10% equity stake in ViiV Healthcare and ViiV
Healthcare also agreed to pay additional future cash consideration
to Shionogi, contingent on the future sales performance of the
products being developed by that joint venture, principally
dolutegravir. Under IFRS 3 ‘Business combinations’, GSK
was required to provide for the estimated fair value of this
contingent consideration at the time of acquisition and is required
to update the liability to the latest estimate of fair value at
each subsequent period end. The liability for the contingent
consideration recognised in the balance sheet at the date of
acquisition was £659 million. Subsequent re-measurements are
reflected within other operating income/expense and within
Adjusting items in the income statement in each period. At 30
September 2020, the liability, which is discounted at 8.5%, stood
at £5,572 million, on a post-tax basis.
Cash
payments to settle the contingent consideration are made to
Shionogi by ViiV Healthcare each quarter, based on the actual sales
performance of the relevant products in the previous quarter. These
payments reduce the balance sheet liability and hence are not
recorded in the income statement. The cash payments made to
Shionogi by ViiV Healthcare in the nine months to September 2020
were £648 million.
Because
the liability is required to be recorded at the fair value of
estimated future payments, there is a significant timing difference
between the charges that are recorded in the Total income statement
to reflect movements in the fair value of the liability and the
actual cash payments made to settle the liability.
Further
explanation of the acquisition-related arrangements with ViiV
Healthcare are set out on pages 50 and 51 of the Annual Report
2019.
|
Financial performance – Q3 2020
|
Total results
|
The
Total results for the Group are set out below.
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
8,646
|
|
9,385
|
|
(8)
|
|
(3)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,885)
|
|
(3,245)
|
|
(11)
|
|
(8)
|
|
|
|
|
|
|
|
|
Gross
profit
|
5,761
|
|
6,140
|
|
(6)
|
|
-
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,669)
|
|
(2,892)
|
|
(8)
|
|
(4)
|
Research
and development
|
(1,140)
|
|
(1,206)
|
|
(5)
|
|
(2)
|
Royalty income
|
85
|
|
118
|
|
(28)
|
|
(26)
|
Other
operating expense
|
(179)
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
1,858
|
|
2,147
|
|
(13)
|
|
(2)
|
|
|
|
|
|
|
|
|
Finance
income
|
(3)
|
|
32
|
|
|
|
|
Finance
expense
|
(195)
|
|
(245)
|
|
|
|
|
Share
of after tax profits of
associates
and joint ventures
|
11
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
1,671
|
|
1,951
|
|
(14)
|
|
(2)
|
|
|
|
|
|
|
|
|
Taxation
|
(241)
|
|
(235)
|
|
|
|
|
Tax rate %
|
14.4%
|
|
12.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
1,430
|
|
1,716
|
|
(17)
|
|
(5)
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
186
|
|
164
|
|
|
|
|
Profit
attributable to shareholders
|
1,244
|
|
1,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,430
|
|
1,716
|
|
(17)
|
|
(5)
|
|
|
|
|
|
|
|
|
Earnings per share
|
25.0p
|
|
31.4p
|
|
(20)
|
|
(9)
|
|
|
|
|
|
|
|
|
Adjusted results
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for Q3 2020 and Q3 2019
are set out on pages 23 and 24.
|
|
Q3 2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
8,646
|
|
100
|
|
(8)
|
|
(3)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,540)
|
|
(29.4)
|
|
(9)
|
|
(6)
|
|
(8)
|
Selling,
general and
administration
|
(2,477)
|
|
(28.6)
|
|
(11)
|
|
(7)
|
|
(10)
|
Research
and development
|
(1,049)
|
|
(12.1)
|
|
(10)
|
|
(6)
|
|
(7)
|
Royalty
income
|
85
|
|
0.9
|
|
(28)
|
|
(26)
|
|
(26)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,665
|
|
30.8
|
|
(4)
|
|
4
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
2,479
|
|
|
|
(5)
|
|
4
|
|
|
Adjusted
profit after tax
|
2,062
|
|
|
|
(6)
|
|
3
|
|
|
Adjusted
profit attributable to
shareholders
|
1,775
|
|
|
|
(7)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
35.6p
|
|
|
|
(8)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit by business
|
Q3 2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,945
|
|
46.4
|
|
(2)
|
|
4
|
|
4
|
Pharmaceuticals
R&D*
|
(770)
|
|
|
|
(14)
|
|
(10)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
1,175
|
|
28.0
|
|
8
|
|
16
|
|
16
|
Vaccines
|
899
|
|
44.2
|
|
(23)
|
|
(18)
|
|
(18)
|
Consumer
Healthcare
|
541
|
|
22.3
|
|
(12)
|
|
(2)
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
2,615
|
|
30.2
|
|
(9)
|
|
(1)
|
|
(3)
|
Corporate
& other unallocated
costs
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,665
|
|
30.8
|
|
(4)
|
|
4
|
|
2
|
|
|
|
|
|
|
|
|
|
|
*
|
Operating
profit of Pharmaceuticals R&D segment, which is the
responsibility of the Chief Scientific Officer and President,
R&D. It excludes ViiV Healthcare R&D expenditure, which is
reported within the Pharmaceuticals segment.
|
Turnover
|
Pharmaceuticals turnover
|
|
Q3 2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
978
|
|
21
|
|
26
|
HIV
|
1,216
|
|
(4)
|
|
-
|
Immuno-inflammation
|
193
|
|
13
|
|
18
|
Oncology
|
99
|
|
55
|
|
58
|
|
2,486
|
|
8
|
|
12
|
Established
Pharmaceuticals
|
1,706
|
|
(23)
|
|
(18)
|
|
|
|
|
|
|
|
4,192
|
|
(7)
|
|
(3)
|
|
|
|
|
|
|
US
|
1,918
|
|
(3)
|
|
2
|
Europe
|
974
|
|
(6)
|
|
(6)
|
International
|
1,300
|
|
(14)
|
|
(7)
|
|
|
|
|
|
|
|
4,192
|
|
(7)
|
|
(3)
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the quarter was £4,192 million, down 7% AER, 3%
CER, but grew 8% AER, 12% CER excluding the impact of the decline
in Established Pharmaceuticals turnover. HIV sales were down 4%
AER, flat at CER, to £1,216 million, with growth in
Juluca and Dovato offset by Tivicay and Triumeq. Respiratory sales were up 21%
AER, 26% CER, to £978 million, on growth of Trelegy and Nucala. Sales of Established
Pharmaceuticals declined 23% AER, 18% CER, to £1,706
million.
In the
quarter, as expected, results reflect the COVID-19 pandemic
environment, with lower levels of new patient prescriptions in US
and Europe, reduced market size for allergy and antibiotic products
in International and pressure on net prices in US.
In the
US, sales declined 3% AER and grew 2% CER. Continued growth of
Nucala, Trelegy, Benlysta and the HIV two-drug regimens
was partially offset by the decline in Triumeq and Established
Pharmaceuticals, including the impact of generic albuterol
substitutes.
In
Europe, sales declined 6% AER, 6% CER, with growth in Trelegy, Anoro, Nucala and HIV two-drug regimens, more
than offset by the impacts of generic competition and a one-off UK
Relenza contract last year
in the Established Pharmaceuticals portfolio.
International
declined 14% AER, 7% CER. In addition to growth from the
Respiratory and HIV portfolios, Immuno-inflammation sales were
boosted by the launch of Duvroq for patients with anaemia due to
chronic kidney disease in Japan. Established Pharmaceutical sales
declined, including the impact of a weaker allergy season and
generic Avolve in Japan and
government mandated changes increasing use of generics in
China.
Respiratory
Total
Respiratory sales were up 21% AER, 26% CER, with growth from
Trelegy, Relvar/Breo and
Nucala in all regions.
International Respiratory sales grew 26% AER, 33% CER including
Nucala, up 39% AER, 45%
CER, and Relvar/Breo up 8%
AER, 15% CER to £81 million. In Europe, Respiratory grew 13%
AER, 13% CER including Nucala growing 11% AER, 11% CER. In the
US, Trelegy and
Nucala growth continued
while Relvar/Breo sales
grew 64% AER, 70% CER, including the effect of a prior period RAR
adjustment and a stronger US ICS/LABA market in the COVID-19
pandemic environment.
Sales
of Nucala were £251
million in the quarter and grew 24% AER, 29% CER, with US sales up
25% AER, 32% CER to £149 million, Europe sales of £59
million grew 11% AER, 11% CER and International sales of £43
million grew 39% AER, 45% CER.
Trelegy sales were up 40% AER, 45% CER to £194 million
driven by growth in all regions. In the US, the new asthma
indication was approved and launched in the quarter, with sales up
20% AER, 29% CER. In Europe, sales grew 50% AER, 54% CER and in
International sales grew to £26 million in the
quarter.
Relvar/Breo sales were up 30% AER, 34% CER to £323
million in the quarter. In the US, Relvar/Breo grew 64% AER, 70% CER,
benefiting from the effect of a prior period RAR adjustment and a
stronger US ICS/LABA market impacted by the COVID-19 pandemic. In
Europe and International, Relvar/Breo continued to grow, up 3%
AER, 1% CER and 8% AER, 15% CER respectively.
HIV
HIV
sales were £1,216 million, down 4% AER, flat at CER in the
quarter. The dolutegravir franchise declined 3% AER but grew 1%
CER, delivering sales of £1,176 million. The remaining
portfolio, with sales of £40 million and 3% of total HIV
sales, declined 29% AER, 25% CER and reduced the overall growth of
total HIV by one percentage point at AER and at CER.
Sales
of dolutegravir products were £1,176 million in the quarter.
Tivicay delivered sales of
£377 million and declined 15% AER, 10% CER. Triumeq delivered sales of £577
million and declined 11% AER, 8% CER. The two-drug regimens,
Juluca and Dovato delivered sales of £222
million in the quarter, with combined growth more than offsetting
the decline of the three-drug regimen Triumeq.
In the
US, dolutegravir sales declined 5% AER, but were flat at CER and in
Europe dolutegravir sales grew 3% AER, 4% CER. Following recent
launches of Dovato,
combined sales of the two-drug regimens were £151 million in
the US and £62 million in Europe, with growth more than
offsetting the decline in Triumeq. International dolutegravir
sales declined 2% AER, but grew 5% CER.
Oncology
Sales
of Zejula, the PARP
inhibitor asset acquired from Tesaro in Q1 2019 were £92
million in the quarter, up 44% AER, 47% CER. Sales comprised
£57 million in the US and £33 million in
Europe.
Blenrep for the treatment of patients with relapsed or
refractory multiple myeloma was approved and launched in the US and
Europe in the quarter and reported sales of £8
million.
Immuno-inflammation
Sales
of Benlysta in the quarter
were up 8% AER, 13% CER to £186 million, including sales of
the sub-cutaneous formulation of £93 million up 19% AER, 24%
CER.
Duvroq for patients with anaemia due to chronic kidney
disease, was launched in Japan in the quarter and reported sales in
the International region of £7 million.
Established
Pharmaceuticals
Sales
of Established Pharmaceuticals in the quarter were £1,706
million, down 23% AER, 18% CER.
Established
Respiratory products declined 23% AER, 18% CER to £725
million. This includes the impact of generic albuterol substitutes
on Ventolin and price
pressure on Flovent in the
US. Advair/Seretide sales
declined 12% AER, 8% CER with all regions impacted by generic
competition.
The
remainder of the Established Pharmaceuticals portfolio declined by
24% AER, 19% CER to £981 million on lower demand for
antibiotics during the COVID-19 pandemic period, the impact of
government mandated changes increasing use of generics in markets
including France and China, and a strong comparator, including a
European Relenza
contract.
|
Vaccines turnover
|
|
Q3 2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
363
|
|
(2)
|
|
1
|
Influenza
|
445
|
|
20
|
|
21
|
Shingles
|
374
|
|
(30)
|
|
(25)
|
Established
Vaccines
|
850
|
|
(18)
|
|
(15)
|
|
|
|
|
|
|
|
2,032
|
|
(12)
|
|
(9)
|
|
|
|
|
|
|
US
|
1,151
|
|
(20)
|
|
(17)
|
Europe
|
383
|
|
(3)
|
|
(3)
|
International
|
498
|
|
6
|
|
11
|
|
|
|
|
|
|
|
2,032
|
|
(12)
|
|
(9)
|
|
|
|
|
|
|
Vaccines turnover declined 12% AER, 9% CER to £2,032 million,
largely driven by the adverse impact of the COVID-19 pandemic
on Shingrix, Established vaccines and Meningitis. This
decline was partly offset by strong demand and lower expected
returns for Influenza vaccine in the US.
Vaccines performance in the third quarter was affected by continued
lower demand in some countries due to limited visits to healthcare
practitioners and points of vaccination during pandemic conditions.
Wellness visits have mostly recovered to prior year levels for
paediatrics and adolescents, although US back-to-school
vaccinations have been disrupted because schools and universities
have delayed or reversed in-person tuition. Adult immunisation
rates have improved over the quarter with wellness visits returning
to prior year levels in the last month of the quarter.
Lower demand in the quarter was related to COVID-19 pandemic
conditions unless stated otherwise.
Meningitis
Meningitis sales declined 2% AER but increased 1% CER to £363
million. Bexsero
sales decreased 14% AER, 11% CER to £219 million, reflecting
lower demand in the US and
International, partly offset by lower US returns and
rebates.
Menveo sales declined 2% AER but remained flat at CER
to £104 million, primarily driven by lower demand mostly offset by lower returns and
rebates in the US together with higher demand and favourable
phasing in International.
Influenza
Fluarix/FluLaval sales were
£445 million, up 20% AER, 21% CER, primarily reflecting strong
sales execution and reversal of prior year returns provision
in the US, together with favourable
phasing delivery and higher demand in
International.
Shingles
Shingrix sales
declined 30% AER, 25% CER to £374 million, driven by
lower adult wellness visits and vaccination rates in the US. Total
US prescriptions for Shingrix reflected a consistent growth trend during the
quarter reaching similar levels to the same time last year
by quarter-end. In Europe, a strong
performance was recorded in Germany due to robust underlying
demand. The launch of Shingrix in China also contributed to sales in the
quarter.
Established
Vaccines
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) declined 17% AER, 14% CER. Infanrix/Pediarix
sales declined 21% AER, 17% CER to
£158 million, reflecting lower demand in the US and supply
constraints in Europe.
Boostrix sales were down 13%
AER, 11% CER to £163 million primarily due to decreased
vaccination rates in International and in the
US.
Hepatitis vaccines declined 36% AER, 33% CER to £138 million,
adversely impacted in the US and Europe by lower demand and travel
restrictions, together with competition returning to market in the
US.
Synflorix sales declined by 28%
AER, 27% CER to £83 million, primarily due to unfavourable
phasing in International and lower demand in Emerging
Markets.
Rotarix sales were down 21%
AER, 18% CER to £132 million, reflecting unfavourable phasing
in International and in Emerging Markets together with channel
de-stocking in the US.
MMRV
vaccines sales grew 26% AER, 30% CER to £72 million, largely
driven by improved supply in Europe.
|
Consumer Healthcare turnover
|
|
|
|
Q3 2020
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
702
|
|
(1)
|
|
5
|
Pain
relief
|
|
|
537
|
|
2
|
|
8
|
Vitamins,
minerals and supplements
|
|
|
353
|
|
58
|
|
67
|
Respiratory
health
|
|
|
294
|
|
(15)
|
|
(9)
|
Digestive
health and other
|
|
|
456
|
|
7
|
|
15
|
|
|
|
2,342
|
|
5
|
|
12
|
|
|
|
|
|
|
|
|
Brands
divested/under review
|
|
|
80
|
|
(73)
|
|
(70)
|
|
|
|
|
|
|
|
|
|
|
|
2,422
|
|
(4)
|
|
2
|
|
|
|
|
|
|
|
|
US
|
|
|
785
|
|
8
|
|
15
|
Europe
|
|
|
654
|
|
(1)
|
|
-
|
International
|
|
|
983
|
|
(14)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
2,422
|
|
(4)
|
|
2
|
|
|
|
|
|
|
|
|
Pro-forma
growth
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
On a
reported basis, sales declined 4% AER,
but grew 2% CER to £2,422 million in the quarter. Reported
numbers reflect a full quarter of sales of legacy Pfizer brands
sales compared to two months in the third quarter of 2019.
Brands divested/under review declined 73% AER,70% CER to
£80 million given strong progress on the divestment
programme.
On a
pro-forma basis, sales declined 6% CER but grew 3% CER, excluding
brands divested/under review. Growth in Oral health and Vitamins,
minerals and supplements brands was offset by weaker performance in
Respiratory health and Pain relief.
The previously disclosed reversal of increased retailer stocking
ahead of a systems cutover in North America impacted overall growth
by approximately two percentage points.
COVID-19
pandemic continues to impact results, with different impacts across
categories. In Oral health and in Pain the accelerated purchases
from earlier this year have largely unwound. In Respiratory social
distancing measures continue to create volatility, especially
within cold and flu categories, while Vitamins, minerals and
supplements brands continue to benefit from strong demand given
increased consumer focus on health and wellness.
Oral
health
Oral
health sales declined 1% AER but grew
5% CER to £702 million. Sensodyne grew in high single digits with strong performance
in the International region, particularly India, partly offset by
the impact of the North America systems cutover. There was minimal
impact from reversal of accelerated purchases seen in prior
quarters. Gum health grew in double digits with broad-based growth,
while Denture care declined in low-single digits, reflecting
challenging market conditions.
Pain
relief
Pain relief grew 2% AER, 8% CER to £537 million. On a
pro-forma basis, sales declined in low single digits, largely
driven by a decline of Advil, reflecting weakness in the US. The performance
of Panadol was impacted by retailer stock movements. This was
partly offset by double-digit growth from Voltaren, largely driven by a successful OTC launch in the
US.
Vitamins, minerals and
supplements
Vitamins,
minerals and supplements grew 58% AER, 67% CER to £353
million. On a pro-forma basis, sales continued to grow in the
high-teens per cent, with double digit growth for Centrum, Caltrate and Emergen-C. This reflects an ongoing
increase in consumer demand for the category, driven by consumer
focus on health and wellness, a trend consistent with previous
quarters.
