Issued:
Wednesday, 28 April 2021, London U.K.
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GSK delivers Q1 sales of £7.4 billion -18% AER, -15%
CER
Total EPS 21.5p, -32% AER, -25% CER; Adjusted EPS 22.9p -39% AER,
-33% CER
2021 guidance reconfirmed
Q1
performance reflects expected year-on-year impact and disruption
from COVID-19
On
track to create New GSK and New Consumer Healthcare company in
2022
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Highlights
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Strong growth in new pharmaceutical products offset by stocking and
pandemic disruption
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●
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Pharmaceuticals
£3.9 billion -12% AER, -8% CER, with growth in new and
specialty products (+3% CER) including: Respiratory +24% CER;
Immuno-inflammation +26% CER; and Oncology +38% CER partly
offsetting decline in Established Products -17% CER. HIV -11% CER
impacted by 2020 stocking and tender phasing; HIV two-drug regimen
sales +41% CER
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●
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Vaccines
£1.2 billion -32% AER, -30% CER (Shingrix -47% CER) reflecting
government prioritisation of COVID-19 vaccinations. Continue to
expect strong growth from Shingrix in H2
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●
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Consumer
Healthcare £2.3 billion -19% AER, -16% CER (-9% excluding
divestments/brands under review) reflecting year-on-year
“pantry-loading” comparison and weak cold/flu
season
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Effective cost control supports delivery of adjusted earnings per
share of 22.9p
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●
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Total
Group operating margin 22.8%. Total EPS 21.5p -32% AER, -25%
CER
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●
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Adjusted
Group operating margin 25.4%. Adjusted EPS 22.9p -39% AER, -33%
CER
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●
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Q1 net
cash flow from operations £331 million. Free cash outflow
£3 million
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Continued R&D delivery and strengthening of Biopharma
pipeline
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Launch of Cabenuva, the world’s first and only long-acting HIV
treatment
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Approvals
of Rukobia and Jemperli (dostarlimab) and positive
regulatory opinion for Benlysta
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Phase
III trial starts for RSV older adults vaccine and GSK ‘294
for severe asthma
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Positive
data for antibody treatment VIR-7831 with EUA filed in US and
EU
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Phase
III trial start with Medicago for adjuvanted COVID-19
vaccine
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On track to create New GSK and standalone Consumer Healthcare
company in 2022
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Consumer
Healthcare JV commercial integration broadly complete; separation
activities advancing
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●
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Pharmaceutical
portfolio rationalisation continues with cephalosporin divestment
announced
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●
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New GSK
Investor Update on 23 June to outline strategy, growth outlooks
(2022-2031), capital allocation
priorities and timing and approach to
separation
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Reconfirming full-year 2021 EPS guidance and 2022
outlook
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●
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Continue
to expect 2021 Adjusted EPS to decline by a mid to high-single
digit percentage in CER
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●
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2022
outlook unchanged with meaningful improvements expected in revenues
and margins
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Dividend of 19p declared for Q1 2021. Continue to expect 80p/share
for 2021
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Emma Walmsley, Chief Executive Officer, GSK said: “Our first quarter
results are in line with our expectations and reflect the
anticipated impacts of COVID-19. We continue to expect a
significant improvement in performance over the remainder of the
year and reconfirm our guidance for 2021 and 2022 outlook. The
launch of Cabenuva for HIV
and Phase III starts for our RSV vaccine and a new long-acting
treatment for severe asthma are key milestones as we continue to
strengthen our growth prospects. Separation plans are also well
underway and we look forward to sharing our strategy and growth
outlook for New GSK with investors in June.”
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The Total results are presented in
summary on page 2 and under ‘Financial performance’ on
page 11 and Adjusted results reconciliations are presented on pages
21 and 22. 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 9 and £% or AER% growth, CER% growth, free
cash flow and other non-IFRS measures are defined on page 41. GSK
provides guidance on an Adjusted results basis only, for the
reasons set out on page 10. All expectations, guidance and targets
regarding future performance and dividend payments should be read
together with ‘Outlook, assumptions and cautionary
statements’ on pages 42 and 43.
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Q1 2021 results
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Q1 2021
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Growth
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£m
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£%
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CER%
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Turnover
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7,418
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(18)
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(15)
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Total
operating profit
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1,693
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(16)
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(8)
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Total
earnings per share
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21.5p
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(32)
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(25)
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Adjusted
operating profit
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1,881
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(30)
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(23)
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Adjusted
earnings per share
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22.9p
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(39)
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(33)
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Net
cash from operating activities
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331
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(66)
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Free
cash flow
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(3)
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>(100)
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2021 guidance
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We reconfirm our guidance range for 2021 for a decline of mid to
high-single digit percent Adjusted EPS at CER.
In
2021, as planned we will continue to increase investment in our
pipeline, build on our top-line momentum for key growth drivers and
largely complete readiness for separation. Assuming healthcare
systems and consumer trends approach normality in the second half
of the year, we continue to expect Pharmaceutical revenue to grow
flat to low-single digits at CER and Consumer Healthcare revenue to
grow low to mid-single digits at CER excluding brands
divested/under review with above market growth. For our Vaccines
business, as noted at the time of announcing full-year 2020
results, we anticipated disruption during the first half of the
year, given governments’ prioritisation of COVID-19
vaccination programmes and ongoing measures to contain the
pandemic. This was expected to impact adult and adolescent
immunisations, including Shingrix, notably in the US and this is
reflected in our first-quarter 2021 Vaccines performance. We are
encouraged by the rate at which COVID-19 vaccinations are being
deployed in many countries, particularly the US and UK, which
provides support for healthcare systems returning to normal. As a
consequence we remain confident in the underlying demand for our
Vaccine products, and we expect strong recovery and contribution to
growth, notably from Shingrix, in the second half of the
year. We continue to expect Vaccines revenue for 2021 to grow flat
to low-single digits at CER.
All
expectations, guidance and targets regarding future performance and
dividend payments should be read together with ‘Outlook,
assumptions and cautionary statements’ on pages 42 and 43. If
exchange rates were to hold at the closing rates on 31 March 2021
($1.38/£1, €1.17/£1 and Yen 152/£1) for the
rest of 2021, the estimated negative impact on 2021 Sterling
turnover growth would be 5% and if exchange gains or losses were
recognised at the same level as in 2020, the estimated negative
impact on 2021 Sterling Adjusted EPS growth would be around
9%.
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Results
presentation
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A
webcast of the quarterly results presentation hosted by Emma
Walmsley, GSK CEO, will be held at 2pm BST on 28 April 2021.
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.
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Investor update
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At our
investor update on 23 June we plan to set out in detail the
strategy, growth prospects and financial outlooks for New GSK,
including an in-depth review of key marketed and pipeline growth
drivers. Alongside these we will provide details of a new
distribution policy which reflects the future investment priorities
focused on delivering sustainable long-term shareholder value.
Lastly we will provide an update on the timing and approach to
separation.
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Operating performance – Q1 2021
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Turnover
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Q1 2021
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£m
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Growth
£%
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Growth
CER%
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Pharmaceuticals
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3,882
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(12)
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(8)
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Vaccines
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1,224
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(32)
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(30)
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Consumer
Healthcare
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2,312
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(19)
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(16)
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7,418
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(18)
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(15)
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Corporate
and other unallocated turnover
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-
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Group
turnover
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7,418
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(18)
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(15)
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Group
turnover was £7,418 million in the quarter, down 18% AER, 15%
CER. Excluding the impact of brands divested or under review in
Consumer Healthcare, Group turnover was down 13% at
CER.
Pharmaceuticals
turnover in the quarter was £3,882 million, down 12% AER, 8%
CER, reflecting the continued impact of the COVID-19 pandemic,
including the stock build in Q1 2020 and lower demand for
antibiotic products in Q1 2021. New and Specialty sales of
£1,940 million declined 1% AER but grew 3% CER, with growth
from Respiratory, Immuno-inflammation and Oncology partially offset
by decline in HIV due to the stock build in prior year and phasing
of tenders in the International region. Sales of Established
Pharmaceuticals declined 20% AER, 17% CER, to £1,942
million.
Vaccines
turnover declined 32% AER, 30% CER to £1,224 million, primarily driven by the adverse impact of
the COVID-19 pandemic on Shingrix, Hepatitis vaccines, DTPa-containing vaccines
and Bexsero, partly offset by the performance of
Cervarix
in China.
Reported
Consumer Healthcare sales declined 19% AER, 16% CER to £2,312
million in the first quarter, largely driven by the divestment
programme which has now completed. Sales excluding brands
divested/under review declined 9% CER as a direct result of the
comparison last year including accelerated purchases across all
categories as a result of the COVID-19 pandemic when sales
excluding brands divested/under review were up 14% CER in Q1 2020
on a pro-forma basis, combined with a historically weak cold and
flu season.
Operating profit
Total operating profit was £1,693 million in Q1 2021 compared
with £2,014 million in Q1 2020. The total operating margin was
22.8%. Adjusted operating profit was £1,881 million, 30% lower
than Q1 2020 at AER, 23% lower at CER on a turnover decline of 15%
CER. The Adjusted operating margin of 25.4% was 4.1 percentage
points lower at AER, and 2.9 percentage points lower on a CER basis
than in Q1 2020. The decrease in Total operating profit included an
unfavourable comparison to an increase in value of the shares in
Hindustan Unilever in Q1 2020, offset by a number of other asset
disposals, lower major restructuring costs and lower re-measurement
charges on the contingent consideration liabilities.
The
reduction in Adjusted operating profit primarily reflected the
impact of sales decline across all three businesses as a result of
the COVID-19 pandemic, including an adverse impact on Vaccines and
an adverse comparison to an uplift from increased customer demand
and stock building in Q1 2020 in Pharmaceuticals and Consumer
Healthcare, plus increased investment in R&D. This was partly
offset by tight control of ongoing costs including reduced
promotional and variable spending across all three businesses as a
result of the COVID-19 lockdowns, a favourable legal settlement in
the quarter compared to increased legal costs in 2020 and benefits
from continued restructuring.
Earnings per share
Total
EPS was 21.5p, compared with 31.5p in Q1 2020. Unfavourable
comparisons to an increase in value of the shares in Hindustan
Unilever in Q1 2020 were offset by a number of other asset
disposals, lower major restructuring costs and lower re-measurement
charges on the contingent consideration liabilities and the unwind
in 2020 of the fair market value uplift on inventory arising on
completion of the Consumer Healthcare Joint Venture with
Pfizer.
Adjusted
EPS was 22.9p compared with 37.7p in Q1 2020, down 39% AER and 33%
CER, on a 23% CER decrease in Adjusted operating profit reflecting
the impact of sales decline across all three businesses as a result
of the COVID-19 pandemic, higher interest costs and a higher
effective tax rate partly offset by a lower non-controlling
interest allocation of Consumer Healthcare and ViiV
profits.
Cash flow
The net cash inflow from operating activities for the quarter was
£331 million (Q1 2020: £965 million). Free cash outflow
was £3 million for the quarter (Q1 2020: £531 million
inflow). The decrease primarily reflected reduced operating profit
including adverse exchange impacts, adverse timing of returns and
rebates, increased inventory and increased dividends to
non-controlling interests, partly offset by a reduction in trade
receivables from lower sales compared to an increase in Q1 2020,
increased proceeds from disposal of intangible assets and lower tax
payments.
|
R&D pipeline
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Our
approach to R&D focuses on the science of the immune system,
genetics and advanced technologies. The pipeline currently
comprises 59 vaccines and medicines, predominantly in the areas of
infectious diseases, oncology and immune-mediated
diseases.
As previously disclosed in the FY 2020 presentation to analysts and
investors on 3 February 2021, the company has identified over 20
potential product approvals which could take place by 2026, of
which more than 10 could significantly change medical practice and
potentially generate peak annual sales in excess of one billion
dollars.
Pipeline
news flow highlights since Q4 2020 Results listed in chronological
order.
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Vaccine collaborations
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●
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Reached
an agreement in principle with Novavax and the UK Government
Vaccines Taskforce to support manufacturing of up to 60 million
doses of Novavax’s COVID-19 vaccine candidate (NVX-CoV2373)
for use in the UK.
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●
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Medicago
and GSK started a Phase III trial of adjuvanted COVID-19 vaccine
candidate in combination with GSK’s pandemic adjuvant, as
part of the ongoing Phase II/III study.
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Sanofi
and GSK started a new Phase II study of adjuvanted recombinant
protein-based COVID-19 vaccine candidate.
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GSK and
SK Bioscience started a new collaboration and Phase I/II study of
an adjuvanted protein-based COVID-19 vaccine
candidate.
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GSK
started a Phase I study with self-amplifying mRNA (SAM) with
COVID-19 as model antigen.
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VIR-7831/GSK4182136 (dual-action SARS-CoV-2 monoclonal
antibody)
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Announced
the European Medicines Agency (EMA) started a review of VIR-7831
for the early treatment of COVID-19.
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Announced
positive topline results from the Phase II BLAZE-4 trial evaluating
bamlanivimab with VIR-7831 in low-risk adults with
COVID-19.