Respiratory
health
Respiratory health sales declined 15% AER, 9% CER to £294
million. On a pro-forma basis, sales declined in low double-digits,
impacted by seasonality in some markets and lower retail sell in
ahead of the cold and flu season. This was partly offset by a
strong performance from Robitussin, which partly benefited from a successful
Naturals innovation.
Digestive health and other
Digestive health and other brands grew 7% AER, 15% CER to £456
million. On a pro-forma basis, sales grew in mid-single digits.
Strong performance from Digestive health products was partly offset
by a decline in Skin health, which continued to be impacted by
lower footfall, reducing impulse purchases in retail stores due to
COVID-19.
|
Operating performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 33.4%, 1.2 percentage
points lower at AER and 1.9 percentage points lower in CER terms
compared with Q3 2019. This primarily reflected the unwind in Q3
2019 of the fair market value uplift on inventory arising on
completion of the Consumer Healthcare Joint Venture with Pfizer,
partly offset by increased write downs in a number of manufacturing
sites.
Excluding
these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 29.4%, 0.3 percentage points lower at
AER and 0.9 percentage points lower at CER compared with Q3 2019.
On a pro-forma basis, Adjusted cost of sales as a percentage of
turnover was 29.4%, 1.0 percentage points lower at CER, compared
with Q3 2019. This reflected favourable product mix and a
favourable comparison to a non-restructuring related write down in
a manufacturing site in Q3 2019 in Pharmaceuticals and
restructuring savings across all three businesses, partly offset by
unfavourable product mix in Vaccines, primarily due to the decline
of Shingrix in the US and
continued adverse pricing pressure in Pharmaceuticals, particularly
in Respiratory.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 30.9%, 0.1
percentage points higher at AER but 0.4 percentage points lower at
CER compared with Q3 2019. This included increased major
restructuring costs and separation costs partly offset by lower
significant legal and transaction costs.
Excluding
these and other Adjusting items, Adjusted SG&A costs as a
percentage of turnover were 28.6%, 0.8 percentage points lower at
AER than in Q3 2019 and 1.3 percentage points lower on a CER basis.
On a pro-forma basis, Adjusted SG&A costs as a percentage of
turnover were 28.6%, 1.5 percentage points lower at CER, compared
with Q3 2019.
Adjusted
SG&A costs declined 11% AER, 7% CER and 10% CER on a pro-forma
basis, which reflected the benefits from restructuring including a
one-off benefit in the quarter from restructuring of
post-retirement benefits and the continuing benefit of
restructuring in Pharmaceuticals, Consumer Healthcare and support
functions, a favourable comparison to increased costs for a number
of legal settlements in Q3 2019, reduced variable spending across
all three businesses as a result of the COVID-19 lockdowns and the
tight control of ongoing costs, partly offset by increased
investment for new launches in Respiratory, HIV and
Vaccines.
Research and development
Total
R&D expenditure was £1,140 million (13.2% of turnover),
down 5% AER, 2% CER, including an increase in impairment charges.
Adjusted R&D expenditure was £1,049 million (12.1% of
turnover), 10% lower at AER, 6% lower at CER than in Q3 2019. On a
pro-forma basis, Adjusted R&D expenditure declined 7% CER
compared with Q3 2019.
Pharmaceuticals
R&D expenditure was £805 million, down 10% AER, 6% CER,
reflecting a benefit in the quarter from recognition of pre-launch
inventory following the successful approval of Blenrep for the treatment of multiple
myeloma, reduction of spend on the PRIMA study and dostarlimab
which filed for approval at the end of 2019 as well as some
efficiency savings as part of the Separation Preparation
restructuring programme and variable spending as a result of
COVID-19 lockdowns. This was partly offset by increased investment
in Oncology assets such as Blenrep and ICOS as well as increased
investment in the progression of key assets in the Specialty and
Primary Care Portfolio including otilimab for Rheumatoid Arthritis
and two key COVID-19 programmes (otilimab COVID and Vir
antibody).
R&D
expenditure in Vaccines was £175 million, down 8% AER, 7% CER,
reflecting efficiency savings as part of the Separation Preparation
restructuring programme and variable spending as a result of
COVID-19 lockdowns. R&D expenditure in Consumer Healthcare was
£69 million.
Royalty income
Royalty
income was £85 million (Q3 2019: £118 million), down 28%
AER, 26% CER, primarily reflecting reduced royalties on sales of
Gardasil.
|
Other operating expense
Net
other operating expense of £179 million (Q3 2019: £13
million expense) primarily reflected accounting charges of
£395 million (Q3 2019: £305 million) arising from the
re-measurement of the contingent consideration liabilities related
to the acquisitions of the former Shionogi-ViiV Healthcare joint
venture and the former Novartis Vaccines business and the
liabilities for the Pfizer put option and Pfizer and Shionogi
preferential dividends in ViiV Healthcare. This included a
re-measurement charge of £339 million (Q3 2019: £255
million) for the contingent consideration liability due to
Shionogi, primarily arising from changes in sales forecasts partly
offset by changes in exchange rate assumptions as well as the
unwind of discounting. These charges were partly offset by
milestone income and profits from a number of asset
disposals.
|
Operating profit
Total
operating profit was £1,858 million in Q3 2020 compared with
£2,147 million in Q3 2019. This reflected higher
re-measurement charges on the contingent consideration liabilities
and an adverse comparison to an increase in value of shares in
Hindustan Unilever Limited in Q3 2019, partly offset by higher
asset disposals.
Excluding
these and other Adjusting items, Adjusted operating profit was
£2,665 million, 4% lower than Q3 2019 at AER but 4% higher at
CER on a turnover decrease of 3% CER. The Adjusted operating margin
of 30.8% was 1.1 percentage points higher at AER, and 2.2
percentage points higher on a CER basis than in Q3 2019. On a
pro-forma basis, Adjusted operating profit was 2% higher at CER on
a turnover decrease of 5% CER. The Adjusted pro-forma operating
margin of 30.8% was 2.4 percentage points higher on a CER basis
than in Q3 2019.
The increase in pro-forma Adjusted operating profit benefited from
continued restructuring across the business including a one-off
benefit in the quarter from restructuring of post-retirement
benefits, a favourable comparison to increased costs for a number
of legal settlements in Q3 2019, a benefit in the quarter from
recognition of pre-launch inventory on approval of
Blenrep, and tight control of ongoing costs including
reduced promotional and variable spending across all three
businesses as a result of the COVID-19
lockdowns.
Contingent
consideration cash payments which are made to Shionogi and other
companies reduce the balance sheet liability and hence are not
recorded in the income statement. Total contingent consideration
cash payments in Q3 2020 amounted to £209 million (Q3 2019:
£217 million). This included cash payments made to Shionogi of
£203 million (Q3 2019: £206 million).
Operating profit by business
Pharmaceuticals
operating profit was £1,175 million, up 8% AER, 16% CER on a
turnover decrease of 3% CER. The operating margin of 28.0% was 3.9
percentage points higher at AER than in Q3 2019 and 4.7 percentage
points higher on a CER basis. This primarily reflected favourable
product mix, a favourable comparison to a non-restructuring related
write down in a manufacturing site in Q3 2019, a favourable
comparison to increased costs for a number of legal settlements in
Q3 2019, a benefit in the quarter from recognition of pre-launch
inventory on approval of Blenrep, the continuing benefit of
restructuring, reduced variable spending across all three
businesses as a result of the COVID-19 lockdowns and the tight
control of ongoing costs. This was partly offset by increased
investment in new product support and targeted priority markets,
the continued impact of lower prices, particularly in Respiratory
and increased investment in Oncology R&D and initiation of
several COVID-19 programmes.
Vaccines
operating profit was £899 million, down 23% AER, 18% CER on a
turnover decrease of 9% CER. The operating margin of 44.2% was 6.1
percentage points lower at AER than in Q3 2019 and 5.0 percentage
points lower on a CER basis. This was primarily driven by the
negative operating leverage from the significant COVID-19 related
sales decline and investment behind key brands.
Consumer
Healthcare operating profit was £541 million, down 12% AER, 2%
CER on a turnover increase of 2% CER. On a pro-forma basis,
operating profit was £541 million, 9% CER lower on a turnover
decrease of 6% CER. The operating margin of 22.3% was 1.9
percentage points lower at AER and 0.9 percentage points lower on a
CER basis than in Q3 2019. The pro-forma operating margin of 22.3%
was 0.9 percentage points lower on a CER basis.
This
primarily reflected the impact of divestments as well as increased
investment in the quarter following delays in the earlier part of
the year due to COVID-19, partially offset by synergy benefits from
the Pfizer integration.
Net finance costs
Total
net finance costs were £198 million compared with £213
million in Q3 2019. Adjusted net finance costs were £197
million compared with £206 million in Q3 2019. The decrease
primarily reflects lower debt levels and favourable refinancing of
term debt, partly offset by a fair value expense on interest rate
swaps in Q3 2020 and lower interest income on reduced overseas cash
post-closing of the divestment of Horlicks and other Consumer
Healthcare nutrition products in India and a number of other
countries.
Share of after tax profits of associates and joint
ventures
The
share of after tax profits of associates and joint ventures was
£11 million (Q3 2019: £17 million).
Taxation
The
charge of £241 million represented an effective tax rate on
Total results of 14.4% (Q3 2019: 12.0%) and reflected the different
tax effects of the various Adjusting items. Tax on Adjusted profit
amounted to £417 million and represented an effective Adjusted
tax rate of 16.8% (Q3 2019: 15.8%).
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2019. The Group
continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Non-controlling interests
The
allocation of Total earnings to non-controlling interests amounted
to £186 million (Q3 2019: £164 million). The increase was
primarily due to the allocation of Consumer Healthcare profits of
£114 million (Q3 2019: £47 million) following the
completion of the new Consumer Healthcare Joint Venture with Pfizer
on 31 July 2019, partly offset by reduced allocation of ViiV
Healthcare profits of £62 million (Q3 2019: £86 million),
including increased charges for re-measurement of contingent
consideration liabilities.
The
allocation of Adjusted earnings to non-controlling interests
amounted to £287 million (Q3 2019: £275 million). The
increase in allocation primarily reflected an increased allocation
of Consumer Healthcare profits of £147 million (Q3 2019:
£103 million) following the completion of the new Consumer
Healthcare Joint Venture with Pfizer on 31 July 2019 partly offset
by a reduced allocation of ViiV Healthcare profits of £130
million (Q3 2019: £141 million) and reduced net profits in
some of the Group’s other entities with non-controlling
interests primarily Consumer Healthcare India following the
Horlicks and other Consumer
brands disposal.
Earnings per share
Total
EPS was 25.0p, compared with 31.4p in Q3 2019. The reduction in EPS
primarily reflected higher re-measurement charges on the contingent
consideration liabilities and an adverse comparison to an increase
in value of shares in Hindustan Unilever Limited in Q3 2019, partly
offset by higher asset disposals and improved operating
performance.
Adjusted
EPS was 35.6p compared with 38.6p in Q3 2019, down 8% AER, but up
1% CER, on a 4% CER increase in Adjusted operating profit
reflecting a higher effective tax rate and a higher non-controlling
interest allocation of Consumer Healthcare profits.
Currency impact on Q3 2020 results
The
results for Q3 2020 are based on average exchange rates,
principally £1/$1.30, £1/€1.11 and £1/Yen 138.
Comparative exchange rates are given on page 59. The period-end
exchange rates were £1/$1.28, £1/€1.10 and
£1/Yen 136.
In the
quarter, turnover decreased 8% AER, 3% CER. Total EPS was 25.0p
compared with 31.4p in Q3 2019. Adjusted EPS was 35.6p compared
with 38.6p in Q3 2019, down 8% AER, but up 1% CER. The adverse
currency impact primarily reflected the strengthening in Sterling,
particularly against the US$ and Yen, partly offset by weakness in
emerging market currencies relative to Q3 2019. Exchange gains or
losses on the settlement of intercompany transactions had a one
percentage point negative impact on the negative currency impact of
nine percentage points on Adjusted EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for Q3
2020 and Q3 2019 are set out below.
|
Three months ended 30 September 2020
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
8,646
|
|
|
|
|
|
|
8,646
|
Cost of sales
|
(2,885)
|
178
|
1
|
163
|
3
|
|
|
(2,540)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
5,761
|
178
|
1
|
163
|
3
|
|
|
6,106
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,669)
|
|
|
160
|
(5)
|
12
|
25
|
(2,477)
|
Research and
development
|
(1,140)
|
16
|
60
|
14
|
|
1
|
|
(1,049)
|
Royalty income
|
85
|
|
|
|
|
|
|
85
|
Other operating (expense)/income
|
(179)
|
|
|
(1)
|
391
|
(211)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
1,858
|
194
|
61
|
336
|
389
|
(198)
|
25
|
2,665
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
(198)
|
|
|
1
|
|
|
|
(197)
|
Share
of after tax profits
of
associates and joint
ventures
|
11
|
|
|
|
|
|
|
11
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,671
|
194
|
61
|
337
|
389
|
(198)
|
25
|
2,479
|
|
|
|
|
|
|
|
|
|
Taxation
|
(241)
|
(37)
|
(11)
|
(89)
|
(72)
|
38
|
(5)
|
(417)
|
Tax rate %
|
14.4%
|
|
|
|
|
|
|
16.8%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,430
|
157
|
50
|
248
|
317
|
(160)
|
20
|
2,062
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
186
|
|
|
|
101
|
|
|
287
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
1,244
|
157
|
50
|
248
|
216
|
(160)
|
20
|
1,775
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
25.0p
|
3.1p
|
1.0p
|
5.0p
|
4.3p
|
(3.2)p
|
0.4p
|
35.6p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average
number
of shares
(millions)
|
4,980
|
|
|
|
|
|
|
4,980
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Three months ended 30 September 2019
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
9,385
|
|
|
|
|
|
9,385
|
Cost of sales
|
(3,245)
|
191
|
10
|
108
|
151
|
|
(2,785)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
6,140
|
191
|
10
|
108
|
151
|
|
6,600
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(2,892)
|
|
(1)
|
77
|
30
|
18
|
(2,768)
|
Research and development
|
(1,206)
|
14
|
17
|
12
|
|
(1)
|
(1,164)
|
Royalty income
|
118
|
|
|
|
|
|
118
|
Other operating (expense)/income
|
(13)
|
|
|
2
|
300
|
(289)
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
2,147
|
205
|
26
|
199
|
481
|
(272)
|
2,786
|
|
|
|
|
|
|
|
|
Net finance costs
|
(213)
|
|
|
3
|
|
4
|
(206)
|
Share of after tax profits of
associates and joint ventures
|
17
|
|
|
|
|
|
17
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,951
|
205
|
26
|
202
|
481
|
(268)
|
2,597
|
|
|
|
|
|
|
|
|
Taxation
|
(235)
|
(39)
|
(6)
|
(33)
|
(86)
|
(12)
|
(411)
|
Tax rate %
|
12.0%
|
|
|
|
|
|
15.8%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,716
|
166
|
20
|
169
|
395
|
(280)
|
2,186
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
164
|
|
|
|
111
|
|
275
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
1,552
|
166
|
20
|
169
|
284
|
(280)
|
1,911
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
Earnings per share
|
31.4p
|
3.4p
|
0.4p
|
3.4p
|
5.7p
|
(5.7)p
|
38.6p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (millions)
|
4,951
|
|
|
|
|
|
4,951
|
|
––––––––––––
|
|
|
|
|
|
––––––––––––
|
Major restructuring and integration
Within
the Pharmaceuticals sector, the highly regulated manufacturing
operations and supply chains and long lifecycle of the business
mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites
are likely to take several years to complete.
|
Total
Major restructuring charges incurred in Q3 2020 were £336
million (Q3 2019: £199 million), analysed as
follows:
|
|
Q3 2020
|
|
Q3
2019
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring
programme
(incl. Tesaro)
|
19
|
|
25
|
|
44
|
|
68
|
|
45
|
|
113
|
Consumer
Healthcare Joint
Venture
integration
programme
|
106
|
|
7
|
|
113
|
|
104
|
-
|
-
|
|
104
|
Separation
Preparation
restructuring
programme
|
73
|
|
109
|
|
182
|
|
-
|
|
-
|
|
-
|
Combined
restructuring and
integration
programme
|
13
|
|
(16)
|
|
(3)
|
|
(30)
|
|
12
|
|
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
211
|
|
125
|
|
336
|
|
142
|
|
57
|
|
199
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £73 million under the Separation Preparation
programme primarily arose from restructuring of Vaccines
manufacturing and R&D functions as well as commercial
pharmaceuticals restructuring. Non-cash charges of £109
million were related to write-down of assets in sites in the Pharma
Supply Chain.
Cash
charges of £106 million on the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs.
The
2018 major restructuring programme incurred cash charges of
£19 million in relation to severance costs for restructuring
within central functions and non-cash charges of £25 million
for write-downs on disposal of sites.
Total
cash payments made in Q3 2020 were £212 million (Q3 2019:
£105 million), £28 million for the existing Combined
restructuring and integration programme (Q3 2019: £28
million), £45 million (Q3 2019: £39 million) under the
2018 major restructuring programme including the settlement of
certain charges accrued in previous quarters, a further £89
million (Q3 2019: £38 million) relating to the Consumer
Healthcare Joint Venture integration programme and £50 million
relating to the Separation Preparation restructuring
programme.