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Announced
submission of an application to the US Food and Drug Administration
(FDA) requesting Emergency Use Authorisation for
VIR-7831.
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Started
a Phase II study evaluating the intramuscular use of VIR-7831 in
early COVID-19 treatment.
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Announced
positive results from the Phase III COMET-ICE trial demonstrating
an 85% reduction in hospitalisation or death from early treatment
with VIR-7831 in adults with COVID-19.
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The
NIH-sponsored ACTIV-3 study of VIR-7831 in hospitalised COVID-19
patients was closed to future enrolment while the data matures,
following a recommendation by the Data and Safety Monitoring
Board.
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VIR-7832/GSK4182137 (dual-action SARS-CoV-2 monoclonal
antibody)
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Dosed
the first patient in the Phase Ib UK AGILE study.
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Otilimab (anti-GM-CSF
monoclonal antibody)
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Announced
an amendment to the Phase II (OSCAR) study of otilimab for the
treatment of hospitalised adult patients with COVID-19 to confirm
potentially significant findings in a cohort of patients 70 years
and older.
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Oncology
|
Jemperli
(dostarlimab;
PD-1)
|
|
●
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Received
US FDA approval for Jemperli (dostarlimab-gxly) for the
treatment of adult patients with mismatch repair-deficient (dMMR)
recurrent or advanced endometrial cancer, as determined by an
FDA-approved test, that have progressed on or following prior
treatment with a platinum-containing regimen.
|
●
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Granted
conditional marketing authorisation from the European Commission
for Jemperli (dostarlimab)
for use in women with dMMR/microsatellite instability-high (MSI-H)
recurrent or advanced endometrial cancer who have progressed on or
following prior treatment with a platinum containing
regimen.
|
●
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Received
positive opinion from the EMA’s Committee for Medicinal
Products for Human Use (CHMP) for the treatment of women with
dMMR/MSI-H recurrent or advanced endometrial cancer who have
progressed on or following prior treatment with a platinum
containing regimen.
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Feladilimab (inducible T
cell co-stimulatory (ICOS) agonist)
|
|
●
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Stopped
the Phase II INDUCE-3 trial enrolling patients, following a
recommendation by the Independent Data Monitoring Committee,
including discontinuing treatment with feladilimab. The Phase II
INDUCE-4 trial has also been stopped.
|
Bintrafusp alfa (TGF beta
trap/PD-1 agonist)
|
|
●
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Merck
KGaA announced the Phase II INTR@PID BTC 047 study in second line
biliary tract cancer failed to meet the pre-defined threshold to
support regulatory filing in this setting.
|
GSK4362676 (Mat2A inhibitor)
|
|
●
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IDEAYA
Biosciences announced the first patient was dosed in a Phase I
trial of IDE397/GSK’676.
|
GSK3537142 (NYESO-ImmTAC)
|
|
●
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Removed
from the Phase I pipeline due to portfolio
prioritisation.
|
HIV/Infectious diseases
|
GSK3640254 (maturation
inhibitor)
|
|
●
|
Presented
positive proof-of-concept findings for GSK’254, a novel,
investigational maturation inhibitor for the treatment of HIV at
the 2021 Conference on Retroviruses and Opportunistic Infections.
Findings showed the antiviral activity, safety and tolerability of
GSK’254 and support its continued study in Phase
IIb.
|
Cabenuva
(cabotegravir + rilpivirine)
|
|
●
|
Presented
data for long-acting cabotegravir and rilpivirine for the treatment
of HIV at the 2021 Conference on Retroviruses and Opportunistic
Infections showing continued virologic suppression to 96
weeks.
|
●
|
Submitted
Supplemental New Drug Application to US FDA for expanded use as a
HIV treatment for use every 2-months.
|
●
|
European
launch for Cabenuva in
long-acting HIV treatment.
|
Rukobia
(fostemsavir; attachment inhibitor)
|
|
●
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Received
European and UK Marketing Authorisation for Rukobia (fostemsavir), a first-in-class
attachment inhibitor in combination with other antiretrovirals for
the treatment of adults with multidrug-resistant HIV.
|
Influenza
|
|
●
|
Announced
a binding agreement with Vir Biotechnology to expand the existing
COVID-19 collaboration to include the research and development of
new therapies for influenza and other respiratory
viruses.
|
Vaccines
|
Respiratory Syncytial Virus (RSV)
|
|
●
|
Started
a Phase III study for RSV candidate vaccine programme for older
adults.
|
Other Pharmaceuticals
|
Benlysta
(belimumab)
|
|
●
|
Received
positive opinion from the CHMP recommending the use of intravenous
and subcutaneous Benlysta
(belimumab) in combination with background immunosuppressive
therapies for the treatment of adult patients with active lupus
nephritis.
|
GSK3511294 (long-acting
anti-IL-5 monoclonal antibody)
|
|
●
|
Dosed
the first patient in the SWIFT-2 trial as part of the Phase III
clinical programme investigating GSK’294 in patients with
severe eosinophilic asthma. The Phase III studies SWIFT-1 and
NIMBLE have also started.
|
Trelegy
(fluticasone
furoate/umeclidinium/vilanterol)
|
|
●
|
Received
a negative opinion from the EMA’s CHMP for Trelegy in asthma recommending against
label expansion.
|
GSK3439171 (H-PGDS
inhibitor; Duchenne Muscular Dystrophy)
|
|
●
|
Removed
from the Phase I pipeline due to portfolio
prioritisation.
|
Contents
|
Page
|
|
|
Total
and Adjusted results
|
9
|
Financial
performance
|
11
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Cash
generation
|
26
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Returns
to shareholders
|
27
|
|
|
Income
statement
|
29
|
Statement
of comprehensive income
|
30
|
Pharmaceuticals
turnover
|
31
|
Vaccines
turnover
|
32
|
Balance
sheet
|
33
|
Statement
of changes in equity
|
34
|
Cash
flow statement
|
35
|
Segment
information
|
36
|
Legal
matters
|
37
|
Additional
information
|
38
|
Reconciliation
of cash flow to movements in net debt
|
40
|
Net
debt analysis
|
40
|
Free
cash flow reconciliation
|
40
|
Reporting
definitions
|
41
|
Outlook,
assumptions and cautionary statements
|
42
|
Independent
review report
|
44
|
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)
|
|
Kristen
Neese
|
+1 215
751 3335
|
(Philadelphia)
|
|
Kathleen
Quinn
|
+1 202
603 5003
|
(Washington)
|
|
|
|
|
Analyst/Investor
enquiries:
|
James
Dodwell
|
+44 (0)
20 8047 2406
|
(London)
|
|
Sonya
Ghobrial
|
+44 (0)
7392 784784
|
(Consumer)
|
|
Mick
Readey
|
+44 (0)
7990 339653
|
(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 other non-IFRS measures are
defined on page 41.