The
analysis of Major restructuring charges by business was as
follows:
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
|
|
|
Pharmaceuticals
|
146
|
|
47
|
Vaccines
|
7
|
|
31
|
Consumer
Healthcare
|
124
|
|
125
|
|
|
|
|
|
277
|
|
203
|
Corporate
& central functions
|
59
|
|
(4)
|
|
|
|
|
Total
Major restructuring costs
|
336
|
|
199
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
|
|
|
Cost of
sales
|
163
|
|
108
|
Selling,
general and administration
|
160
|
|
77
|
Research
and development
|
14
|
|
12
|
Other
operating expense
|
(1)
|
|
2
|
|
|
|
|
Total
Major restructuring costs
|
336
|
|
199
|
|
|
|
|
The
benefit in the quarter from the 2018 major restructuring programme
was £nil and the benefit from the Consumer Healthcare Joint
Venture integration was £0.1 billion. Given its early stage
the benefit from the Separation Preparation restructuring programme
was less than £0.1 billion.
|
Transaction-related adjustments
Transaction-related
adjustments resulted in a net charge of £389 million (Q3 2019:
£481 million). This included a net £395 million
accounting charge for the re-measurement of the contingent
consideration liabilities related to the acquisitions of the former
Shionogi-ViiV Healthcare joint venture and the former Novartis
Vaccines business and the liabilities for the Pfizer put option and
Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
|
Charge/(credit)
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint
venture
(including
Shionogi preferential dividends)
|
339
|
|
255
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
(101)
|
|
(10)
|
Contingent
consideration on former Novartis Vaccines business
|
157
|
|
60
|
Other
adjustments
|
(6)
|
|
176
|
|
|
|
|
Total
transaction-related charges
|
389
|
|
481
|
|
|
|
|
The
£339 million charge relating to the contingent consideration
for the former Shionogi-ViiV Healthcare joint venture represented
an increase in the valuation of the contingent consideration due to
Shionogi, primarily as a result of a £105 million unwind of
the discount and a £234 million charge primarily from
adjustments to sales forecasts including the impact of the results
of the cabotegravir for pre-exposure prophylaxis HPTN 083 study,
partly offset by updated exchange rate assumptions.
The
ViiV Healthcare contingent consideration liability is valued on a
long-term basis. The potential impact of the COVID-19 pandemic
remains uncertain and at 30 September 2020, it has been assumed
that there will be no significant impact on the long-term value of
the liability. This position remains under review and the amount of
the liability will be updated in future quarters as further
information on the impact of the pandemic becomes available. An
explanation of the accounting for the non-controlling interests in
ViiV Healthcare is set out on page 11.
Divestments, significant legal charges and other items
Divestments
and other items also included milestone income and gains from a
number of asset disposals and certain other Adjusting items. There
was no charge (Q3 2019: £18 million) for significant legal
matters arising in the quarter. Significant legal cash payments
were £1 million (Q3 2019: £5 million).
Separation costs
From Q2
2020, the Group started to report additional one-time costs to
prepare for Consumer Healthcare separation.
|
Financial performance – nine months 2020
|
Total results
|
The
Total results for the Group are set out below.
|
|
9 months 2020
£m
|
|
9
months 2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
25,360
|
|
24,855
|
|
2
|
|
4
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(8,533)
|
|
(8,615)
|
|
(1)
|
|
-
|
|
|
|
|
|
|
|
|
Gross
profit
|
16,827
|
|
16,240
|
|
4
|
|
6
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(8,294)
|
|
(7,959)
|
|
4
|
|
6
|
Research
and development
|
(3,628)
|
|
(3,325)
|
|
9
|
|
10
|
Royalty income
|
227
|
|
269
|
|
(16)
|
|
(16)
|
Other
operating income/(expense)
|
1,590
|
|
(166)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
6,722
|
|
5,059
|
|
33
|
|
37
|
|
|
|
|
|
|
|
|
Finance
income
|
39
|
|
87
|
|
|
|
|
Finance
expense
|
(653)
|
|
(706)
|
|
|
|
|
Share
of after tax profits of
associates
and joint ventures
|
39
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
6,147
|
|
4,510
|
|
36
|
|
41
|
|
|
|
|
|
|
|
|
Taxation
|
(598)
|
|
(759)
|
|
|
|
|
Tax rate %
|
9.7%
|
|
16.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
5,549
|
|
3,751
|
|
48
|
|
53
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
477
|
|
405
|
|
|
|
|
Profit
attributable to shareholders
|
5,072
|
|
3,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,549
|
|
3,751
|
|
48
|
|
53
|
|
|
|
|
|
|
|
|
Earnings per share
|
102.0p
|
|
67.7p
|
|
51
|
|
55
|
|
|
|
|
|
|
|
|
Adjusted results
|
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for the nine months 2020
and the nine months 2019 are set out on pages 38 and
39.
|
|
9 months 2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
25,360
|
|
100
|
|
2
|
|
4
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(7,399)
|
|
(29.2)
|
|
2
|
|
4
|
|
(3)
|
Selling,
general and
administration
|
(7,793)
|
|
(30.7)
|
|
3
|
|
4
|
|
(3)
|
Research
and development
|
(3,306)
|
|
(13.0)
|
|
4
|
|
5
|
|
3
|
Royalty
income
|
227
|
|
0.9
|
|
(16)
|
|
(16)
|
|
(16)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
7,089
|
|
28.0
|
|
-
|
|
3
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
6,517
|
|
|
|
(1)
|
|
2
|
|
|
Adjusted
profit after tax
|
5,442
|
|
|
|
-
|
|
3
|
|
|
Adjusted
profit attributable to
shareholders
|
4,606
|
|
|
|
(6)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
92.6p
|
|
|
|
(7)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit by business
|
9 months 2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Reported
growth
CER%
|
|
Pro-forma
growth
CER%
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
5,849
|
|
46.1
|
|
(3)
|
|
(1)
|
|
(1)
|
Pharmaceuticals
R&D*
|
(2,515)
|
|
|
|
3
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
3,334
|
|
26.3
|
|
(7)
|
|
(5)
|
|
(5)
|
Vaccines
|
2,022
|
|
40.7
|
|
(15)
|
|
(14)
|
|
(14)
|
Consumer
Healthcare
|
1,828
|
|
23.8
|
|
27
|
|
33
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
7,184
|
|
28.3
|
|
(3)
|
|
-
|
|
(6)
|
Corporate
& other unallocated
costs
|
(95)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
7,089
|
|
28.0
|
|
-
|
|
3
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
*
|
Operating
profit of Pharmaceuticals R&D segment, which is the
responsibility of the Chief Scientific Officer and President,
R&D. It excludes ViiV Healthcare R&D expenditure, which is
reported within the Pharmaceuticals segment.
|
Turnover
|
Pharmaceuticals turnover
|
|
9 months 2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
2,732
|
|
25
|
|
26
|
HIV
|
3,608
|
|
-
|
|
1
|
Immuno-inflammation
|
521
|
|
18
|
|
19
|
Oncology
|
257
|
|
57
|
|
57
|
|
7,118
|
|
11
|
|
12
|
Established
Pharmaceuticals
|
5,572
|
|
(16)
|
|
(14)
|
|
|
|
|
|
|
|
12,690
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
US
|
5,477
|
|
1
|
|
1
|
Europe
|
3,047
|
|
(1)
|
|
(1)
|
International
|
4,166
|
|
(7)
|
|
(3)
|
|
|
|
|
|
|
|
12,690
|
|
(2)
|
|
(1)
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the nine months was £12,690 million, down 2% AER,
1% CER, but grew 11% AER, 12% CER excluding the impact of the
decline in Established Pharmaceuticals turnover. HIV sales were
flat at AER and up 1% CER, to £3,608 million, with growth in
Juluca and Dovato partly offset by declines in
Tivicay and Triumeq. Respiratory sales were up 25%
AER, 26% CER, to £2,732 million, on growth of Trelegy, Nucala and Relvar/Breo. Sales of Established
Pharmaceuticals declined 16% AER, 14% CER to £5,572
million.
Towards
the end of the first quarter, additional demand related to the
COVID-19 pandemic had a positive impact on growth of HIV and
Respiratory products. This effect broadly reversed in the second
quarter, which also saw lower levels of new patient prescriptions
in US and Europe and reduced market demand for allergy and
antibiotic products in International and Europe. These effects
continue to be seen in the third quarter.
In the
US, sales grew 1% AER, 1% CER. Continued growth of Nucala, Trelegy, Benlysta, Zejula and the HIV two-drug
regimens was partly offset by the decline in Tivicay, Triumeq and Established Products,
including the impact of generic albuterol substitutes.
In
Europe, sales declined 1% AER, 1% CER, with growth from
Respiratory, HIV and Oncology partly offset by the decline of
Established Pharmaceutical sales, impacted by generic competition
and lower demand for antibiotics during the COVID-19 pandemic
period. Approximately two percentage points of decline are due to
the impact of a one-off UK Relenza contract in the
comparator.
International
declined 7% AER, 3% CER, with Respiratory, HIV and Benlysta growth partly offset by lower
Established Pharmaceutical sales. This included the impact of a
weaker allergy season and generic competition for Avolve in Japan and government mandated
changes increasing the use of generics in China.
Respiratory
Total
Respiratory sales were up 25% AER, 26% CER, with strong growth in
all regions. International Respiratory sales grew 26% AER, 29% CER
including Nucala, up 43%
AER 43% CER and Relvar/Breo, up 11% AER, 14% CER to
£245 million. In Europe, Respiratory sales grew to £691
million up 21% AER, 22% CER. In the US, Trelegy and Nucala growth continued while
Relvar/Breo sales grew 34%
AER, 35% CER, including the effect of a prior period RAR adjustment
and a stronger US ICS/LABA market in the COVID-19 pandemic
environment.
Sales
of Nucala were £702
million in the nine months and grew 28% AER, 28% CER, with US sales
up 29% AER, 30% CER to £414 million. Europe sales of £175
million grew 17% AER 17% CER and International sales of £113
million grew 43% AER, 43% CER.
Trelegy sales were up 68% AER, 69% CER to £581 million
driven by growth in all regions. In the US, the new asthma
indication was approved and launched in Q3 2020, with sales up 56%
AER, 57% CER to £400 million. In Europe, sales grew 74% AER,
75% CER and in International, sales grew to £61 million in the
nine months.
Relvar/Breo sales were up 21% AER, 22% CER to £850
million in the nine months. In the US, Relvar/Breo grew 34% AER, 35% CER,
benefiting from the effect of a prior period RAR adjustment and a
stronger US ICS/LABA market in the COVID-19 pandemic environment.
In Europe and International, Relvar/Breo continued to grow, up 14%
AER, 14% CER and 11% AER, 14% CER respectively.
HIV
HIV
sales were £3,608 million, flat at AER, up 1% CER in the nine
months. The dolutegravir franchise grew 2% AER, 3% CER, delivering
sales of £3,477 million. The remaining portfolio, with sales
of £131 million and 4% of total HIV sales, declined 24% AER,
24% CER and reduced the overall growth of total HIV by two
percentage points at CER.
Sales
of dolutegravir products were £3,477 million in the nine
months. Tivicay delivered
sales of £1,162 million, down 6% AER, 5% CER and Triumeq sales were £1,726 million,
down 10% AER, 9% CER. The two-drug regimens, Juluca and Dovato delivered sales of £589
million in the nine months, with combined growth more than
offsetting decline in the three-drug regimen, Triumeq.
In the
US, dolutegravir sales declined 1% AER, but were flat at CER, and
in Europe dolutegravir sales grew 5% AER, 5% CER. Following recent
launches of Dovato,
combined sales of the two-drug regimens were £429 million in
the US and £143 million in Europe, with growth offsetting the
decline in Triumeq.
International continued to grow strongly with total dolutegravir
sales growth of 6% AER, 11% CER, driven by Tivicay tender business.
Oncology
Sales
of Zejula, the PARP
inhibitor asset acquired from Tesaro in Q1 2019 were £250
million in the nine months, up 53% AER, 53% CER.
Blenrep for the treatment of patients with relapsed or
refractory multiple myeloma was approved and launched in the US and
Europe in Q3 2020 and reported sales of £8
million.
Immuno-inflammation
Sales
of Benlysta in the nine
months were up 16% AER, 17% CER to £514 million, including
sales of the sub-cutaneous formulation of £249 million up 32%
AER, 32% CER.
Duvroq for patients with anaemia due to chronic kidney
disease was launched in Japan in Q3 2020 and reported sales in the
International region of £7 million.
Established Pharmaceuticals
Sales
of Established Pharmaceuticals in the nine months were £5,572
million, down 16% AER, 14% CER.
Established
Respiratory products declined 15% AER, 13% CER to £2,495
million. Advair/Seretide
and Ventolin were impacted
by generic substitutes in the US and Europe, and Flovent experienced price pressure in
the US. In the International region, allergy sales were impacted by
market contraction in Japan.
The
remainder of the Established Pharmaceuticals portfolio declined 16%
AER, 14% CER to £3,077 million on lower demand for antibiotics
during the COVID-19 pandemic period, the impact of government
mandated changes increasing use of generics in markets including
France and China, and a strong comparator, including a European
Relenza
contract.
|
Vaccines turnover
|
|
9 months 2020
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
755
|
|
(7)
|
|
(5)
|
Influenza
|
481
|
|
19
|
|
21
|
Shingles
|
1,344
|
|
5
|
|
6
|
Established
Vaccines
|
2,390
|
|
(18)
|
|
(17)
|
|
|
|
|
|
|
|
4,970
|
|
(8)
|
|
(7)
|
|
|
|
|
|
|
US
|
2,612
|
|
(13)
|
|
(12)
|
Europe
|
1,019
|
|
(10)
|
|
(10)
|
International
|
1,339
|
|
5
|
|
8
|
|
|
|
|
|
|
|
4,970
|
|
(8)
|
|
(7)
|
|
|
|
|
|
|
Vaccines turnover declined 8% AER, 7% CER to £4,970 million,
primarily driven by the adverse impact of the COVID-19 pandemic on
Hepatitis, DTPa-containing, Shingrix and Meningitis vaccines, together with the
Rabipur
and Encepur divestment. This decline was partly offset by
higher sales of Influenza vaccines in the US.
Vaccines performance across all regions was affected by lower
demand due to limited visits to healthcare practitioners and points
of vaccination during the pandemic and government stay-at-home
directives. In areas where lockdowns were lifted, wellness visits
and vaccination rates recovered, with paediatric vaccination near
pre-COVID levels by the end of Q2 2020, while adolescent and adult
immunisations improved at a slower pace. US back-to-school vaccinations have been disrupted
because schools and universities have delayed or reversed in-person
tuition. Adult immunisation rates have improved during Q3 2020 with
wellness visits returning to prior year levels in the last month of
the quarter.
Lower demand year-to-date was related to COVID-19 pandemic
conditions unless stated otherwise.
Meningitis
Meningitis sales declined 7% AER, 5% CER to £755
million. Bexsero sales declined 13% AER, 11% CER to £491
million, reflecting lower
demand in the US and International, partly offset by lower US
returns and rebates.
Menveo sales declined 9% AER, 8% CER to £182
million, primarily driven by lower
demand partly offset by lower returns and rebates in the US
together with higher demand and favourable phasing in
International.
In the US, Bexsero maintained and Menveo grew market share.
Influenza
Fluarix/FluLaval sales were
£481 million, up 19% AER, 21% CER, primarily reflecting strong
sales execution and reversal of prior year returns provision
in the US, together with favourable
phasing delivery and higher demand in
International.
Shingles
Shingrix grew 5%
AER, 6% CER to £1,344 million, primarily driven by a strong
performance in Europe reflecting robust underlying demand in
post-lockdown conditions in Germany. The launch of
Shingrix
in China also contributed to sales
growth. In the US, a decline in demand in Q2 and Q3 2020 due to
lower adult wellness visits and vaccination rates was partially
offset by strong uptake in Q1 2020 and favourable returns and
rebates.
Established Vaccines
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) declined by 22% AER, 21% CER.
Infanrix/Pediarix
sales declined 21% AER, 20% CER to
£457 million, reflecting lower demand in the US, unfavourable
year-on-year US CDC stockpile movements and supply constraints in
Europe.
Boostrix sales were down 23%
AER, 22% CER to £351 million primarily due to lower
vaccination rates across all regions.
Hepatitis vaccines declined 36% AER, 35% CER to £437 million,
adversely impacted in the US and Europe lower demand and travel
restrictions, together with competition returning to market in the
US.
Synflorix sales declined by 10%
AER, 9% CER to £309 million, primarily due to unfavourable
phasing in International and lower demand in Emerging
Markets.
Rotarix sales
declined 1% AER but
remained flat at CER to £411 million, reflecting lower demand in the US, mostly offset
by higher demand in International.
MMRV vaccines sales grew 13% AER, 15% CER to £183 million,
largely driven by improved supply in Europe.
|
Consumer Healthcare turnover
|
|
|
|
9 months 2020
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
2,074
|
|
3
|
|
5
|
Pain
relief
|
|
|
1,677
|
|
31
|
|
34
|
Vitamins,
minerals and supplements
|
|
|
1,120
|
|
>100
|
|
>100
|
Respiratory
health
|
|
|
947
|
|
14
|
|
16
|
Digestive
health and other
|
|
|
1,395
|
|
19
|
|
22
|
|
|
|
7,213
|
|
29
|
|
32
|
|
|
|
|
|
|
|
|
Brands
divested/under review
|
|
|
460
|
|
(45)
|
|
(43)
|
|
|
|
|
|
|
|
|
|
|
|
7,673
|
|
19
|
|
23
|
|
|
|
|
|
|
|
|
US
|
|
|
2,583
|
|
52
|
|
53
|
Europe
|
|
|
2,002
|
|
9
|
|
10
|
International
|
|
|
3,088
|
|
7
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
7,673
|
|
19
|
|
23
|
|
|
|
|
|
|
|
|
Pro-forma
growth
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
On a reported basis, sales grew 19% AER, 23% CER to £7,673
million in the nine months, largely driven by the inclusion of the
Pfizer portfolio, partly offset by brands divested/under
review.
On a pro-forma basis, sales were flat at CER, but grew 6% CER
excluding brands divested/under review. This reflected the
continued momentum of our Vitamins, minerals and supplements brands
as well as continued strong performance in Oral
health.
Oral health
Oral health sales grew 3% AER, 5% CER to £2,074
million. Sensodyne continued to drive performance for the category,
reporting high single-digit growth, reflecting the underlying
strength of the brand. Growth was supported by new launches
including Sensodyne Sensitivity &
Gum. Gum health grew in double
digits, while Denture care declined in low single digits, largely
due to challenging market conditions. Overall growth was impacted
by a decline in non-strategic brands.
Pain relief
Pain relief grew 31% AER, 34% CER to £1,677 million. On a
pro-forma basis, sales grew in mid-single-digits, driven by
Panadol
and Voltaren. Panadol growth reflected increased consumption due to the
COVID-19 pandemic earlier in the year, while Voltaren performance was largely driven by the successful
OTC launch in the US. This was partly offset by weaker performance
of Advil in the US.