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 21 and
22.
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.
|
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 86% of the Total
earnings and 83% of the Adjusted earnings of ViiV Healthcare for
2020.
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 31 March
2021, the liability, which is discounted at 8.0%, stood at
£5,277 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 Q1 2021 were £216
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 52 and 53 of the Annual Report
2020.
|
Financial performance – Q1 2021
|
Total results
|
The
Total results for the Group are set out below.
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
7,418
|
|
9,090
|
|
(18)
|
|
(15)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,480)
|
|
(3,199)
|
|
(22)
|
|
(21)
|
|
|
|
|
|
|
|
|
Gross
profit
|
4,938
|
|
5,891
|
|
(16)
|
|
(12)
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,427)
|
|
(2,916)
|
|
(17)
|
|
(15)
|
Research
and development
|
(1,118)
|
|
(1,187)
|
|
(6)
|
|
(3)
|
Royalty income
|
91
|
|
67
|
|
36
|
|
39
|
Other
operating income/(expense)
|
209
|
|
159
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
1,693
|
|
2,014
|
|
(16)
|
|
(8)
|
|
|
|
|
|
|
|
|
Finance
income
|
10
|
|
41
|
|
|
|
|
Finance
expense
|
(201)
|
|
(229)
|
|
|
|
|
Share
of after tax profits of
associates
and joint ventures
|
16
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
1,518
|
|
1,835
|
|
(17)
|
|
(9)
|
|
|
|
|
|
|
|
|
Taxation
|
(258)
|
|
(156)
|
|
|
|
|
Tax rate %
|
17.0%
|
|
8.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
1,260
|
|
1,679
|
|
(25)
|
|
(17)
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
187
|
|
114
|
|
|
|
|
Profit
attributable to shareholders
|
1,073
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,260
|
|
1,679
|
|
(25)
|
|
(17)
|
|
|
|
|
|
|
|
|
Earnings per share
|
21.5p
|
|
31.5p
|
|
(32)
|
|
(25)
|
|
|
|
|
|
|
|
|
Adjusted results
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for Q1 2021 and Q1 2020
are set out on pages 21 and 22.
|
|
Q1 2021
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
7,418
|
|
100
|
|
(18)
|
|
(15)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,236)
|
|
(30.1)
|
|
(14)
|
|
(13)
|
Selling,
general and administration
|
(2,315)
|
|
(31.2)
|
|
(17)
|
|
(15)
|
Research
and development
|
(1,077)
|
|
(14.5)
|
|
(1)
|
|
3
|
Royalty
income
|
91
|
|
1.2
|
|
36
|
|
39
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
1,881
|
|
25.4
|
|
(30)
|
|
(23)
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
1,707
|
|
|
|
(32)
|
|
(25)
|
Adjusted
profit after tax
|
1,389
|
|
|
|
(36)
|
|
(29)
|
Adjusted
profit attributable to shareholders
|
1,143
|
|
|
|
(39)
|
|
(33)
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
22.9p
|
|
|
|
(39)
|
|
(33)
|
|
|
|
|
|
|
|
|
Operating profit by business
|
Q1 2021
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,910
|
|
49.2
|
|
(5)
|
|
-
|
Pharmaceuticals
R&D*
|
(791)
|
|
|
|
(5)
|
|
(1)
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
1,119
|
|
28.8
|
|
(5)
|
|
2
|
Vaccines
|
306
|
|
25.0
|
|
(64)
|
|
(60)
|
Consumer
Healthcare
|
535
|
|
23.1
|
|
(30)
|
|
(25)
|
|
|
|
|
|
|
|
|
|
1,960
|
|
26.4
|
|
(30)
|
|
(25)
|
Corporate
& other unallocated costs
|
(79)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
1,881
|
|
25.4
|
|
(30)
|
|
(23)
|
|
|
|
|
|
|
|
|
*
|
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
|
|
Q1 2021
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
619
|
|
19
|
|
24
|
HIV
|
1,031
|
|
(15)
|
|
(11)
|
Immuno-inflammation
|
180
|
|
19
|
|
26
|
Oncology
|
110
|
|
36
|
|
38
|
|
|
|
|
|
|
New and
Specialty
|
1,940
|
|
(1)
|
|
3
|
Established
Pharmaceuticals
|
1,942
|
|
(20)
|
|
(17)
|
|
|
|
|
|
|
|
3,882
|
|
(12)
|
|
(8)
|
|
|
|
|
|
|
US
|
1,713
|
|
(3)
|
|
4
|
Europe
|
950
|
|
(17)
|
|
(18)
|
International
|
1,219
|
|
(19)
|
|
(14)
|
|
|
|
|
|
|
|
3,882
|
|
(12)
|
|
(8)
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the quarter was £3,882 million, down 12% AER, 8%
CER.
The
first quarter decline reflected the continued impact of the
COVID-19 pandemic. A strong prior year comparator included pandemic
related stock build at the end of the first quarter, accounting for
approximately 4 percentage points of the CER decline. In the
current quarter, the impact on the market environment included
lower demand for antibiotic products in International and Europe
regions.
New and
Specialty sales of £1,940 million declined 1% AER but grew 3%
CER, with ongoing growth from Respiratory, Immuno-inflammation and
Oncology partially offset by decline in HIV due to pandemic related
stock build in prior year and phasing of tenders in the
International region.
Respiratory
sales were up 19% AER, 24% CER, to £619 million, on growth of
Trelegy and Nucala and our Immuno-inflammation and
Oncology portfolios continue to show double digit growth. HIV sales
declined 15% AER, 11% CER, to £1,031 million, including the
impact of stock build last year, with growth in Dovato offset by Tivicay and Triumeq. Sales of Established
Pharmaceuticals declined 20% AER, 17% CER, to £1,942
million.
In the
US, sales declined 3% AER but grew 4% CER. Continued growth of
Nucala, Trelegy, Benlysta and Dovato was offset by the decline in
Triumeq and in Established
Pharmaceuticals, including the ongoing impact of generic
Ventolin.
In
Europe, sales declined 17% AER, 18% CER, with a strong comparator,
including COVID-19 pandemic related stocking at the end of the
quarter. This quarter, growth of Trelegy, Benlysta and HIV two-drug
regimens was offset by declines in Tivicay, Triumeq, and the Established
Pharmaceuticals portfolio. This portfolio was impacted by generic
competition including Seretide,
Duodart and Volibris, lower antibiotic demand, and
a one-off UK Relenza
contract last year.
International
declined 19% AER, 14% CER. Growth from the Respiratory portfolio
was offset by declines in HIV and Established Pharmaceuticals which
was impacted by COVID-19 suppressed antibiotics and dermatology
markets and increased generic competition in Japan on Xyzal and Avolve.
Respiratory
Total
Respiratory sales were up 19% AER, 24% CER, with growth from
Trelegy, Nucala and Anoro. International
Respiratory sales grew 32% AER, 38% CER including Nucala, up 27% AER, 33% CER, and
Trelegy up 76% AER, 82% CER
including the impact of Trelegy
Asthma launched in Japan in Q4 2020.
In
Europe, Respiratory grew 2% AER, but was flat at CER reflecting
strong comparator including additional demand related to COVID-19
pandemic related stocking at the end of the quarter. In the US,
Respiratory grew 24% AER, 32% CER, driven by Trelegy and Nucala and the impact of a prior period
RAR adjustment.
Sales
of Nucala were £254
million in the quarter and grew 21% AER, 26% CER, with US sales up
30% AER, 39% CER to £150 million and International sales of
£42 million grew 27% AER, 33% CER. Europe sales were flat at
AER, down 2% CER.
Trelegy sales were up 28% AER, 35% CER to £248 million
driven by growth in all regions. In the US, sales benefited from
the new asthma indication approved and launched in Q3 2020, with
sales up 29% AER, 37% CER. In Europe, sales grew 7% AER, 7% CER and
in International, where Trelegy asthma was approved in Japan in
Q4 2020, sales grew 76% AER, 82% CER to £30
million.
HIV
HIV
sales were £1,031 million with decline of 15% AER, 11% CER in
the quarter. The Q1 2020 sales comparator benefited from customer
stocking due to COVID-19, mainly in the US and Europe together with
timing of Tivicay tenders
in International. These two factors accounted for 8 and 2
percentage points of CER decline respectively, in addition to 1
percentage point of CER decline from the mature portfolio.
Triumeq sales were
£436 million, down 23% AER, 20% CER and Tivicay sales were £301 million,
down 27% AER,
24%
CER.
New HIV
products Juluca,
Dovato, Rukobia and Cabenuva delivered sales of £262
million representing 25% of the total HIV portfolio. Sales of the
two drug regimens Juluca
and Dovato were £112
million and £141 million respectively with combined growth of
36% AER, 41% CER. Rukobia
sales were £7 million. Cabenuva, the first long acting
injectable, launched in the US.
In the
US, total sales were £597 million with decline of 15% AER, 10%
CER. New HIV products delivered sales of £166 million,
including: Dovato £74
million growing 64% AER, 76% CER, Juluca £83 million declining 12%
AER, 5% CER, Rukobia
£7 million and Cabenuva £2 million. Combined
Tivicay and Triumeq sales were £419 million
declining 24% AER, 19% CER. In Europe, total sales were £287
million with decline of 10% AER, 12% CER. New HIV products
delivered sales of £84 million, including: Dovato £58 million growing
>100% AER, CER and Juluca £26 million growing 8% AER,
4% CER. Combined Tivicay
and Triumeq sales were
£196 million declining 25% AER, 26% CER.
Oncology
Sales
of Zejula, our PARP
inhibitor treatment for Ovarian cancer were £88 million in the
quarter, up 9% AER, 11% CER. Sales comprised £51 million in
the US and £36 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 Q3 2020 and reported sales of £21 million in the
quarter.
Immuno-inflammation
Sales
of Benlysta in the quarter
were up 18% AER, 25% CER to £178 million, including impact of
Lupus Nephritis launches in US and Japan.
Established
Pharmaceuticals
Sales
of Established Pharmaceuticals in the quarter were £1,942
million, down 20% AER, 17% CER.
Established
Respiratory products declined 14% AER, 11% CER to £1,127
million. This includes the ongoing impact of generic Ventolin in the US and Xyzal in Japan. Advair/Seretide sales declined 11% AER,
8% CER reflecting ongoing impact of generic
competition.
The
remainder of the Established Pharmaceuticals portfolio declined by
27% AER, 24% CER to £815 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, Japan and China, and a strong pre-COVID-19
comparator.
|
Vaccines turnover
|
|
Q1 2021
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
190
|
|
(16)
|
|
(13)
|
Influenza
|
18
|
|
(14)
|
|
(5)
|
Shingles
|
327
|
|
(49)
|
|
(47)
|
Established
Vaccines
|
689
|
|
(24)
|
|
(23)
|
|
|
|
|
|
|
|
1,224
|
|
(32)
|
|
(30)
|
|
|
|
|
|
|
US
|
505
|
|
(50)
|
|
(47)
|
Europe
|
307
|
|
(12)
|
|
(13)
|
International
|
412
|
|
(7)
|
|
(5)
|
|
|
|
|
|
|
|
1,224
|
|
(32)
|
|
(30)
|
|
|
|
|
|
|
Vaccines turnover declined 32% AER, 30% CER to £1,224 million,
primarily driven by the adverse impact of the COVID-19 pandemic
on Shingrix, Hepatitis vaccines, DTPa-containing vaccines
and Bexsero. This decline was partly offset by the
performance of Cervarix in China.
Vaccines performance in the first quarter was affected by lower
demand due to the rapid pace of COVID-19 vaccination programme
deployment mainly in the US, resulting in lower Shingrix vaccination in Q1 2021. In addition to COVID-19
mass vaccination, some markets re-introduced stay-at-home
directives resulting in limited visits to healthcare practitioners
and points of vaccination. Vaccines sales in the comparator quarter
in 2020 grew 19% CER and had no material pandemic impact outside of
China.
Lower demand in the quarter was related to COVID-19 pandemic
conditions unless stated otherwise.
Meningitis
Meningitis sales declined 16% AER, 13% CER to £190
million. Bexsero sales declined 18% AER, 16% CER to £134
million, reflecting lower
demand in the US and International.
Menveo sales declined 2% AER but grew 2% CER to
£39 million, primarily driven by favourable phasing in
International, partly offset by lower
demand in Europe. In the
US, Bexsero and Menveo both grew market share.
Influenza
Fluarix/FluLaval sales declined
by 14% AER, 5% CER to £18 million.
Shingles
Shingrix declined by 49% AER, 47% CER to £327 million,
primarily driven by lower demand in the US due to prioritised focus
on COVID-19 mass vaccination of older adults, partly offset by a
continued strong performance momentum in Germany and the launch in
China.