Vitamins, minerals and supplements
Vitamins,
minerals and supplements more than doubled at AER and CER to
£1,120 million. On a pro-forma basis, sales continued to grow
in the high-teens per cent, with strong performance from
Centrum and Emergen-C. This reflects an ongoing
increase in consumer demand for the category, driven by consumer
focus on health and wellness, a trend consistent with previous
quarters.
Respiratory health
Respiratory health sales grew 14% AER, 16% CER to £947
million. On a pro-forma basis, sales grew in low single-digits,
driven by Theraflu, Flonase and Robitussin. Theraflu performance benefitted from increased consumption
in response to COVID-19. Growth was impacted by weaker performance
of Otrivin and other Respiratory brands.
Digestive health and other
Digestive health and other brands grew 19% AER, 22% CER to
£1,395 million. On a pro-forma basis, sales grew in low-single
digits with growth in Smokers’ health and Digestive health
products partly offset by a decline in Skin health products and
other non-strategic brands.
|
Operating performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 33.6%, 1.0 percentage
points lower at AER and 1.2 percentage points lower in CER terms
compared with 2019. This reflected a reduction in the costs of
Major restructuring programmes, primarily as a result of lower
write downs in a number of manufacturing sites, partly offset by
the unwinding of the fair market value uplift on inventory arising
on completion of the Consumer Healthcare Joint Venture with
Pfizer.
Excluding
these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 29.2%, 0.1 percentage points higher at
AER, but flat at CER compared with 2019. On a pro-forma basis,
Adjusted cost of sales as a percentage of turnover was 29.2%, 0.3
percentage points lower at CER, compared with 2019. This reflected
a more favourable product mix in Pharmaceuticals, a further
contribution from restructuring savings in Pharmaceuticals and
Vaccines and integration savings in Consumer Healthcare, partly
offset by adverse product mix in Vaccines and continued adverse
pricing pressure in Pharmaceuticals, particularly in
Respiratory.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 32.7%, 0.7
percentage points higher at AER and 0.6 percentage points higher at
CER compared with 2019. This reflected increased Major
restructuring costs and separation costs partly offset by lower
significant legal and transaction costs.
Excluding
these and other Adjusting items, Adjusted SG&A costs as a
percentage of turnover were 30.7%, 0.2 percentage points higher at
AER than in 2019 and 0.1 percentage points higher on a CER basis.
On a pro-forma basis, Adjusted SG&A costs as a percentage of
turnover were 30.7%, 0.1 percentage points lower at CER, compared
with 2019.
The
growth in Adjusted SG&A costs of 3% AER, 4% CER but reduction
of 3% CER on a pro-forma basis reflected the benefits from
restructuring including a one-off benefit from restructuring of
post-retirement benefits in Q3 2020 and the continuing benefit of
restructuring in Pharmaceuticals, Consumer Healthcare and support
functions, reduced variable spending across all three businesses as
a result of the COVID-19 lockdowns and the tight control of ongoing
costs, particularly in non-promotional spending across all three
businesses. This was partly offset by increased investment
resulting from the acquisition of Tesaro and in promotional product
support, particularly for new launches in Vaccines, Respiratory and
HIV.
Research and development
Total
R&D expenditure was £3,628 million (14.3% of turnover), up
9% AER, 10% CER, including an increase in Major restructuring costs
and intangible impairments. Adjusted R&D expenditure was
£3,306 million (13.0% of turnover), 4% higher at AER, 5%
higher at CER than in 2019. On a pro-forma basis, Adjusted R&D
expenditure grew 3% CER compared with 2019.
Pharmaceuticals
R&D expenditure was £2,580 million, up 5% AER, 6% CER,
primarily driven by the significant increase in investment in
Oncology, reflecting the progression of a number of key programmes
including Blenrep, ICOS and
bintrafusp alfa, as well as initiation and progression of COVID-19
treatment programmes (Vir, Otilimab). This has been partly offset
by a reduction in investment in research and several Specialty and
Primary Care programmes (daprodustat, Trelegy, HIV) as well as efficiency
savings as part of the Separation Preparation restructuring
programme and variable spending as a result of COVID-19
lockdowns.
R&D
expenditure in Vaccines was £508 million, down 5% AER, 4% CER
reflecting efficiency savings as part of the Separation Preparation
restructuring programme and variable spending as a result of
COVID-19 lockdowns. R&D expenditure in Consumer Healthcare was
£218 million.
Royalty income
Royalty
income was £227 million (2019: £269 million), down 16%
AER, 16% CER, primarily reflecting adverse movements in Consumer
Healthcare and lower sales of Gardasil.
|
Other operating income/(expense)
Net other operating income of £1,590 million (2019: £166
million expense) primarily reflected the net profit on disposal of
the Horlicks and other Consumer Healthcare brands of
£2,815 million in Q2 2020, which was after reversal of
£240 million of embedded derivative gains on the value of the
shares taken in prior years. This was partly offset by the related
loss on sale of the shares in Hindustan Unilever in Q2 2020 of
£476 million. Other operating income also included an increase
in profit and milestone income from a number of asset
disposals.
This was partly offset by accounting charges of £1,236 million
(2019: £408 million) arising from the re-measurement of the
contingent consideration liabilities related to the acquisitions of
the former Shionogi-ViiV Healthcare joint venture and the former
Novartis Vaccines business and the liabilities for the Pfizer put
option and Pfizer and Shionogi preferential dividends in ViiV
Healthcare. This included a re-measurement charge of £1,117
million (2019: £421 million) for the contingent consideration
liability due to Shionogi, primarily arising from changes in
exchange rate assumptions as well as sales forecasts and the unwind
of discounting.
|
Operating profit
Total
operating profit was £6,722 million in the nine months
compared with £5,059 million in 2019. This reflected the
profit on disposal of the Horlicks and other Consumer Healthcare
brands and resultant sale of shares in Hindustan Unilever as well
as increased income from asset disposals. This was partly offset by
higher re-measurement charges on the contingent consideration
liabilities.
Excluding
these and other Adjusting items, Adjusted operating profit was
£7,089 million, flat compared with 2019 at AER and 3% higher
at CER on a turnover increase of 4% CER. The Adjusted operating
margin of 28.0% was 0.7 percentage points lower at AER, and 0.4
percentage points lower on a CER basis than in 2019. On a pro-forma
basis, Adjusted operating profit was 3% lower at CER on a turnover
decrease of 2% at CER. The Adjusted pro-forma operating margin of
28.0% was 0.4 percentage points lower on a CER basis than in
2019.
The
reduction in pro-forma Adjusted operating profit reflects the
adverse impact from the reduction in sales in Vaccines as a result
of the COVID-19 pandemic, investment in R&D including a
significant increase in Oncology, partly on the assets from the
Tesaro acquisition and initiation of several COVID-19 programmes,
continuing price pressure, particularly in Respiratory, including
the impact of the launch of a generic version of Advair in the US in February 2019 and
investments in promotional product support, particularly for new
launches in Vaccines, HIV and Respiratory. This was offset by
reduced promotional and variable spending across all three business
as a result of the COVID-19 lockdowns, a one-off benefit in Q3 2020
from restructuring of post-retirement benefits and the continuing
benefit of restructuring in Pharmaceuticals, Consumer Healthcare
and support functions and the tight control of ongoing costs,
particularly in non-promotional spending across all three
businesses.
Contingent
consideration cash payments which are made to Shionogi and other
companies reduce the balance sheet liability and hence are not
recorded in the income statement. Total contingent consideration
cash payments in the nine months amounted to £664 million
(2019: £660 million). This included cash payments made to
Shionogi of £648 million (2019: £645
million).
Operating profit by business
Pharmaceuticals
operating profit was £3,334 million, down 7% AER, 5% CER on a
turnover decrease of 1% CER. The operating margin of 26.3% was 1.3
percentage points lower at AER than in 2019 and 1.1 percentage
points lower on a CER basis. This primarily reflected a significant
increase in Oncology R&D as well as the continued impact of
lower prices, including the impact of the launch of a generic
version of Advair in the US
in February 2019, and investment in new product support and
targeted priority markets. This was partly offset by the reduced
promotional and variable spending as a result of the COVID-19
lockdowns and the continued benefit of restructuring and tight
control of ongoing costs.
Vaccines operating profit was £2,022 million, down 15% AER,
14% CER on a turnover decrease of 7% CER. The operating margin of
40.7% was 3.4 percentage points lower at AER than in 2019 and 3.1
percentage points lower on a CER basis. This was primarily driven
by negative operating leverage from the COVID-19 related decline in
sales, investment behind key brands and income from one-off
settlements in 2019.
Consumer
Healthcare operating profit was £1,828 million, up 27% AER,
33% CER on a turnover increase of 23% CER. On a pro-forma basis,
operating profit was £1,828 million, 2% CER higher on flat
turnover at CER. The operating margin of 23.8% was 1.5 percentage
points higher at AER and 1.9 percentage points higher on a CER
basis than in 2019. The pro-forma operating margin of 23.8% was 0.5
percentage points higher on a CER basis. The higher margin was
driven by higher than normal sales growth in Q1 due to COVID-19,
favourable product mix from growth in power brands and synergy
delivery from the Pfizer integration. This was partially offset by
the impact of divestments and increased targeted promotional
investment.
Net finance costs
Total
net finance costs were £614 million compared with £619
million in 2019. Adjusted net finance costs were £611 million
compared with £613 million in 2019. The decrease primarily
reflects reduced interest expense from lower debt levels and
refinancing at lower rates offset by reductions in income on
overseas cash post-closing of the divestment of Horlicks and other
Consumer Healthcare nutrition products in India and a number of
other countries, a fair value gain on interest rate swaps in the
2019 comparator and reduced swap interest income on foreign
currency hedges.
Share of after tax profits of associates and joint
ventures
The
share of after tax profits of associates was £39 million
(2019: £70 million). 2019 included a one-off adjustment of
£51 million to reflect GSK’s share of increased after
tax profits of Innoviva primarily as a result of a non-recurring
income tax benefit.
Taxation
The
charge of £598 million represented an effective tax rate on
Total results of 9.7% (2019: 16.8%) and reflected the different tax
effects of the various Adjusting items, including the disposal of
Horlicks and other Consumer
Healthcare brands to Unilever and subsequent disposal of shares
received in Hindustan Unilever. Tax on Adjusted profit amounted to
£1,075 million and represented an effective Adjusted tax rate
of 16.5% (2019: 16.9%), reflecting cancellation by the UK
Government of a reduction in the UK corporation tax rate from 19%
to 17% resulting in an increase in the value of balance sheet
deferred tax assets.
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2019. The Group
continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Non-controlling interests
The
allocation of Total earnings to non-controlling interests amounted
to £477 million (2019: £405 million). The increase was
primarily due to an increased allocation of Consumer Healthcare
profits of £310 million (2019: £47 million) following the
completion of the new Consumer Healthcare Joint Venture with Pfizer
on 31 July 2019, and which included the unwind of the fair value
uplift on acquired inventory and major restructuring costs. This
was partly offset by a reduced allocation of ViiV Healthcare
profits of £126 million (2019: £290 million), including
increased charges for re-measurement of contingent consideration
liabilities.
The
allocation of Adjusted earnings to non-controlling interests
amounted to £836 million (2019: £562 million). The
increase in allocation primarily reflected an increased allocation
of Consumer Healthcare profits of £424 million (2019:
£103 million) following the completion of the new Consumer
Healthcare Joint Venture with Pfizer on 31 July 2019 partly offset
by a reduced allocation of ViiV Healthcare profits of £371
million (2019: £391 million), and lower net profits in some of
the Group’s other entities with non-controlling interests,
primarily Consumer Healthcare India following the Horlicks and other Consumer brands
disposal.
Earnings per share
Total
EPS was 102.0p, compared with 67.7p in 2019. The increase in EPS
primarily reflected the net profit on disposal of Horlicks and other Consumer Healthcare
brands as well as increased income from asset disposals, partly
offset by higher re-measurement charges on the contingent
consideration liabilities and a one-off benefit in 2019 from
increased share of after tax profits of the associate
Innoviva.
Adjusted
EPS was 92.6p compared with 99.2p in 2019, down 7% AER, 4% CER, on
a 3% CER increase in Adjusted operating profit. The reduction
primarily resulted from a higher non-controlling interest
allocation of Consumer Healthcare profits, reduced share of after
tax profits of associates resulting from a non-recurring income tax
benefit in Innoviva and partly offset by a reduced effective tax
rate.
Currency impact on nine months 2020 results
The
results for the nine months to September 2020 are based on average
exchange rates, principally £1/$1.28, £1/€1.13 and
£1/Yen 137. Comparative exchange rates are given on page 59.
The period-end exchange rates were £1/$1.28,
£1/€1.10 and £1/Yen 136.
In the
nine months, turnover increased 2% AER, 4% CER. Total EPS was
102.0p compared with 67.7p in 2019. Adjusted EPS was 92.6p compared
with 99.2p in 2019, down 7% AER, 4% CER. The adverse currency
impact primarily reflected strengthening of Sterling against the
US$ and weakness in emerging market currencies relative to 2019.
Exchange gains or losses on the settlement of intercompany
transactions had a negligible impact on the adverse currency impact
of three percentage points on Adjusted EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for the
nine months 2020 and the nine months 2019 are set out
below.
|
Nine months ended 30 September 2020
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Trans-
action-
related
£m
|
Divest-
ments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
25,360
|
|
|
|
|
|
|
25,360
|
Cost of sales
|
(8,533)
|
529
|
28
|
468
|
109
|
|
|
(7,399)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
16,827
|
529
|
28
|
468
|
109
|
|
|
17,961
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(8,294)
|
|
17
|
448
|
(25)
|
18
|
43
|
(7,793)
|
Research and
development
|
(3,628)
|
50
|
176
|
96
|
|
|
|
(3,306)
|
Royalty income
|
227
|
|
|
|
|
|
|
227
|
Other operating income/
(expense)
|
1,590
|
|
|
|
1,223
|
(2,813)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
6,722
|
579
|
221
|
1,012
|
1,307
|
(2,795)
|
43
|
7,089
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(614)
|
|
|
2
|
|
1
|
|
(611)
|
Share of after tax profits
of associates and joint
ventures
|
39
|
|
|
|
|
|
|
39
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
6,147
|
579
|
221
|
1,014
|
1,307
|
(2,794)
|
43
|
6,517
|
|
|
|
|
|
|
|
|
|
Taxation
|
(598)
|
(110)
|
(39)
|
(241)
|
(186)
|
107
|
(8)
|
(1,075)
|
Tax rate %
|
9.7%
|
|
|
|
|
|
|
16.5%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
5,549
|
469
|
182
|
773
|
1,121
|
(2,687)
|
35
|
5,442
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
477
|
|
|
|
359
|
|
|
836
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
5,072
|
469
|
182
|
773
|
762
|
(2,687)
|
35
|
4,606
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
102.0p
|
9.4p
|
3.7p
|
15.5p
|
15.3p
|
(54.0)p
|
0.7p
|
92.6p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
(millions)
|
4,974
|
|
|
|
|
|
|
4,974
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Nine months ended 30 September 2019
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
24,855
|
|
|
|
|
|
24,855
|
Cost of sales
|
(8,615)
|
550
|
27
|
647
|
160
|
|
(7,231)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
16,240
|
550
|
27
|
647
|
160
|
|
17,264
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(7,959)
|
|
5
|
169
|
100
|
87
|
(7,598)
|
Research and development
|
(3,325)
|
48
|
30
|
71
|
|
1
|
(3,175)
|
Royalty income
|
269
|
|
|
|
|
|
269
|
Other operating (expense)/income
|
(166)
|
|
|
1
|
415
|
(250)
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
5,059
|
598
|
62
|
888
|
675
|
(162)
|
7,120
|
|
|
|
|
|
|
|
|
Net finance costs
|
(619)
|
|
|
4
|
|
2
|
(613)
|
Share of after tax profits of
associates and joint ventures
|
70
|
|
|
|
|
|
70
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
4,510
|
598
|
62
|
892
|
675
|
(160)
|
6,577
|
|
|
|
|
|
|
|
|
Taxation
|
(759)
|
(115)
|
(11)
|
(150)
|
(139)
|
63
|
(1,111)
|
Tax rate %
|
16.8%
|
|
|
|
|
|
16.9%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
3,751
|
483
|
51
|
742
|
536
|
(97)
|
5,466
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
405
|
|
|
|
157
|
|
562
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
3,346
|
483
|
51
|
742
|
379
|
(97)
|
4,904
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
Earnings per share
|
67.7p
|
9.8p
|
1.0p
|
15.0p
|
7.7p
|
(2.0)p
|
99.2p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (millions)
|
4,945
|
|
|
|
|
|
4,945
|
|
––––––––––––
|
|
|
|
|
|
––––––––––––
|
Major restructuring and integration
Within
the Pharmaceuticals sector, the highly regulated manufacturing
operations and supply chains and long lifecycle of the business
mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites
are likely to take several years to complete.
|
Total
Major restructuring charges incurred in the nine months were
£1,012 million (2019: £888 million), analysed as
follows:
|
|
9 months 2020
|
|
9
months 2019
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring
programme
(incl. Tesaro)
|
75
|
|
195
|
|
270
|
|
179
|
|
549
|
|
728
|
Consumer
Healthcare Joint
Venture
integration
programme
|
245
|
|
24
|
|
269
|
|
135
|
|
-
|
|
135
|
Separation
Preparation
restructuring
programme
|
352
|
|
112
|
|
464
|
|
-
|
|
-
|
|
-
|
Combined
restructuring and
integration
programme
|
13
|
|
(4)
|
|
9
|
|
(8)
|
|
33
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
685
|
|
327
|
|
1,012
|
|
306
|
|
582
|
|
888
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £352 million under the Separation Preparation
programme primarily arose from restructuring of Vaccines
manufacturing and R&D functions as well as restructuring of
commercial pharmaceuticals and some administrative functions.
Non-cash charges of £112 million were related to write-down of
assets in sites in the Pharma Supply Chain.
Cash
charges of £245 million under the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs.
The
2018 major restructuring programme incurred cash charges of
£75 million in relation to severance costs for restructuring
of the manufacturing organisation, R&D and some administrative
functions as well as the integration of Tesaro and non-cash charges
of £195 million for write-downs on disposal of
sites.
Total cash payments made in the nine months were £543 million
(2019: £390 million), £93 million for the existing
Combined restructuring and integration programme (2019: £247
million), £145 million (2019: £85 million) under the 2018
major restructuring programme including the settlement of certain
charges accrued in previous quarters, a further £224 million
(2019: £58 million) relating to the Consumer Healthcare Joint
Venture integration programme and £81 million relating to the
Separation Preparation restructuring programme.
The analysis of Major restructuring charges by business was as
follows:
|
|
9 months 2020
£m
|
|
9
months 2019
£m
|
|
|
|
|
Pharmaceuticals
|
362
|
|
615
|
Vaccines
|
203
|
|
48
|
Consumer
Healthcare
|
303
|
|
187
|
|
|
|
|
|
868
|
|
850
|
Corporate
& central functions
|
144
|
|
38
|
|
|
|
|
Total
Major restructuring costs
|
1,012
|
|
888
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
9 months 2020
£m
|
|
9
months 2019
£m
|
|
|
|
|
Cost of
sales
|
468
|
|
647
|
Selling,
general and administration
|
448
|
|
169
|
Research
and development
|
96
|
|
71
|
Other
operating expense
|
-
|
|
1
|
|
|
|
|
Total
Major restructuring costs
|
1,012
|
|
888
|
|
|
|
|
The benefit in the nine months from the 2018 major restructuring
programme was £0.2 billion and the benefit from the Consumer
Healthcare Joint Venture integration was £0.2 billion. Given
its early stage the benefit from the Separation Preparation
restructuring programme was less than £0.1
billion.
The 2018 major restructuring programme, including Tesaro, is
expected to cost £1.75 billion over the period to 2021, with
cash costs of £0.85 billion and non-cash costs of £0.9
billion, and is expected to deliver annual savings of around
£450 million by 2021 (at 2019 rates). These savings are
intended to be fully re-invested to help fund targeted increases in
R&D and commercial support of new products.
The completion of the Consumer Healthcare Joint Venture with Pfizer
is expected to realise substantial cost synergies, generating total
annual cost savings of £0.5 billion by 2022 for expected cash
costs of £0.7 billion and non-cash charges of £0.3
billion, plus additional capital expenditure of £0.2 billion.
Up to 25% of the cost savings are intended to be reinvested in the
business to support innovation and other growth
opportunities.
The Group initiated in Q1 2020 a two-year Separation Preparation
programme to prepare for the separation of GSK into two companies:
New GSK, a biopharma company with an R&D approach focused on
science related to the immune system, the use of genetics and new
technologies, and a new leader in Consumer Healthcare. The
programme aims to:
|
●
|
Drive a
common approach to R&D with improved capital
allocation
|
●
|
Align
and improve the capabilities and efficiency of global support
functions to support New GSK
|
●
|
Further
optimise the supply chain and product portfolio, including the
divestment of non-core assets. A strategic review of prescription
dermatology is underway
|
●
|
Prepare
Consumer Healthcare to operate as a standalone company
|
The programme will target delivery of £0.7 billion of annual
savings by 2022 and £0.8 billion by 2023, with total costs
estimated at £2.4 billion, of which £1.6 billion is
expected to be cash costs. The proceeds of anticipated divestments
are largely expected to cover the cash costs of the
programme.
|
Transaction-related adjustments
Transaction-related
adjustments resulted in a net charge of £1,307 million (2019:
£675 million). This included a net £1,236 million
accounting charge for the re-measurement of the contingent
consideration liabilities related to the acquisitions of the former
Shionogi-ViiV Healthcare joint venture and the former Novartis
Vaccines business and the liabilities for the Pfizer put option and
Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
|
Charge/(credit)
|
9 months 2020
£m
|
|
9
months 2019
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint
venture
(including
Shionogi preferential dividends)
|
1,117
|
|
421
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
(42)
|
|
(81)
|
Contingent
consideration on former Novartis Vaccines business
|
161
|
|
68
|
Release
of fair value uplift on acquired Pfizer inventory
|
91
|
|
-
|
Other
adjustments
|
(20)
|
|
267
|
|
|
|
|
Total
transaction-related charges
|
1,307
|
|
675
|
|
|
|
|
The
£1,117 million charge relating to the contingent consideration
for the former Shionogi-ViiV Healthcare joint venture represented
an increase in the valuation of the contingent consideration due to
Shionogi, as a result of a £298 million unwind of the discount
and £819 million primarily from updated exchange rate
assumptions as well as adjustments to sales forecasts. The £42
million credit relating to the ViiV Healthcare put options and
Pfizer preferential dividends represented a decrease in the
valuation of the put option as a result of adjustments to multiples
and sales forecasts partly offset by updated exchange rate
assumptions.
The
ViiV Healthcare contingent consideration liability is valued on a
long-term basis. The potential impact of the COVID-19 pandemic
remains uncertain and at 30 September 2020, it has been assumed
that there will be no significant impact on the long-term value of
the liability. This position remains under review and the amount of
the liability will be updated in future quarters as further
information on the impact of the pandemic becomes available. An
explanation of the accounting for the non-controlling interests in
ViiV Healthcare is set out on page 11.
Divestments, significant legal charges and other items
Divestments
and other items included a gain in the period of £2,339
million arising from the net profit on disposal of the Horlicks and other Consumer Healthcare
brands of £2,815 million in Q2 2020, after reversal of
£240 million of embedded derivative gains on the value of the
shares taken in prior years. This was partly offset by the related
loss on sale of the shares in Hindustan Unilever in Q2 2020 of
£476 million. Divestments and other items also included
milestone income and gains from a number of asset disposals and
certain other Adjusting items. A charge of £6 million (2019:
£87 million) for significant legal matters included the
settlement of existing matters as well as provisions for ongoing
litigation. Significant legal cash payments were £7 million
(2019: £13 million).
Separation costs
From Q2
2020, the Group has started to report additional one-time costs to
prepare Consumer Healthcare for separation. These are estimated at
£600-700 million, excluding transaction costs.
|
Cash generation
|
Cash flow
|
|
Q3 2020
|
|
9
months 2020
|
|
9
months 2019
|
|
|
|
|
|
|
Net
cash inflow from operating activities (£m)
|
861
|
|
4,586
|
|
4,567
|
Free
cash flow* (£m)
|
(180)
|
|
2,300
|
|
2,474
|
Free
cash flow growth (%)
|
>(100)%
|
|
(7)%
|
|
4%
|
Free
cash flow conversion* (%)
|
<-%
|
|
45%
|
|
74%
|
Net
debt** (£m)
|
23,882
|
|
23,882
|
|
28,139
|
*
|
Free
cash flow and free cash flow conversion are defined on page
62.
|
**
|
Net
debt is analysed on page 61.
|
Q3 2020
The net cash inflow from operating activities for the quarter was
£861 million (Q3 2019: £2,515 million). The reduction
primarily reflected increased trade receivables following lower
collections from lower sales in Q2 2020, increased inventory
primarily in Vaccines, adverse timing of payments for returns and
rebates and taxes and adverse exchange rate impacts partly offset
by increased operating profits.
Total cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the quarter were £203
million (Q3 2019: £206 million), of which £178 million
was recognised in cash flows from operating activities and £25
million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax
purposes.
Free cash outflow was £180 million for the quarter (Q3 2019:
£1,939 million inflow). The reduction primarily reflected a
significant increase in trade receivables following lower
collections from lower sales in Q2 2020, increased inventory
primarily in Vaccines, adverse timing of payments for returns and
rebates and taxes, higher dividends to non-controlling interests
and increased purchases of intangible assets.
|
9 months 2020
The net cash inflow from operating activities for the nine months
was £4,586 million (2019: £4,567 million). The increase
primarily reflected a lower seasonal increase in trade receivables,
beneficial timing of payments for returns and rebates and improved
operating profits, partly offset by adverse exchange impacts and
increased tax payments including tax on disposals.
Total cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the nine months were
£648 million (2019: £645 million), of which £566
million was recognised in cash flows from operating activities and
£82 million was recognised in contingent consideration paid
within investing cash flows. These payments are deductible for tax
purposes.
Free cash flow was £2,300 million for the nine months (2019:
£2,474 million). The reduction primarily reflected higher
dividends to non-controlling interests, increased tax payments
including tax on disposals and adverse exchange impacts, partly
offset by a lower seasonal increase in trade receivables,
beneficial timing of payments for returns and rebates, higher
proceeds from disposals of intangible assets and improved operating
profits.
|
Net debt
At 30 September 2020, net debt was £23.9 billion, compared
with £25.2 billion at 31 December 2019, comprising gross debt
of £28.3 billion and cash and liquid investments of £4.4
billion. Net debt decreased due to the £3.3 billion proceeds
from the Horlicks and other Consumer brands disposal including
shares in Hindustan Unilever of £2.7 billion and £0.6
billion of other assets, £0.5 billion of other business and
asset disposals together with £2.3 billion free cash flow,
partly offset by cash divested of £0.5 billion, dividends paid
to shareholders of £3.0 billion, £0.4 billion in
additional investments and £0.9 billion of unfavourable
exchange impacts from the translation of non-Sterling denominated
debt and exchange on other financing items.
At 30 September 2020, GSK had short-term borrowings (including
overdrafts and lease liabilities) repayable within 12 months of
£4.9 billion with loans of £2.7 billion repayable in the
subsequent year.
|
Returns to shareholders
|
Quarterly dividends
The
Board has declared a third interim dividend for 2020 of 19 pence
per share (Q3 2019: 19 pence per share).
GSK
recognises the importance of dividends to shareholders and aims to
distribute regular dividend payments that will be determined
primarily with reference to the free cash flow generated by the
business after funding the investment necessary to support the
Group’s future growth.
The
Board currently intends to maintain the dividend for 2020 at the
current level of 80p per share, subject to any material change in
the external environment or performance expectations. Over time, as
free cash flow strengthens, it intends to build free cash flow
cover of the annual dividend to a target range of 1.25-1.50x,
before returning the dividend to growth.
Payment of dividends
The
equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 12 January 2021. An annual
fee of $0.03 per ADS (or $0.0075 per ADS per quarter) is charged by
the Depositary.
The
ex-dividend date will be 12 November 2020, with a record date of 13
November 2020 and a payment date of 14 January 2021.
|
|
Paid/
payable
|
|
Pence
per
share
|
|
£m
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
First
interim
|
9 July
2020
|
|
19
|
|
946
|
Second
interim
|
8
October 2020
|
|
19
|
|
946
|
Third
interim
|
14
January 2021
|
|
19
|
|
946
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
First
interim
|
11 July
2019
|
|
19
|
|
940
|
Second
interim
|
10 October
2019
|
|
19
|
|
941
|
Third
interim
|
9 January
2020
|
|
19
|
|
941
|
Fourth
interim
|
9 April
2020
|
|
23
|
|
1,144
|
|
|
|
|
|
|
|
|
|
80
|
|
3,966
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
Q3 2020
millions
|
|
Q3
2019
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
4,980
|
|
4,951
|
Dilutive
effect of share options and share awards
|
|
|
60
|
|
56
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,040
|
|
5,007
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
9 months
2020
Millions
|
|
9
months
2019
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
4,974
|
|
4,945
|
Dilutive
effect of share options and share awards
|
|
|
60
|
|
56
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,034
|
|
5,001
|
|
|
|
|
|
|
At 30
September 2020, 4,980 million shares (30 September 2019: 4,952
million) were in free issue (excluding Treasury shares and shares
held by the ESOP Trusts). GSK made no share repurchases during the
period. The company issued 0.1 million shares under employee share
schemes in the quarter for proceeds of £2 million (Q3 2019:
£8 million).
|
At 30 September 2020, the ESOP Trust held 36.8 million GSK shares
against the future exercise of share options and share awards. The
carrying value of £259 million has been deducted from other
reserves. The market value of these shares was £543
million.
At 30 September 2020, the company held 367.7 million Treasury
shares at a cost of £5,144 million, which has been deducted
from retained earnings.
|
Financial information
|
Income statements
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
9 months
2020
£m
|
|
9
months
2019
£m
|
|
|
|
|
|
|
|
|
TURNOVER
|
8,646
|
|
9,385
|
|
25,360
|
|
24,855
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,885)
|
|
(3,245)
|
|
(8,533)
|
|
(8,615)
|
|
|
|
|
|
|
|
|
Gross
profit
|
5,761
|
|
6,140
|
|
16,827
|
|
16,240
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,669)
|
|
(2,892)
|
|
(8,294)
|
|
(7,959)
|
Research
and development
|
(1,140)
|
|
(1,206)
|
|
(3,628)
|
|
(3,325)
|
Royalty income
|
85
|
|
118
|
|
227
|
|
269
|
Other
operating (expense)/income
|
(179)
|
|
(13)
|
|
1,590
|
|
(166)
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
1,858
|
|
2,147
|
|
6,722
|
|
5,059
|
|
|
|
|
|
|
|
|
Finance
income
|
(3)
|
|
32
|
|
39
|
|
87
|
Finance
expense
|
(195)
|
|
(245)
|
|
(653)
|
|
(706)
|
Share
of after tax profits of
associates
and joint ventures
|
11
|
|
17
|
|
39
|
|
70
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION
|
1,671
|
|
1,951
|
|
6,147
|
|
4,510
|
|
|
|
|
|
|
|
|
Taxation
|
(241)
|
|
(235)
|
|
(598)
|
|
(759)
|
Tax rate %
|
14.4%
|
|
12.0%
|
|
9.7%
|
|
16.8%
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION
|
1,430
|
|
1,716
|
|
5,549
|
|
3,751
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
186
|
|
164
|
|
477
|
|
405
|
Profit
attributable to shareholders
|
1,244
|
|
1,552
|
|
5,072
|
|
3,346
|
|
|
|
|
|
|
|
|
|
1,430
|
|
1,716
|
|
5,549
|
|
3,751
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
|
25.0p
|
|
31.4p
|
|
102.0p
|
|
67.7p
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
24.7p
|
|
31.0p
|
|
100.7p
|
|
66.9p
|
|
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
|
|
|
Profit
for the period
|
1,430
|
|
1,716
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
(171)
|
|
(150)
|
Fair
value movements on cash flow hedges
|
-
|
|
(33)
|
Reclassification
of cash flow hedges to income statement
|
1
|
|
2
|
Deferred
tax on fair value movements on cash flow hedges
|
1
|
|
-
|
|
|
|
|
|
(169)
|
|
(181)
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
(65)
|
|
38
|
Fair
value movements on equity investments
|
528
|
|
52
|
Deferred
tax on fair value movements on equity investments
|
(102)
|
|
3
|
Re-measurement
gains on defined benefit plans
|
63
|
|
(619)
|
Tax on