Established
Vaccines
Hepatitis vaccines declined 55% AER, 54% CER to £95 million,
adversely impacted in the US and Europe by lower demand, travel
restrictions in Europe and competition returning to the US
market.
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) declined by 21% AER, 19% CER.
Infanrix/Pediarix
sales declined 24% AER, 22% CER to
£136 million, reflecting lower demand in the US together with
change in recommendation for the dosing schedule in Germany.
Boostrix
sales were down 16% AER, 14% CER to
£94 million primarily due to lower vaccination rates in the
US.
Rotarix sales were down
25% AER, 23% CER to £114 million, reflecting lower demand in the US and
unfavourable phasing in Emerging Markets.
Synflorix sales declined by 17%
AER, 17% CER to £102 million, primarily due to lower tender
demand in Emerging Markets and Europe.
MMRV vaccines sales grew 11% AER, 12% CER to £63 million,
largely driven by improved supply and increased market share in
Europe together with favorable phasing in
International.
|
Consumer Healthcare turnover
|
|
|
|
Q1 2021
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
695
|
|
(5)
|
|
(1)
|
Pain
relief
|
|
|
546
|
|
(11)
|
|
(8)
|
Vitamins,
minerals and supplements
|
|
|
349
|
|
(4)
|
|
(1)
|
Respiratory
health
|
|
|
243
|
|
(45)
|
|
(42)
|
Digestive
health and other
|
|
|
428
|
|
(5)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
2,261
|
|
(13)
|
|
(9)
|
Brands
divested/under review
|
|
|
51
|
|
(81)
|
|
(80)
|
|
|
|
|
|
|
|
|
|
|
|
2,312
|
|
(19)
|
|
(16)
|
|
|
|
|
|
|
|
|
US
|
|
|
713
|
|
(26)
|
|
(21)
|
Europe
|
|
|
611
|
|
(18)
|
|
(19)
|
International
|
|
|
988
|
|
(14)
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
2,312
|
|
(19)
|
|
(16)
|
|
|
|
|
|
|
|
|
On a
reported basis, sales declined 19% AER, 16% CER to £2,312
million in the first quarter largely driven by the divestment
programme which has now completed.
Sales
excluding brands divested/under review declined 9% CER as a direct
result of the comparison last year including accelerated purchases
across all categories as a result of the COVID-19 pandemic when
sales excluding brands divested/under review were up 14% CER in Q1
2020 on a pro-forma basis, combined with a historically weak cold
and flu season. Given these challenging comparisons in Q1 2020 from
COVID-19 and subsequent destocking in Q2 2020, the 2 year category
CAGRs are shared below and these will be shared for the first half
of this year only, as this is more indicative of underlying trends
than looking at the quarters in isolation.
International
sales excluding brands divested/under review reported sales grew
mid-single digit with strong performance in the emerging markets
such as China helped by easier comparatives, with good growth in
the retained business in India, Latin America, the Middle East and
Africa.
Oral
health
Oral
health sales fell 5% AER, 1% CER to £695 million. In the
previous year Oral health sales had increased 13% CER. Sensodyne delivered low single digit
growth despite the comparative, reflecting underlying brand
strength, continued innovation and good consumer up take in
traditional retail and ecommerce channels particularly in India and
China. Gum health
delivered high single digit growth, whilst Denture care declined
high single-digit given challenging market conditions consistent
with trends seen through 2020. On a 2 year CAGR growth was
mid-single digit, consistent with the trends seen in the second
half of 2020 after the accelerated purchases and subsequent
destocking.
Pain
relief
Pain
relief sales declined 11% AER, 8% CER to £546 million. In the
prior year, Pain relief sales had increased mid-teens per cent on a
pro-forma basis. Advil
declined double digit with Panadol down high single digit which
more than offset double digit growth in Voltaren driven by the successful Rx to
OTC switch in the US last year. The 2 year CAGR for the category
was up mid-single digit, helped also by the Voltaren Rx to OTC switch in Q2
2020.
Vitamins, minerals and
supplements
Vitamins,
minerals and supplements sales declined 4% AER, 1% CER to £349
million. In the prior year Vitamins, minerals and supplements sales
had increased high-teens per cent on a pro-forma basis.
Caltrate delivered double
digit growth, continuing the momentum seen throughout last year,
and Centrum grew low single
digit, both the result of continued consumer focus on health and
wellness although this was more than offset by a double digit
decline in Emergen-C which
faced particularly challenging comparatives (volumes almost doubled
last year). On a 2 year CAGR the category growth was up high single
digit.
Respiratory
health
Respiratory
health sales declined 45% AER, 42% CER to £243 million. In the
previous year Respiratory health sales had increased mid-twenties
per cent on a pro-forma basis. Theraflu and Robitussin declined double digit with
Contac down high single
digit, and all were adversely impacted by a lower cold and flu
season as a result of the pandemic and social distancing. On a 2
year CAGR the category was down in the mid-teens.
Digestive health and
other
Digestive
health and other brands sales declined 5% AER and was flat CER at
£428 million. In the prior year Digestive health and other
brands had increased low-single digits on a pro-forma basis. Growth
in Digestive health products more than offset a decline in Skin
health products and Smokers’ health products. The 2 year
category CAGR was up low single digit.
|
Operating
performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 33.4%, 1.8 percentage
points lower at AER and 2.6 percentage points lower in CER terms
compared with Q1 2020. This primarily reflected lower write downs
in a number of manufacturing sites and the unwind in Q1 2020 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 30.1%, 1.4 percentage points higher at
AER and 0.7 percentage points higher at CER compared with Q1 2020.
This reflected an adverse mix in Vaccines, primarily due to the
reduction in Shingrix
sales in the US as
well as higher supply chain costs and under-recoveries resulting
from lower demand in the current period, partly offset by
favourable mix in Pharmaceuticals.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 32.7%, 0.6
percentage points higher at AER and 0.1 percentage points higher at
CER compared with Q1 2020.
Excluding
Adjusting items, Adjusted SG&A costs as a percentage of
turnover were 31.2%, 0.6 percentage points higher at AER than in Q1
2020 and 0.1 percentage points higher on a CER basis. Adjusted
SG&A costs declined 17% AER, 15% CER which reflected the tight
control of ongoing costs and reduced variable spending across all
three businesses as a result of the COVID-19 lockdowns, and the
continuing benefit of restructuring in Pharmaceuticals, Consumer
Healthcare and support functions. Around a third of this decline
also reflected a favourable legal settlement in the quarter
compared to increased legal costs in 2020.