re-measurement gains on defined benefit plans
|
(14)
|
|
113
|
|
|
|
|
|
410
|
|
(413)
|
|
|
|
|
Other
comprehensive income/(expense) for the period
|
241
|
|
(594)
|
|
|
|
|
Total
comprehensive income for the period
|
1,671
|
|
1,122
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
Shareholders
|
1,550
|
|
920
|
Non-controlling
interests
|
121
|
|
202
|
|
|
|
|
|
1,671
|
|
1,122
|
|
|
|
|
Statement of comprehensive income
|
|
9 months
2020
£m
|
|
9
months
2019
£m
|
|
|
|
|
Profit
for the period
|
5,549
|
|
3,751
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
189
|
|
(195)
|
Reclassification
of exchange movements on liquidation or disposal of
overseas
subsidiaries
|
36
|
|
-
|
Fair
value movements on cash flow hedges
|
(23)
|
|
(106)
|
Reclassification
of cash flow hedges to income statement
|
53
|
|
3
|
Deferred
tax on fair value movements on cash flow hedges
|
(2)
|
|
-
|
|
|
|
|
|
253
|
|
(298)
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
30
|
|
28
|
Fair
value movements on equity investments
|
713
|
|
96
|
Deferred
tax on fair value movements on equity investments
|
(116)
|
|
(27)
|
Re-measurement
losses on defined benefit plans
|
(382)
|
|
(1,192)
|
Tax on
re-measurement losses on defined benefit plans
|
78
|
|
215
|
|
|
|
|
|
323
|
|
(880)
|
|
|
|
|
Other
comprehensive income/(expense) for the period
|
576
|
|
(1,178)
|
|
|
|
|
Total
comprehensive income for the period
|
6,125
|
|
2,573
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
Shareholders
|
5,618
|
|
2,140
|
Non-controlling
interests
|
507
|
|
433
|
|
|
|
|
|
6,125
|
|
2,573
|
|
|
|
|
Pharmaceuticals turnover – three months ended 30 September
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
978
|
21
|
26
|
576
|
24
|
30
|
225
|
13
|
13
|
177
|
26
|
33
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Ellipta
products
|
727
|
21
|
26
|
427
|
23
|
29
|
166
|
13
|
13
|
134
|
22
|
30
|
Anoro Ellipta
|
140
|
(2)
|
3
|
86
|
(9)
|
(4)
|
35
|
17
|
13
|
19
|
-
|
21
|
Arnuity Ellipta
|
14
|
17
|
33
|
13
|
30
|
30
|
-
|
-
|
-
|
1
|
(50)
|
50
|
Incruse Ellipta
|
56
|
(7)
|
(2)
|
33
|
(3)
|
3
|
16
|
(11)
|
(6)
|
7
|
(13)
|
(12)
|
Relvar/Breo Ellipta
|
323
|
30
|
34
|
169
|
64
|
70
|
73
|
3
|
1
|
81
|
8
|
15
|
Trelegy Ellipta
|
194
|
40
|
45
|
126
|
20
|
29
|
42
|
50
|
54
|
26
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nucala
|
251
|
24
|
29
|
149
|
25
|
32
|
59
|
11
|
11
|
43
|
39
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
1,216
|
(4)
|
-
|
755
|
(5)
|
-
|
296
|
1
|
1
|
165
|
(7)
|
1
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Dolutegravir
products
|
1,176
|
(3)
|
1
|
739
|
(5)
|
-
|
284
|
3
|
4
|
153
|
(2)
|
5
|
Tivicay
|
377
|
(15)
|
(10)
|
220
|
(18)
|
(13)
|
87
|
(15)
|
(14)
|
70
|
(1)
|
7
|
Triumeq
|
577
|
(11)
|
(8)
|
368
|
(11)
|
(6)
|
135
|
(12)
|
(13)
|
74
|
(11)
|
(5)
|
Juluca
|
123
|
22
|
28
|
95
|
14
|
20
|
24
|
50
|
56
|
4
|
>100
|
100
|
Dovato
|
99
|
>100
|
>100
|
56
|
>100
|
>100
|
38
|
>100
|
>100
|
5
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Epzicom/Kivexa
|
7
|
(63)
|
(58)
|
1
|
-
|
-
|
2
|
(67)
|
(67)
|
4
|
(67)
|
(58)
|
Selzentry
|
23
|
(8)
|
(8)
|
12
|
(14)
|
(14)
|
6
|
(14)
|
(14)
|
5
|
25
|
25
|
Rukobia
|
3
|
-
|
-
|
3
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Other
|
7
|
(42)
|
(42)
|
-
|
-
|
-
|
4
|
(20)
|
(40)
|
3
|
(40)
|
(20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-
Inflammation and other specialty
|
193
|
13
|
18
|
158
|
5
|
11
|
15
|
25
|
25
|
20
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Benlysta
|
186
|
8
|
13
|
158
|
5
|
11
|
15
|
25
|
25
|
13
|
30
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
99
|
55
|
58
|
61
|
61
|
68
|
36
|
35
|
35
|
2
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Zejula
|
92
|
44
|
47
|
57
|
50
|
55
|
33
|
27
|
27
|
2
|
>100
|
>100
|
Blenrep
|
8
|
-
|
-
|
5
|
-
|
-
|
3
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
excluding established products
|
2,486
|
8
|
12
|
1,550
|
7
|
13
|
572
|
8
|
8
|
364
|
12
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Pharmaceuticals
|
1,706
|
(23)
|
(18)
|
368
|
(30)
|
(26)
|
402
|
(21)
|
(21)
|
936
|
(22)
|
(14)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Established
Respiratory
|
725
|
(23)
|
(18)
|
256
|
(30)
|
(26)
|
164
|
(11)
|
(11)
|
305
|
(22)
|
(13)
|
Seretide/Advair
|
368
|
(12)
|
(8)
|
112
|
(4)
|
(1)
|
104
|
(14)
|
(14)
|
152
|
(16)
|
(8)
|
Flixotide/Flovent
|
92
|
(46)
|
(42)
|
45
|
(59)
|
(57)
|
15
|
(17)
|
(17)
|
32
|
(26)
|
(14)
|
Ventolin
|
177
|
(23)
|
(18)
|
100
|
(26)
|
(22)
|
25
|
(7)
|
(4)
|
52
|
(24)
|
(15)
|
Avamys/Veramyst
|
56
|
(15)
|
(8)
|
-
|
-
|
-
|
13
|
(13)
|
(13)
|
43
|
(16)
|
(6)
|
Other
Respiratory
|
32
|
(40)
|
(28)
|
(1)
|
-
|
-
|
7
|
75
|
50
|
26
|
(46)
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
110
|
(7)
|
(1)
|
-
|
-
|
-
|
36
|
(10)
|
(13)
|
74
|
(5)
|
5
|
Augmentin
|
106
|
(30)
|
(24)
|
-
|
-
|
-
|
30
|
(21)
|
(21)
|
76
|
(33)
|
(25)
|
Avodart
|
95
|
(37)
|
(30)
|
1
|
(50)
|
(50)
|
36
|
(29)
|
(29)
|
58
|
(40)
|
(30)
|
Imigran/Imitrex
|
30
|
(17)
|
(14)
|
11
|
(27)
|
(27)
|
12
|
(8)
|
(8)
|
7
|
(13)
|
-
|
Lamictal
|
125
|
(15)
|
(10)
|
61
|
(18)
|
(12)
|
30
|
(3)
|
(3)
|
34
|
(19)
|
(10)
|
Seroxat/Paxil
|
38
|
(10)
|
(2)
|
-
|
-
|
-
|
9
|
(10)
|
(10)
|
29
|
(9)
|
-
|
Valtrex
|
24
|
(14)
|
(7)
|
4
|
-
|
-
|
8
|
(11)
|
(11)
|
12
|
(20)
|
(7)
|
Other
|
453
|
(26)
|
(22)
|
35
|
(44)
|
(46)
|
77
|
(41)
|
(40)
|
341
|
(18)
|
(13)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Pharmaceuticals
|
4,192
|
(7)
|
(3)
|
1,918
|
(3)
|
2
|
974
|
(6)
|
(6)
|
1,300
|
(14)
|
(7)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals turnover – nine months ended 30 September
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
2,732
|
25
|
26
|
1,540
|
26
|
27
|
691
|
21
|
22
|
501
|
26
|
29
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Ellipta
products
|
2,030
|
24
|
25
|
1,126
|
25
|
26
|
516
|
23
|
23
|
388
|
21
|
25
|
Anoro Ellipta
|
396
|
6
|
8
|
237
|
2
|
2
|
103
|
18
|
18
|
56
|
6
|
13
|
Arnuity Ellipta
|
31
|
(6)
|
(3)
|
26
|
(7)
|
(7)
|
-
|
-
|
-
|
5
|
-
|
20
|
Incruse Ellipta
|
172
|
(7)
|
(6)
|
96
|
(12)
|
(12)
|
55
|
-
|
2
|
21
|
-
|
5
|
Relvar/Breo Ellipta
|
850
|
21
|
22
|
367
|
34
|
35
|
238
|
14
|
14
|
245
|
11
|
14
|
Trelegy Ellipta
|
581
|
68
|
69
|
400
|
56
|
57
|
120
|
74
|
75
|
61
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nucala
|
702
|
28
|
28
|
414
|
29
|
30
|
175
|
17
|
17
|
113
|
43
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
3,608
|
-
|
1
|
2,200
|
(1)
|
-
|
886
|
3
|
3
|
522
|
1
|
6
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Dolutegravir
products
|
3,477
|
2
|
3
|
2,155
|
(1)
|
-
|
848
|
5
|
5
|
474
|
6
|
11
|
Tivicay
|
1,162
|
(6)
|
(5)
|
642
|
(12)
|
(12)
|
280
|
(5)
|
(5)
|
240
|
15
|
21
|
Triumeq
|
1,726
|
(10)
|
(9)
|
1,084
|
(10)
|
(9)
|
425
|
(10)
|
(10)
|
217
|
(8)
|
(4)
|
Juluca
|
356
|
40
|
41
|
279
|
30
|
31
|
69
|
86
|
89
|
8
|
100
|
100
|
Dovato
|
233
|
>100
|
>100
|
150
|
>100
|
>100
|
74
|
>100
|
>100
|
9
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Epzicom/Kivexa
|
25
|
(58)
|
(57)
|
2
|
(33)
|
(33)
|
7
|
(61)
|
(61)
|
16
|
(59)
|
(56)
|
Selzentry
|
70
|
(5)
|
(4)
|
35
|
(13)
|
(13)
|
20
|
(9)
|
(9)
|
15
|
25
|
33
|
Rukobia
|
3
|
-
|
-
|
3
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Other
|
33
|
(13)
|
(21)
|
5
|
(44)
|
(67)
|
11
|
(8)
|
(17)
|
17
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-
Inflammation and other specialty
|
521
|
18
|
19
|
437
|
13
|
14
|
41
|
21
|
21
|
43
|
95
|
100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Benlysta
|
514
|
16
|
17
|
437
|
13
|
14
|
41
|
21
|
21
|
36
|
64
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
257
|
57
|
57
|
156
|
61
|
62
|
99
|
48
|
48
|
2
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Zejula
|
250
|
53
|
53
|
152
|
57
|
57
|
96
|
45
|
45
|
2
|
-
|
-
|
Blenrep
|
8
|
-
|
-
|
5
|
-
|
-
|
3
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
excluding established products
|
7,118
|
11
|
12
|
4,333
|
10
|
11
|
1,717
|
12
|
12
|
1,068
|
14
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Pharmaceuticals
|
5,572
|
(16)
|
(14)
|
1,144
|
(25)
|
(24)
|
1,330
|
(14)
|
(14)
|
3,098
|
(12)
|
(9)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Established
Respiratory
|
2,495
|
(15)
|
(13)
|
814
|
(24)
|
(24)
|
563
|
(8)
|
(8)
|
1,118
|
(11)
|
(7)
|
Seretide/Advair
|
1,184
|
(10)
|
(8)
|
361
|
(9)
|
(9)
|
344
|
(10)
|
(10)
|
479
|
(10)
|
(7)
|
Flixotide/Flovent
|
332
|
(25)
|
(23)
|
149
|
(41)
|
(41)
|
60
|
(9)
|
(8)
|
123
|
(1)
|
4
|
Ventolin
|
574
|
(19)
|
(17)
|
305
|
(28)
|
(27)
|
87
|
(2)
|
(1)
|
182
|
(9)
|
(3)
|
Avamys/Veramyst
|
227
|
(10)
|
(7)
|
-
|
-
|
-
|
51
|
(6)
|
(6)
|
176
|
(11)
|
(8)
|
Other
Respiratory
|
178
|
(16)
|
(16)
|
(1)
|
-
|
-
|
21
|
11
|
5
|
158
|
(18)
|
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
316
|
(5)
|
(2)
|
1
|
(67)
|
(67)
|
104
|
(13)
|
(13)
|
211
|
-
|
6
|
Augmentin
|
375
|
(16)
|
(12)
|
-
|
-
|
-
|
108
|
(14)
|
(13)
|
267
|
(16)
|
(12)
|
Avodart
|
370
|
(15)
|
(12)
|
4
|
-
|
-
|
124
|
(23)
|
(23)
|
242
|
(10)
|
(6)
|
Imigran/Imitrex
|
91
|
(12)
|
(11)
|
36
|
(18)
|
(18)
|
37
|
(5)
|
(5)
|
18
|
(10)
|
(5)
|
Lamictal
|
397
|
(6)
|
(4)
|
196
|
(7)
|
(6)
|
90
|
7
|
7
|
111
|
(12)
|
(8)
|
Seroxat/Paxil
|
110
|
(10)
|
(7)
|
-
|
-
|
-
|
27
|
(4)
|
(4)
|
83
|
(12)
|
(9)
|
Valtrex
|
77
|
(4)
|
(1)
|
11
|
10
|
10
|
24
|
4
|
4
|
42
|
(11)
|
(6)
|
Other
|
1,341
|
(23)
|
(21)
|
82
|
(52)
|
(53)
|
253
|
(29)
|
(29)
|
1,006
|
(16)
|
(13)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Pharmaceuticals
|
12,690
|
(2)
|
(1)
|
5,477
|
1
|
1
|
3,047
|
(1)
|
(1)
|
4,166
|
(7)
|
(3)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – three months ended 30 September
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
363
|
(2)
|
1
|
197
|
(16)
|
(14)
|
93
|
3
|
3
|
73
|
55
|
68
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
219
|
(14)
|
(11)
|
119
|
(18)
|
(17)
|
87
|
4
|
4
|
13
|
(50)
|
(27)
|
Menveo
|
104
|
(2)
|
-
|
78
|
(12)
|
(10)
|
4
|
-
|
-
|
22
|
69
|
69
|
Other
|
40
|
>100
|
>100
|
-
|
-
|
-
|
2
|
-
|
-
|
38
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
445
|
20
|
21
|
379
|
19
|
20
|
33
|
(3)
|
(3)
|
33
|
74
|
74
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
445
|
20
|
21
|
379
|
19
|
20
|
33
|
(3)
|
(3)
|
33
|
74
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
374
|
(30)
|
(25)
|
287
|
(42)
|
(37)
|
53
|
>100
|
>100
|
34
|
48
|
57
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
374
|
(30)
|
(25)
|
287
|
(42)
|
(37)
|
53
|
>100
|
>100
|
34
|
48
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Vaccines
|
850
|
(18)
|
(15)
|
288
|
(27)
|
(23)
|
204
|
(20)
|
(20)
|
358
|
(6)
|
(2)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
158
|
(21)
|
(17)
|
82
|
(23)
|
(19)
|
40
|
(27)
|
(25)
|
36
|
(5)
|
-
|
Boostrix
|
163
|
(13)
|
(11)
|
95
|
(6)
|
(2)
|
42
|
-
|
(2)
|
26
|
(41)
|
(39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
138
|
(36)
|
(33)
|
79
|
(40)
|
(37)
|
31
|
(46)
|
(44)
|
28
|
-
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
132
|
(21)
|
(18)
|
26
|
(28)
|
(22)
|
29
|
4
|
7
|
77
|
(25)
|
(23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
83
|
(28)
|
(27)
|
-
|
-
|
-
|
13
|
18
|
27
|
70
|
(33)
|
(32)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,
Varilrix
|
72
|
26
|
30
|
-
|
-
|
-
|
39
|
70
|
70
|
33
|
(3)
|
3
|
Cervarix
|
49
|
>100
|
>100
|
-
|
-
|
-
|
5
|
-
|
-
|
44
|
>100
|
>100
|
Other
|
55
|
(26)
|
(23)
|
6
|
(68)
|
(68)
|
5
|
(86)
|
(91)
|
44
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines
|
2,032
|
(12)
|
(9)
|
1,151
|
(20)
|
(17)
|
383
|
(3)
|
(3)
|
498
|
6
|
11
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – nine months ended 30 September
2020
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
755
|
(7)
|
(5)
|
323
|
(20)
|
(20)
|
265
|
2
|
2
|
167
|
11
|
20
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
491
|
(13)
|
(11)
|
200
|
(19)
|
(19)
|
242
|
-
|
-
|
49
|
(36)
|
(21)
|
Menveo
|
182
|
(9)
|
(8)
|
123
|
(22)
|
(21)
|
18
|
50
|
50
|
41
|
28
|
34
|
Other
|
82
|
74
|
74
|
-
|
-
|
-
|
5
|
-
|
-
|
77
|
83
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
481
|
19
|
21
|
381
|
19
|
20
|
33
|
(3)
|
(3)
|
67
|
37
|
43
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
481
|
19
|
21
|
381
|
19
|
20
|
33
|
(3)
|
(3)
|
67
|
37
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
1,344
|
5
|
6
|
1,155
|
(2)
|
(1)
|
117
|
>100
|
>100
|
72
|
6
|
9
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
1,344
|
5
|
6
|
1,155
|
(2)
|
(1)
|
117
|
>100
|
>100
|
72
|
6
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Vaccines
|
2,390
|
(18)
|
(17)
|
753
|
(31)
|
(31)
|
604
|
(25)
|
(25)
|
1,033
|
2
|
4
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
457
|
(21)
|
(20)
|
211
|
(28)
|
(27)
|
136
|
(20)
|
(19)
|
110
|
(5)
|
(2)
|
Boostrix
|
351
|
(23)
|
(22)
|
187
|
(20)
|
(19)
|
104
|
(15)
|
(15)
|
60
|
(39)
|
(37)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
437
|
(36)
|
(35)
|
248
|
(41)
|
(40)
|
111
|
(38)
|
(37)
|
78
|
(6)
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
411
|
(1)
|
-
|
84
|
(21)
|
(20)
|
88
|
5
|
6
|
239
|
5
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
309
|
(10)
|
(9)
|
-
|
-
|
-
|
42
|
(5)
|
(2)
|
267
|
(11)
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,
Varilrix
|
183
|
13
|
15
|
-
|
-
|
-
|
95
|
28
|
28
|
88
|
-
|
5
|
Cervarix
|
95
|
51
|
56
|
-
|
-
|
-
|
14
|
(13)
|
(13)
|
81
|
72
|
79
|
Other
|
147
|
(34)
|
(33)
|
23
|
(51)
|
(55)
|
14
|
(89)
|
(89)
|
110
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines
|
4,970
|
(8)
|
(7)
|
2,612
|
(13)
|
(12)
|
1,019
|
(10)
|
(10)
|
1,339
|
5
|
8
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
30 September 2020
£m
|
|
30
September 2019
£m
|
|
31
December 2019
£m
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property,
plant and equipment
|
10,307
|
|
10,668
|
|
10,348
|
Right
of use assets
|
898
|
|
1,032
|
|
966
|
Goodwill
|
10,888
|
|
11,046
|
|
10,562
|
Other
intangible assets
|
30,664
|
|
32,455
|
|
30,955
|
Investments
in associates and joint ventures
|
396
|
|
334
|
|
314
|
Other
investments
|
2,576
|
|
1,592
|
|
1,837
|
Deferred
tax assets
|
4,381
|
|
3,909
|
|
4,096
|
Derivative
financial instruments
|
4
|
|
161
|
|
103
|
Other
non-current assets
|
932
|
|
1,058
|
|
1,020
|
|
|
|
|
|
|
Total non-current assets
|
61,046
|
|
62,255
|
|
60,201
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
6,440
|
|
6,776
|
|
5,947
|
Current
tax recoverable
|
567
|
|
169
|
|
262
|
Trade
and other receivables
|
7,854
|
|
8,173
|
|
7,202
|
Derivative
financial instruments
|
206
|
|
518
|
|
421
|
Liquid
investments
|
83
|
|
86
|
|
79
|
Cash
and cash equivalents
|
4,283
|
|
4,305
|
|
4,707
|
Assets
held for sale
|
448
|
|
963
|
|
873
|
|
|
|
|
|
|
Total current assets
|
19,881
|
|
20,990
|
|
19,491
|
|
|
|
|
|
|
TOTAL ASSETS
|
80,927
|
|
83,245
|
|
79,692
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term
borrowings
|
(4,914)
|
|
(8,216)
|
|
(6,918)
|
Contingent
consideration liabilities
|
(776)
|
|
(838)
|
|
(755)
|
Trade
and other payables
|
(15,142)
|
|
(14,737)
|
|
(14,939)
|
Derivative
financial instruments
|
(127)
|
|
(310)
|
|
(188)
|
Current
tax payable
|
(428)
|
|
(610)
|
|
(629)
|
Short-term
provisions
|
(792)
|
|
(803)
|
|
(621)
|
|
|
|
|
|
|
Total current liabilities
|
(22,179)
|
|
(25,514)
|
|
(24,050)
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Long-term
borrowings
|
(23,334)
|
|
(24,833)
|
|
(23,590)
|
Corporation
tax payable
|
(195)
|
|
(273)
|
|
(189)
|
Deferred
tax liabilities
|
(3,917)
|
|
(3,914)
|
|
(3,810)
|
Pensions
and other post-employment benefits
|
(3,771)
|
|
(3,793)
|
|
(3,457)
|
Other
provisions
|
(782)
|
|
(686)
|
|
(670)
|
Derivative
financial instruments
|
(6)
|
|
-
|
|
(1)
|
Contingent
consideration liabilities
|
(5,329)
|
|
(5,288)
|
|
(4,724)
|
Other
non-current liabilities
|
(789)
|
|
(884)
|
|
(844)
|
|
|
|
|
|
|
Total non-current liabilities
|
(38,123)
|
|
(39,671)
|
|
(37,285)
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
(60,302)
|
|
(65,185)
|
|
(61,335)
|
|
|
|
|
|
|
NET ASSETS
|
20,625
|
|
18,060
|
|
18,357
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
1,346
|
|
1,345
|
|
1,346
|
Share
premium account
|
3,280
|
|
3,165
|
|
3,174
|
Retained
earnings
|
7,055
|
|
5,265
|
|
4,530
|
Other
reserves
|
2,605
|
|
1,997
|
|
2,355
|
|
|
|
|
|
|
Shareholders’ equity
|
14,286
|
|
11,772
|
|
11,405
|
|
|
|
|
|
|
Non-controlling
interests
|
6,339
|
|
6,288
|
|
6,952
|
|
|
|
|
|
|
TOTAL EQUITY
|
20,625
|
|
18,060
|
|
18,357
|
|
|
|
|
|
|
Statement of changes in equity
|
|
Share
capital
£m
|
Share
premium
£m
|
Retained
earnings
£m
|
Other
reserves
£m
|
Share-
holder’s
equity
£m
|
Non-
controlling
interests
£m
|
Total
equity
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
At 1
January 2020
|
1,346
|
3,174
|
4,530
|
2,355
|
11,405
|
6,952
|
18,357
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
5,072
|
|
5,072
|
477
|
5,549
|
Other
comprehensive (expense)/income for the period
|
|
|
(83)
|
629
|
546
|
30
|
576
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income
for the
period
|
|
|
4,989
|
629
|
5,618
|
507
|
6,125
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(1,006)
|
(1,006)
|
Contributions
from non-controlling interests
|
|
|
|
|
|
3
|
3
|
Changes
to non-controlling interests
|
|
|
|
|
|
(117)
|
(117)
|
Dividends
to shareholders
|
|
|
(3,031)
|
|
(3,031)
|
|
(3,031)
|
Shares
issued
|
-
|
28
|
|
|
28
|
|
28
|
Realised
after tax profits on disposal of
equity
investments
|
|
|
260
|
(260)
|
-
|
|
-
|
Shares
acquired by ESOP Trusts
|
|
78
|
361
|
(439)
|
-
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(320)
|
320
|
-
|
|
-
|
Share-based
incentive plans
|
|
|
266
|
|
266
|
|
266
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 30 September 2020
|
1,346
|
3,280
|
7,055
|
2,605
|
14,286
|
6,339
|
20,625
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
As
previously reported
|
1,345
|
3,091
|
(2,137)
|
2,061
|
4,360
|
(688)
|
3,672
|
Adjustment
to non-controlling interest
|
|
|
(579)
|
|
(579)
|
579
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
As
revised
|
1,345
|
3,091
|
(2,716)
|
2,061
|
3,781
|
(109)
|
3,672
|
Implementation
of IFRS16
|
|
|
(93)
|
|
(93)
|
|
(93)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 1
January 2019, as adjusted
|
1,345
|
3,091
|
(2,809)
|
2,061
|
3,688
|
(109)
|
3,579
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
3,346
|
|
3,346
|
405
|
3,751
|
Other
comprehensive (expense)/income
for the
period
|
|
|
(1,171)
|
(35)
|
(1,206)
|
28
|
(1,178)
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income/(expense) for the period
|
|
|
2,175
|
(35)
|
2,140
|
433
|
2,573
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(313)
|
(313)
|
Changes
in non-controlling interests
|
|
|
|
|
|
10
|
10
|
Dividends
to shareholders
|
|
|
(3,012)
|
|
(3,012)
|
|
(3,012)
|
Recognition
of interest in Consumer
Healthcare
Joint Venture
|
|
|
8,082
|
|
8,082
|
6,846
|
14,928
|
Shares
issued
|
-
|
41
|
|
|
41
|
|
41
|
Realised
profits on disposal of equity
investments
|
|
|
(4)
|
4
|
|
|
-
|
Shares
acquired by ESOP Trusts
|
|
33
|
295
|
(328)
|
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(295)
|
295
|
|
|
-
|
Share-based
incentive plans
|
|
|
254
|
|
254
|
|
254
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 30
September 2019
|
1,345
|
3,165
|
4,686
|
1,997
|
11,193
|
6,867
|
18,060
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Cash flow statement – nine months ended 30 September
2020
|
|
9 months 2020
£m
|
|
9
months 2019
£m
|
|
|
|
|
|
|
Profit after tax
|
5,549
|
|
3,751
|
|
Tax on
profits
|
598
|
|
759
|
|
Share
of after tax profits of associates and joint ventures
|
(39)
|
|
(70)
|
|
Net
finance expense
|
614
|
|
619
|
|
Depreciation,
amortisation and other adjusting items
|
(330)
|
|
2,472
|
|
Increase
in working capital
|
(1,444)
|
|
(1,477)
|
|
Contingent
consideration paid
|
(573)
|
|
(577)
|
|
Increase
in other net liabilities (excluding contingent
consideration
paid)
|
1,547
|
|
149
|
|
|
|
|
|
|
Cash generated from operations
|
5,922
|
|
5,626
|
|
Taxation
paid
|
(1,336)
|
|
(1,059)
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
4,586
|
|
4,567
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
Purchase
of property, plant and equipment
|
(712)
|
|
(785)
|
|
Proceeds
from sale of property, plant and equipment
|
35
|
|
86
|
|
Purchase
of intangible assets
|
(682)
|
|
(613)
|
|
Proceeds
from sale of intangible assets
|
637
|
|
88
|
|
Purchase
of equity investments
|
(396)
|
|
(239)
|
|
Proceeds
from sale of equity investments
|
3,134
|
|
51
|
|
Purchase
of businesses, net of cash acquired
|
9
|
|
(3,548)
|
|
Contingent
consideration paid
|
(91)
|
|
(83)
|
|
Disposal
of businesses
|
234
|
|
(2)
|
|
Investment
in associates and joint ventures
|
(1)
|
|
(6)
|
|
Interest
received
|
33
|
|
66
|
|
Increase/(decrease)
in liquid investments
|
(1)
|
|
1
|
|
Dividends
from associates and joint ventures
|
14
|
|
-
|
|
|
|
|
|
|
Net cash inflow/(outflow) from investing activities
|
2,213
|
|
(4,984)
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
Issue
of share capital
|
28
|
|
41
|
|
Increase
in short-term loans
|
-
|
|
4,350
|
|
Increase
in long-term loans
|
2,333
|
|
4,822
|
|
Repayment
of short-term loans
|
(5,824)
|
|
(4,253)
|
|
Repayment
of lease liabilities
|
(166)
|
|
(159)
|
|
Purchase
of non-controlling interests
|
-
|
|
(7)
|
|
Interest
paid
|
(517)
|
|
(539)
|
|
Dividends
paid to shareholders
|
(3,031)
|
|
(3,012)
|
|
Distributions
to non-controlling interests
|
(1,006)
|
|
(313)
|
|
Contributions
from non-controlling interests
|
3
|
|
-
|
|
Other
financing items
|
223
|
|
(11)
|
|
|
|
|
|
|
Net cash (outflow)/inflow from financing activities
|
(7,957)
|
|
919
|
|
|
|
|
|
|
(Decrease)/increase in cash and bank overdrafts in the
period
|
(1,158)
|
|
502
|
|
|
|
|
|
|
Cash
and bank overdrafts at beginning of the period
|
4,831
|
|
4,087
|
|
Exchange
adjustments
|
(17)
|
|
20
|
|
(Decrease)/increase
in cash and bank overdrafts
|
(1,158)
|
|
502
|
|
|
|
|
|
|
Cash and bank overdrafts at end of the period
|
3,656
|
|
4,609
|
|
|
|
|
|
|
Cash
and bank overdrafts at end of the period comprise:
|
|
|
|
|
|
Cash
and cash equivalents
|
4,283
|
|
4,305
|
|
Cash
and cash equivalents reported in assets held for sale
|
-
|
|
519
|
|
|
|
|
|
|
|
4,283
|
|
4,824
|
|
Overdrafts
|
(627)
|
|
(215)
|
|
|
|
|
|
|
3,656
|
|
4,609
|
|
|
|
|
|
Segment information
|
|
Operating
segments are reported based on the financial information provided
to the Chief Executive Officer and the responsibilities of the
Corporate Executive Team (CET). GSK reports results under four
segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines and
Consumer Healthcare, and individual members of the CET are
responsible for each segment.
The
Pharmaceuticals R&D segment is the responsibility of the Chief
Scientific Officer and President, R&D and is reported as a
separate segment. The operating profit of this segment excludes the
ViiV Healthcare operating profit (including R&D expenditure)
that is reported within the Pharmaceuticals segment.
The
Group’s management reporting process allocates intra-Group
profit on a product sale to the market in which that sale is
recorded, and the profit analyses below have been presented on that
basis.
Corporate
and other unallocated turnover and costs include the results of
certain Consumer Healthcare products which are being held for sale
in a number of markets in order to meet anti-trust approval
requirements, together with the costs of corporate
functions.
|
Turnover by segment
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,192
|
|
4,531
|
|
(7)
|
|
(3)
|
Vaccines
|
2,032
|
|
2,308
|
|
(12)
|
|
(9)
|
Consumer
Healthcare
|
2,422
|
|
2,526
|
|
(4)
|
|
2
|
|
|
|
|
|
|
|
|
|
8,646
|
|
9,365
|
|
(8)
|
|
(3)
|
Corporate
and other unallocated turnover
|
-
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
8,646
|
|
9,385
|
|
(8)
|
|
(3)
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|
Q3 2020
£m
|
|
Q3
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,945
|
|
1,986
|
|
(2)
|
|
4
|
Pharmaceuticals
R&D
|
(770)
|
|
(893)
|
|
(14)
|
|
(10)
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
1,175
|
|
1,093
|
|
8
|
|
16
|
Vaccines
|
899
|
|
1,162
|
|
(23)
|
|
(18)
|
Consumer
Healthcare
|
541
|
|
613
|
|
(12)
|
|
(2)
|
|
|
|
|
|
|
|
|
Segment
profit
|
2,615
|
|
2,868
|
|
(9)
|
|
(1)
|
Corporate
and other unallocated costs
|
50
|
|
(82)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,665
|
|
2,786
|
|
(4)
|
|
4
|
Adjusting
items
|
(807)
|
|
(639)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
1,858
|
|
2,147
|
|
(13)
|
|
(2)
|
|
|
|
|
|
|
|
|
Finance
income
|
(3)
|
|
32
|
|
|
|
|
Finance
costs
|
(195)
|
|
(245)
|
|
|
|
|
Share
of after tax profits of associates
and
joint ventures
|
11
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
1,671
|
|
1,951
|
|
(14)
|
|
(2)
|
|
|
|
|
|
|
|
|
Turnover by segment
|
|
9 months
2020
£m
|
|
9
months
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
12,690
|
|
12,996
|
|
(2)
|
|
(1)
|
Vaccines
|
4,970
|
|
5,415
|
|
(8)
|
|
(7)
|
Consumer
Healthcare
|
7,673
|
|
6,424
|
|
19
|
|
23
|
|
|
|
|
|
|
|
|
|
25,333
|
|
24,835
|
|
2
|
|
4
|
Corporate
and other unallocated turnover
|
27
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
25,360
|
|
24,855
|
|
2
|
|
4
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|
9 months
2020
£m
|
|
9
months
2019
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
5,849
|
|
6,029
|
|
(3)
|
|
(1)
|
Pharmaceuticals
R&D
|
(2,515)
|
|
(2,442)
|
|
3
|
|
4
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
3,334
|
|
3,587
|
|
(7)
|
|
(5)
|
Vaccines
|
2,022
|
|
2,388
|
|
(15)
|
|
(14)
|
Consumer
Healthcare
|
1,828
|
|
1,434
|
|
27
|
|
33
|
|
|
|
|
|
|
|
|
Segment
profit
|
7,184
|
|
7,409
|
|
(3)
|
|
-
|
Corporate
and other unallocated costs
|
(95)
|
|
(289)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
7,089
|
|
7,120
|
|
-
|
|
3
|
Adjusting
items
|
(367)
|
|
(2,061)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
6,722
|
|
5,059
|
|
33
|
|
37
|
|
|
|
|
|
|
|
|
Finance
income
|
39
|
|
87
|
|
|
|
|
Finance
costs
|
(653)
|
|
(706)
|
|
|
|
|
Share
of after tax profits of associates
and
joint ventures
|
39
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
6,147
|
|
4,510
|
|
36
|
|
41
|
|
|
|
|
|
|
|
|
Legal matters
The Group is involved in significant legal and
administrative proceedings, principally product liability,
intellectual property, tax, anti-trust, consumer fraud and
governmental investigations, which are more fully described in the
‘Legal Proceedings’ note in the Annual Report 2019 and
the ‘Legal Matters’ notes in subsequent quarterly
results. At 30 September 2020, the Group’s aggregate
provision for legal and other disputes (not including tax matters
described on page 22) was £0.3 billion (31 December 2019:
£0.2 billion).
The
Group may become involved in significant legal proceedings in
respect of which it is not possible to make a reliable estimate of
the expected financial effect, if any, that could result from
ultimate resolution of the proceedings. In these cases, the Group
would provide appropriate disclosures about such cases, but no
provision would be made.
The
ultimate liability for legal claims may vary from the amounts
provided and is dependent upon the outcome of litigation
proceedings, investigations and possible settlement negotiations.
The Group’s position could change over time, and, therefore,
there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material
amount the amount of the provisions reported in the Group’s
financial accounts.
There
have been no significant legal developments since the date of the
Annual Report 2019 and the Q2 2020 results.
|
Additional information
|
Accounting policies and basis of preparation
|
This
unaudited Results Announcement contains condensed financial
information for the three and nine months ended 30 September 2020, and should be read in
conjunction with the Annual Report 2019, which was prepared
in accordance with International Financial Reporting Standards as
adopted by the European Union. This Results Announcement has been
prepared applying consistent accounting policies to those applied
by the Group in the Annual Report 2019.
The
Group has not identified any changes to its key sources of
accounting judgements or estimations of uncertainty compared with
those disclosed in the Annual Report 2019.
|
This
Results Announcement does not constitute statutory accounts of the
Group within the meaning of sections 434(3) and 435(3) of the
Companies Act 2006. The full Group accounts for 2019 were published
in the Annual Report 2019, which has been delivered to the
Registrar of Companies and on which the report of the independent
auditor was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
COVID-19 pandemic
The
potential impact of the COVID-19 pandemic on GSK’s trading
performance and all our principal risks has been assessed with
mitigation plans put in place. Up to the date of this report, the
pandemic has, as anticipated, impacted the Group performance during
the nine months to September 2020 primarily in demand for Vaccines
as a result of ongoing containment measures impacting
customers’ ability and willingness to access vaccination
services across all regions. We continue to monitor the situation
closely, as this is clearly a very dynamic and uncertain situation,
with the ultimate severity, duration and impact unknown at this
point including the potential impacts on trading results, our
clinical trials, our supply continuity and our employees. The
situation could change at any time and there can be no assurance
that COVID-19 will not have a material adverse impact on the future
results of the Group.
|
Exchange rates
|
GSK
operates in many countries, and earns revenues and incurs costs in
many currencies. The results of the Group, as reported in Sterling,
are affected by movements in exchange rates between Sterling and
other currencies. Average exchange rates, as modified by specific
transaction rates for large transactions, prevailing during the
period, are used to translate the results and cash flows of
overseas subsidiaries, associates and joint ventures into Sterling.
Period-end rates are used to translate the net assets of those
entities. The currencies which most influenced these translations
and the relevant exchange rates were:
|
|
Q3 2020
|
|
Q3
2019
|
|
9 months 2020
|
|
9
months 2019
|
|
2019
|
||
|
|
|
|
|
|
|
|
|
|
||
Average
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
1.30
|
|
1.23
|
|
1.28
|
|
1.27
|
|
1.28
|
|
|
Euro/£
|
1.11
|
|
1.11
|
|
1.13
|
|
1.13
|
|
1.14
|
|
|
Yen/£
|
138
|
|
133
|
|
137
|
|
139
|
|
139
|
|
|
|
|
|
|
|
|
|
|
||
Period-end
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
1.28
|
|
1.23
|
|
1.28
|
|
1.23
|
|
1.32
|
|
|
Euro/£
|
1.10
|
|
1.13
|
|
1.10
|
|
1.13
|
|
1.18
|
|
|
Yen/£
|
136
|
|
133
|
|
136
|
|
133
|
|
143
|
During Q3 2020 average Sterling exchange rates were stronger
against the US Dollar and the Yen, but flat against the Euro
compared with the same period in 2019. During the nine months ended
30 September 2020, average Sterling exchange rates were stronger
against the US Dollar, flat against the Euro, but weaker against
the Yen compared with the same period in 2019. Period-end Sterling
exchange rates were stronger against the US Dollar and the Yen, but
weaker against the Euro compared with the 2019 period-end
rates.
|
Net assets
|
The
book value of net assets increased by £2,268 million from
£18,357 million at 31 December 2019 to £20,625 million at
30 September 2020. This primarily reflected the Total profit for
the period exceeding the re-measurement losses on defined benefit
plans and the dividends paid during the period.