Research and development
Total
R&D expenditure was £1,118 million (15.1% of turnover),
down 6% AER, 3% CER, including a decrease in major restructuring
charges. Adjusted R&D expenditure was £1,077 million
(14.5% of turnover), 1% lower at AER, 3% higher at CER than in Q1
2020.
Pharmaceuticals
R&D expenditure was £834 million, down 2% AER, up 2% CER,
primarily driven by increases in Specialty and Primary Care and HIV
portfolios, offset by a net reduction in Oncology compared to Q1
2020 reflecting phasing in spend on Blenrep, efficiency savings from the
implementation of our One Development programme for Pharmaceuticals
and Vaccines as part of the Separation Preparation restructuring
programme and variable spending as a result of COVID-19
lockdowns.
In the
Specialty and Primary Care portfolio there has been a significant
increase in investment, primarily related to our two key COVID-19
treatment programmes (VIR-7831 and otilimab) as well as a number of
other programs including HBV antisense oligonucleotide
(GSK3228836), anti-IL5 for asthma (GSK3511294) and otilimab for
rheumatoid arthritis. In Oncology, there was increased investment
from progression of a number of key programmes, including
Zejula and dostarlimab,
offset by a phasing in spend on Blenrep.
R&D
expenditure in Vaccines was £188 million, up 19% AER, 18% CER,
reflecting increased investment in clinical programmes for
meningitis ABCWY and RSV, partly offset by efficiency savings from
the implementation of the One Development programme and variable
spending as a result of COVID-19 lockdowns. R&D expenditure in
Consumer Healthcare was £55 million.
Royalty income
Royalty
income was £91 million (Q1 2020: £67 million), up 36%
AER, 39% CER, primarily driven by higher sales of
Gardasil.
|
Other operating income/(expense)
Net
other operating income of £209 million (Q1 2020: £159
million income) primarily reflected a number of asset disposals
including the disposal of royalty rights on cabozantinib and
disposal of a number of Consumer brands partly offset by accounting
charges of £107 million (Q1 2020: £473 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 £134 million (Q1 2020: £435
million) for the contingent consideration liability due to
Shionogi, primarily as a result of the unwinding of the discount
for £93 million and a charge for £41 million from
adjustments to sales forecasts partly offset by updated exchange
rate assumptions.
|
Operating profit
Total
operating profit was £1,693 million in Q1 2021 compared with
£2,014 million in Q1 2020. This included an unfavourable
comparison to an increase in value of the shares in Hindustan
Unilever in Q1 2020, offset by a number of other asset disposals,
lower major restructuring costs, lower re-measurement charges on
the contingent consideration liabilities and the unwind in 2020 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 operating profit was
£1,881 million, 30% lower than Q1 2020 at AER, 23% lower at
CER on a turnover decline of 15% CER. The Adjusted operating margin
of 25.4% was 4.1 percentage points lower at AER, and 2.9 percentage
points lower on a CER basis than in Q1 2020.
The
reduction in Adjusted operating profit primarily reflected the
impact of sales decline across all three businesses as a result of
the COVID-19 pandemic, including an adverse impact on Vaccines
particularly Shingrix and
Hepatitis and an adverse comparison to an uplift from increased
customer demand and stock building in Q1 2020 in Pharmaceuticals
and Consumer Healthcare, as well as increased investment in
R&D. This was partly offset by tight control of ongoing costs
including reduced promotional and variable spending across all
three businesses as a result of the COVID-19 lockdowns, a
favourable legal settlement in the quarter compared to increased
legal costs in 2020 and benefits from continued restructuring
across the business.
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 Q1 2021 amounted to £221 million (Q1 2020:
£215 million). This included cash payments made to Shionogi of
£216 million (Q1 2020: £213 million).
Operating profit by business
Pharmaceuticals
operating profit was £1,119 million, down 5% AER, but up 2%
CER on a turnover decrease of 8% CER. The operating margin of 28.8%
was 1.9 percentage points higher at AER than in Q1 2020 and 2.8
percentage points higher on a CER basis. This primarily reflected
the tight control of ongoing costs, reduced variable spending as a
result of the COVID-19 lockdowns, a favourable legal settlement in
the quarter compared to increased legal costs in 2020 and the
continuing benefit of restructuring. This was partly offset by
increased investment in R&D.
Vaccines
operating profit was £306 million, down 64% AER, 60% CER on a
turnover decrease of 30% CER. The operating margin of 25.0% was
22.5 percentage points lower at AER than in Q1 2020 and 20.4
percentage points lower on a CER basis. This was primarily driven
by the negative operating leverage from the significant COVID-19
related sales decline, higher supply chain costs resulting from
lower demand, under recoveries in the current period and adverse
mix due to Shingrix sales
in the US, along with higher R&D spend to support key strategic
priorities. This was partly offset by higher royalty
income.
Consumer
Healthcare operating profit was £535 million, down 30% AER,
25% CER on a turnover decrease of 16% CER. The operating margin of
23.1% was 3.6 percentage points lower at AER and 2.9 percentage
points lower on a CER basis than in Q1 2020. This primarily
reflected the impact of divestments and comparison with the
favourable profit impact of accelerated purchases due to COVID-19
in Q1 2020 partially offset by synergy benefits from the Pfizer
Joint Venture integration and tight cost control.
Net finance costs
Total
net finance costs were £191 million compared with £188
million in Q1 2020. Adjusted net finance costs were £190
million compared with £187 million in Q1 2020. The increase
primarily reflects an adverse comparison to a fair value gain on
interest rate swaps in the 2020 comparator and lower interest
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, partly offset by reduced interest
expense from lower debt levels and favourable movements in foreign
exchange rates.
Share of after tax profits of associates and joint
ventures
The
share of after tax losses of associates and joint ventures was
£16 million (Q1 2020: £9 million profits).
Taxation
The
charge of £258 million represented an effective tax rate on
Total results of 17.0% (Q1 2020: 8.5%) and reflected the different
tax effects of the various Adjusting items. Q1 2020 included a
non-taxable unrealised gain arising from the increase in value of
the shares in Hindustan Unilever Limited in connection with the
disposal of Horlicks and other Consumer Healthcare brands. Tax on
Adjusted profit amounted to £318 million and represented an
effective Adjusted tax rate of 18.6% (Q1 2020: 13.7%).
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2020. 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 £187 million (Q1 2020: £114 million). The increase was
primarily due to an increased allocation of ViiV Healthcare profits
of £76 million (Q1 2020: £40 million), including reduced
credits for re-measurement of contingent consideration liabilities,
and an increased allocation of Consumer Healthcare Joint Venture
profits of £87 million (Q1 2020: £59
million).