The
carrying value of investments in associates and joint ventures at
30 September 2020 was £396 million (31 December 2019:
£314 million), with a market value of £340 million (31
December 2019: £396 million).
At 30
September 2020, the net deficit on the Group’s pension plans
was £2,296 million compared with £1,921 million at 31
December 2019. The increase in the net deficit primarily arose from
decreases in the rates used to discount UK pension liabilities from
2.0% to 1.6%, and US pension liabilities from 3.2% to 2.5%, partly
offset by higher UK assets and a decrease in the UK inflation rate
from 3.0% to 2.9%. The Group continues to monitor and review the
pension asset portfolios in response to the pandemic given the
elevated uncertainty inherent for valuations particularly for the
property asset class.
The
estimated present value of the potential redemption amount of the
Pfizer put option related to ViiV Healthcare, recorded in Other
payables in Current liabilities, was £969 million (31 December
2019: £1,011 million).
Contingent
consideration amounted to £6,105 million at 30 September 2020
(31 December 2019: £5,479 million), of which £5,572
million (31 December 2019: £5,103 million) represented the
estimated present value of amounts payable to Shionogi relating to
ViiV Healthcare and £493 million (31 December 2019: £339
million) represented the estimated present value of contingent
consideration payable to Novartis related to the Vaccines
acquisition.
Of the
contingent consideration payable (on a post-tax basis) to Shionogi
at 30 September 2020, £741 million (31 December 2019:
£730 million) is expected to be paid within one
year.
|
Movements in contingent consideration are as follows:
|
9
months 2020
|
ViiV Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the period
|
5,103
|
|
5,479
|
Re-measurement
through income statement
|
1,117
|
|
1,290
|
Cash
payments: operating cash flows
|
(566)
|
|
(573)
|
Cash
payments: investing activities
|
(82)
|
|
(91)
|
|
|
|
|
Contingent
consideration at end of the period
|
5,572
|
|
6,105
|
|
|
|
|
9 months
2019
|
ViiV
Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the period
|
5,937
|
|
6,286
|
Re-measurement
through income statement
|
421
|
|
500
|
Cash
payments: operating cash flows
|
(572)
|
|
(577)
|
Cash
payments: investing activities
|
(73)
|
|
(83)
|
|
|
|
|
Contingent
consideration at end of the period
|
5,713
|
|
6,126
|
|
|
|
|
Contingent liabilities
|
There
were contingent liabilities at 30 September 2020 in respect of
guarantees and indemnities entered into as part of the ordinary
course of the Group’s business. No material losses are
expected to arise from such contingent liabilities. Provision is
made for the outcome of legal and tax disputes where it is both
probable that the Group will suffer an outflow of funds and it is
possible to make a reliable estimate of that outflow. Descriptions
of the significant legal disputes to which the Group is a party are
set out on page 58.
|
Reconciliation of cash flow to movements in net debt
|
|
9 months 2020
£m
|
|
9
months 2019
£m
|
|
|
|
|
Net
debt, as previously reported
|
(25,215)
|
|
(21,621)
|
Implementation
of IFRS 16
|
-
|
|
(1,303)
|
|
|
|
|
Net
debt at beginning of the period, as adjusted
|
(25,215)
|
|
(22,924)
|
|
|
|
|
Increase
in cash and bank overdrafts
|
(1,158)
|
|
502
|
Increase/(decrease)
in liquid investments
|
1
|
|
(1)
|
Net
decrease/(increase) in short-term loans
|
5,824
|
|
(97)
|
Increase
in long-term loans
|
(2,333)
|
|
(4,822)
|
Repayment
of lease liabilities
|
166
|
|
159
|
Debt of
subsidiary undertakings acquired
|
-
|
|
(518)
|
Exchange
adjustments
|
(1,084)
|
|
(406)
|
Other
non-cash movements
|
(83)
|
|
(32)
|
|
|
|
|
Decrease/(increase)
in net debt
|
1,333
|
|
(5,215)
|
|
|
|
|
Net
debt at end of the period
|
(23,882)
|
|
(28,319)
|
|
|
|
|
Net debt analysis
|
|
30 September
2020
£m
|
|
30
September
2019
£m
|
|
31
December
2019
£m
|
|
|
|
|
|
|
Liquid
investments
|
83
|
|
86
|
|
79
|
Cash
and cash equivalents
|
4,283
|
|
4,305
|
|
4,707
|
Cash
and cash equivalents reported in assets
held
for sale
|
-
|
|
519
|
|
507
|
Short-term
borrowings
|
(4,914)
|
|
(8,216)
|
|
(6,918)
|
Long-term
borrowings
|
(23,334)
|
|
(24,833)
|
|
(23,590)
|
|
|
|
|
|
|
Net
debt at end of the period
|
(23,882)
|
|
(28,139)
|
|
(25,215)
|
|
|
|
|
|
|
Free cash flow reconciliation
|
|
Q3 2020
£m
|
|
9
months 2020
£m
|
|
9
months 2019
£m
|
|
|
|
|
|
|
Net
cash inflow from operating activities
|
861
|
|
4,586
|
|
4,567
|
Purchase
of property, plant and equipment
|
(292)
|
|
(712)
|
|
(785)
|
Proceeds
from sale of property, plant and equipment
|
23
|
|
35
|
|
86
|
Purchase
of intangible assets
|
(356)
|
|
(682)
|
|
(613)
|
Proceeds
from disposals of intangible assets
|
1
|
|
637
|
|
88
|
Net
finance costs
|
(34)
|
|
(484)
|
|
(473)
|
Dividends
from joint ventures and associates
|
-
|
|
14
|
|
-
|
Contingent
consideration paid (reported in investing
activities)
|
(29)
|
|
(91)
|
|
(83)
|
Distributions
to non-controlling interests
|
(354)
|
|
(1,006)
|
|
(313)
|
Contributions
from non-controlling interests
|
-
|
|
3
|
|
-
|
|
|
|
|
|
|
Free
cash flow
|
(180)
|
|
2,300
|
|
2,474
|
|
|
|
|
|
|
Reporting definitions
|
Total and Adjusted results
Total
reported results represent the Group’s overall
performance.
GSK
also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS
measures may be considered in addition to, but not as a substitute
for or superior to, information presented in accordance with IFRS.
Adjusted results are defined on page 10 and other non-IFRS measures
are defined below.
Free cash flow
Free
cash flow is defined as the net cash inflow from operating
activities less capital expenditure on property, plant and
equipment and intangible assets, contingent consideration payments,
net finance costs, and dividends paid to non-controlling interests
plus proceeds from the sale of property, plant and equipment and
intangible assets, and dividends received from joint ventures and
associates. It is used by management for planning and reporting
purposes and in discussions with and presentations to investment
analysts and rating agencies. Free cash flow growth is calculated
on a reported basis. A reconciliation of net cash inflow from
operations to free cash flow is set out on page 61.
Free cash flow conversion
Free
cash flow conversion is free cash flow as a percentage of
earnings.
Working capital
Working
capital represents inventory and trade receivables less trade
payables.
CER and AER growth
In
order to illustrate underlying performance, it is the Group’s
practice to discuss its results in terms of constant exchange rate
(CER) growth. This represents growth calculated as if the exchange
rates used to determine the results of overseas companies in
Sterling had remained unchanged from those used in the comparative
period. CER% represents growth at constant exchange rates. £%
or AER% represents growth at actual exchange rates.
Pro-forma growth
The
acquisition of the Pfizer consumer healthcare business completed on
31 July 2019 and so GSK’s reported results for Q3 2020
include three months of results of the former Pfizer consumer
healthcare business from 1 July 2020.
The
Group has presented pro-forma growth rates at CER for turnover,
Adjusted operating profit and operating profit by business taking
account of this transaction. Pro-forma growth rates at CER for the
quarter are calculated comparing reported results for Q3 2020,
calculated applying the exchange rates used in the comparative
period, with the results for Q3 2019 adjusted to include the
equivalent one month of results of the former Pfizer consumer
healthcare business during July 2019, as consolidated (in US$) and
included in Pfizer’s US GAAP results. Similarly, pro-forma
growth rates at CER for the nine months to 30 September 2020 are
calculated comparing reported results for the nine months to 30
September 2020, calculated applying the exchange rates used in the
comparative period, with the results for the nine months to 30
September 2019, adjusted to include the equivalent seven months of
results to 31 July 2019 of the former Pfizer consumer healthcare
business, as consolidated (in US$) and included in Pfizer’s
US GAAP results.
|
Brand names and partner acknowledgements
Brand
names appearing in italics throughout this document are trademarks
of GSK or associated companies or used under licence by the
Group.
|
Outlook, assumptions and cautionary statements
|
2020 guidance
The
COVID-19 pandemic has impacted Group performance, particularly in
the Vaccines business, during the first nine months of 2020. During
the third quarter we have seen a recovery in vaccination rates,
including adult immunisation rates in the United States returning
to prior year levels in the last month of the quarter.
This
improvement, coupled with strong commercial execution of key growth
products and disciplined cost control, mean we are on track to
deliver within our earnings guidance range, with 2020 Adjusted EPS
now expected to be at the lower end of the -1% to -4% range at CER.
Achieving this guidance is supported by the expectation of
sustained recovery of adult immunisation rates, particularly in
Shingrix.
2016-2020 outlook
In May
2015, GSK announced that it expected Group sales to grow at CER at
a low-to-mid single digits percentage CAGR and Adjusted EPS to grow
at CER at a mid-to-high single digit percentage CAGR for the period
2016-2020. On 3 December 2018, GSK announced that it continued to
expect to deliver on its previously published Group outlooks to
2020, but, following the acquisition of Tesaro, expected Adjusted
EPS growth at CER for the period 2016-2020 to be at the bottom end
of the mid-to-high single digit percentage CAGR range. These
outlooks are based on 2015 exchange rates.
Assumptions related to 2020 guidance and 2016-2020
outlook
In
outlining the expectations for 2020 and the five-year period
2016-2020, the Group has made certain assumptions about the
healthcare sector, the different markets in which the Group
operates and the delivery of revenues and financial benefits from
its current portfolio, pipeline and restructuring
programmes.
For the
Group specifically, over the period to the end of 2020, GSK expects
further declines in sales of Seretide/Advair. The introduction of a
generic alternative to Advair in the US has been factored into
the Group’s assessment of its future performance. The Group
assumes no premature loss of exclusivity for other key products
over the period.
The
assumptions for the Group’s revenue, earnings and dividend
expectations assume no material interruptions to supply of the
Group’s products, no material mergers, acquisitions or
disposals, except for the acquisition of Tesaro, the divestment of
Horlicks and other Consumer
Healthcare products to Unilever and the formation of a new Consumer
Healthcare Joint Venture with Pfizer, all announced in December
2018, no material litigation or investigation costs for the Company
(save for those that are already recognised or for which provisions
have been made), no share repurchases by the Company, and no change
in the Group’s shareholdings in ViiV Healthcare. The
assumptions also assumed no material changes in the macro-economic
and healthcare environment over the period. The 2020 guidance and
2016-2020 outlook have factored in all divestments and product
exits since 2015, including the divestment and exit of more than
130 non-core tail brands (£0.5 billion in annual sales) as
announced on 26 July 2017 and the product divestments planned in
connection with the formation of the Consumer Healthcare Joint
Venture with Pfizer.
The
Group’s expectations assume successful delivery of the
Group’s integration and restructuring plans over the period
2016-2020, including the extension and enhancement to the combined
programme announced on 26 July 2017, the new Major restructuring
plan announced on 25 July 2018, the Consumer Healthcare Joint
Venture integration programme and the new Separation Preparation
programme. They also assume that the integration and investment
programmes following the Tesaro acquisition and the Consumer
Healthcare Joint Venture with Pfizer over this period are delivered
successfully. Material costs for investment in new product launches
and R&D have been factored into the expectations given. Given
the potential development options in the Group’s pipeline,
the outlook may be affected by additional data-driven R&D
investment decisions. The expectations are given on a constant
currency basis (2016-2020 outlook at 2015 CER).
Assumptions and cautionary statement regarding forward-looking
statements
The
Group’s management believes that the assumptions outlined
above are reasonable, and that the aspirational targets described
in this report are achievable based on those assumptions. However,
given the longer term nature of these expectations and targets,
they are subject to greater uncertainty, including potential
material impacts if the above assumptions are not realised, and
other material impacts related to foreign exchange fluctuations,
macro-economic activity, the impact of outbreaks, epidemics or
pandemics, such as the COVID-19 pandemic and ongoing challenges and
uncertainties posed by the COVID-19 pandemic for businesses and
governments around the world, changes in regulation, government
actions or intellectual property protection, actions by our
competitors, and other risks inherent to the industries in which we
operate.
This
document contains statements that are, or may be deemed to be,
“forward-looking statements”. Forward-looking
statements give the Group’s current expectations or forecasts
of future events. An investor can identify these statements by the
fact that they do not relate strictly to historical or current
facts. They use words such as ‘anticipate’,
‘estimate’, ‘expect’, ‘intend’,
‘will’, ‘project’, ‘plan’,
‘believe’, ‘target’ and other words and
terms of similar meaning in connection with any discussion of
future operating or financial performance. In particular, these
include statements relating to future actions, prospective products
or product approvals, future performance or results of current and
anticipated products, sales efforts, expenses, the outcome of
contingencies such as legal proceedings, dividend payments and
financial results. Other than in accordance with its legal or
regulatory obligations (including under the Market Abuse
Regulation, the UK Listing Rules and the Disclosure and
Transparency Rules of the Financial Conduct Authority), the Group
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
The reader should, however, consult any additional disclosures that
the Group may make in any documents which it publishes and/or files
with the SEC. All readers, wherever located, should take note of
these disclosures. Accordingly, no assurance can be given that any
particular expectation will be met and investors are cautioned not
to place undue reliance on the forward-looking
statements.
Forward-looking
statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the
Group’s control or precise estimate. The Group cautions
investors that a number of important factors, including those in
this document, could cause actual results to differ materially from
those expressed or implied in any forward-looking statement. Such
factors include, but are not limited to, those discussed under Item
3.D ‘Risk Factors’ in the Group’s Annual Report
on Form 20-F for 2019 and any impacts of the COVID-19 pandemic. Any
forward looking statements made by or on behalf of the Group speak
only as of the date they are made and are based upon the knowledge
and information available to the Directors on the date of this
report.
Cautionary statement regarding pro-forma growth rates
The
pro-forma growth rates at CER in this Results Announcement have
been provided to illustrate the position in Q3 2020 relative to the
position in Q3 2019 as if, for the purposes of the Q3 2019 results,
the acquisition of the Pfizer consumer healthcare business had
taken place as at 31 July 2018 and that, accordingly, one month of
results of the former Pfizer consumer healthcare business were
included in Q3 2019. Similarly, pro-forma growth rates have been
provided to illustrate the position for the nine months to 30
September 2020 relative to the position for the nine months to 30
September 2019 as if, for the purposes of the nine months to 30
September 2019 results, the acquisition of the Pfizer consumer
healthcare business had taken place as at 31 July 2018 and that,
accordingly, seven months of results of the former Pfizer consumer
healthcare business were included in the nine months to 30
September 2019. The results of the former Pfizer consumer
healthcare business included for Q3 2019 and the nine months to 30
September 2019 are as consolidated (in US$) and included in
Pfizer’s US GAAP results. The results for Q3 2020 and the
nine months to 30 September 2020 used to calculate the pro-forma
growth rates are as reported at CER.
The
pro-forma growth rates have been provided for illustrative purposes
only and, by their nature, address a hypothetical situation and
therefore do not represent the Group’s actual growth rates.
The pro-forma growth rates do not purport to represent what the
Group’s results of operations actually would have been if the
Pfizer acquisition had been completed on the date indicated, nor do
they purport to represent the results of operations at any future
date. In addition, the pro-forma growth rates do not reflect the
effect of anticipated synergies and efficiencies or accounting and
reporting differences associated with the acquisition of the Pfizer
consumer healthcare business.
|
Independent review report to GlaxoSmithKline plc
|
We have
been engaged by GlaxoSmithKline plc (“the Company”) to
review the condensed financial information in the Results
Announcement for the three and nine months ended 30 September
2020.
|
What we have reviewed
|
|
The
condensed financial information comprises:
|
|
●
|
the
income statement and statement of comprehensive income for the
three and nine month periods ended 30 September 2020 on pages 46 to
48;
|
●
|
the
balance sheet as at 30 September 2020 on page 53;
|
●
|
the
statement of changes in equity for the nine month period then ended
on page 54;
|
●
|
the
cash flow statement for the nine month period then ended on page
55; and
|
●
|
the
accounting policies and basis of preparation and the explanatory
notes to the condensed financial information on pages 56 to 61 that
have been prepared applying consistent accounting policies to those
applied by the Group in the Annual Report 2019, which was prepared
in accordance with International Financial Reporting Standards
(“IFRS”) as adopted by the European Union.
|
|
|
We have
read the other information contained in the Results Announcement,
including the non-IFRS measures contained on pages 56 to 61, and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This
report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
“Review of Interim Financial Information Performed by the
Independent Auditor of the Entity” issued by the Auditing
Practices Board. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have
formed.
Directors’ responsibilities
The
Results Announcement of GlaxoSmithKline plc, including the
condensed financial information, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the Results Announcement by applying consistent
accounting policies to those applied by the Group in the Annual
Report 2019, which was prepared in accordance with IFRS as adopted
by the European Union.
Our responsibility
Our
responsibility is to express to the Company a conclusion on the
condensed financial information in the Results Announcement based
on our review.
Scope of review
We
conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity” issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim financial information consists
of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based
on our review, nothing has come to our attention that causes us to
believe that the condensed financial information in the Results
Announcement for the three and nine months ended 30 September 2020
are not prepared, in all material respects in accordance with the
accounting policies set out in the accounting policies and basis of
preparation section on page 59.
Deloitte LLP
Statutory
Auditor
London,
United Kingdom
28
October 2020
|
|
GlaxoSmithKline plc
|
|
(Registrant)
|
|
|
Date: October
28, 2020
|
|
|
|
|
By:/s/ VICTORIA
WHYTE
--------------------------
|
|
|
|
Victoria Whyte
|
|
Authorised
Signatory for and on
|
|
behalf
of GlaxoSmithKline plc
|