The
allocation of Adjusted earnings to non-controlling interests
amounted to £246 million (Q1 2020: £282 million). The
reduction in allocation primarily reflected a reduced allocation of
Consumer Healthcare Joint Venture profits of £114 million (Q1
2020: £139 million) and a reduced allocation of ViiV
Healthcare profits of £108 million (Q1 2020: £128
million), partly offset by higher net profits in some of the
Group’s other entities with non-controlling
interests.
Earnings per share
Total
EPS was 21.5p, compared with 31.5p in Q1 2020. Unfavourable
comparisons to an increase in value of the shares in Hindustan
Unilever in Q1 2020 were offset by a number of other asset
disposals, lower major restructuring costs and lower re-measurement
charges on the contingent consideration liabilities and the unwind
in 2020 of the fair market value uplift on inventory arising on
completion of the Consumer Healthcare Joint Venture with
Pfizer.
Adjusted
EPS was 22.9p compared with 37.7p in Q1 2020, down 39% AER and 33%
CER, on a 23% CER decrease in Adjusted operating profit reflecting
the impact of sales decline across all three businesses as a result
of the COVID-19 pandemic, higher interest costs and a higher
effective tax rate partly offset by a lower non-controlling
interest allocation of Consumer Healthcare and ViiV
profits.
Currency impact on Q1 2021 results
The
results for Q1 2021 are based on average exchange rates,
principally £1/$1.38, £1/€1.14 and £1/Yen 146.
Comparative exchange rates are given on page 38. The period-end
exchange rates were £1/$1.38, £1/€1.17 and
£1/Yen 152.
In the
quarter, turnover decreased 18% AER, 15% CER. Total EPS was 21.5p
compared with 31.5p in Q1 2020. Adjusted EPS was 22.9p compared
with 37.7p in Q1 2020, down 39% AER and 33% CER. The adverse
currency impact primarily reflected the strengthening in Sterling,
particularly against the US as well as Yen. Exchange gains or
losses on the settlement of intercompany transactions had a
negligible impact on the negative currency impact of six percentage
points on Adjusted EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for Q1
2021 and Q1 2020 are set out below.
|
Three months ended 31 March 2021
|
|
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
|
7,418
|
|
|
|
|
|
|
7,418
|
Cost of sales
|
(2,480)
|
175
|
1
|
34
|
7
|
27
|
|
(2,236)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
4,938
|
175
|
1
|
34
|
7
|
27
|
|
5,182
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,427)
|
|
|
75
|
|
2
|
35
|
(2,315)
|
Research and
development
|
(1,118)
|
26
|
13
|
2
|
|
|
|
(1,077)
|
Royalty income
|
91
|
|
|
|
|
|
|
91
|
Other operating
income/(expense)
|
209
|
|
|
(1)
|
109
|
(317)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
1,693
|
201
|
14
|
110
|
116
|
(288)
|
35
|
1,881
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
(191)
|
|
|
1
|
|
|
|
(190)
|
Share
of after tax profits
of
associates and joint
ventures
|
16
|
|
|
|
|
|
|
16
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,518
|
201
|
14
|
111
|
116
|
(288)
|
35
|
1,707
|
|
|
|
|
|
|
|
|
|
Taxation
|
(258)
|
(39)
|
(3)
|
(24)
|
(31)
|
44
|
(7)
|
(318)
|
Tax rate %
|
17.0%
|
|
|
|
|
|
|
18.6%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,260
|
162
|
11
|
87
|
85
|
(244)
|
28
|
1,389
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
187
|
|
|
|
59
|
|
|
246
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
1,073
|
162
|
11
|
87
|
26
|
(244)
|
28
|
1,143
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
21.5p
|
3.2p
|
0.2p
|
1.7p
|
0.5p
|
(4.8)p
|
0.6p
|
22.9p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average
number
of shares
(millions)
|
4,993
|
|
|
|
|
|
|
4,993
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Three months ended 31 March 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
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
9,090
|
|
|
|
|
|
9,090
|
Cost of sales
|
(3,199)
|
171
|
29
|
293
|
96
|
|
(2,610)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
5,891
|
171
|
29
|
293
|
96
|
|
6,480
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
(2,916)
|
|
14
|
106
|
|
10
|
(2,786)
|
Research and development
|
(1,187)
|
17
|
|
84
|
|
|
(1,086)
|
Royalty income
|
67
|
|
|
|
|
|
67
|
Other operating income/(expense)
|
159
|
|
|
|
473
|
(632)
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
2,014
|
188
|
43
|
483
|
569
|
(622)
|
2,675
|
|
|
|
|
|
|
|
|
Net finance costs
|
(188)
|
|
|
1
|
|
|
(187)
|
Share of after tax profits of
associates and joint ventures
|
9
|
|
|
|
|
|
9
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,835
|
188
|
43
|
484
|
569
|
(622)
|
2,497
|
|
|
|
|
|
|
|
|
Taxation
|
(156)
|
(39)
|
(6)
|
(105)
|
(58)
|
22
|
(342)
|
Tax rate %
|
8.5%
|
|
|
|
|
|
13.7%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,679
|
149
|
37
|
379
|
511
|
(600)
|
2,155
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
114
|
|
|
|
168
|
|
282
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
1,565
|
149
|
37
|
379
|
343
|
(600)
|
1,873
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
Earnings per share
|
31.5p
|
3.0p
|
0.8p
|
7.6p
|
6.9p
|
(12.1)p
|
37.7p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares (millions)
|
4,965
|
|
|
|
|
|
4,965
|
|
––––––––––––
|
|
|
|
|
|
––––––––––––
|
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 Q1 2021 were £110
million (Q1 2020: £483 million), analysed as
follows:
|
|
Q1 2021
|
|
Q1
2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring
programme
(incl. Tesaro)
|
7
|
|
3
|
|
10
|
|
26
|
|
155
|
|
181
|
Consumer
Healthcare Joint
Venture
integration
programme
|
40
|
|
4
|
|
44
|
|
57
|
|
2
|
|
59
|
Separation
Preparation
restructuring
programme
|
79
|
|
9
|
|
88
|
|
237
|
|
-
|
|
237
|
Combined
restructuring and
integration
programme
|
-
|
|
(32)
|
|
(32)
|
|
3
|
|
3
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126
|
|
(16)
|
|
110
|
|
323
|
|
160
|
|
483
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £79 million under the Separation Preparation
programme primarily arose from restructuring of some administrative
and central manufacturing functions. Non-cash charges of £9
million were related to write-down of assets on disposal and
closure of sites in the Pharmaceuticals Supply Chain.
Cash
charges of £40 million on the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs. The non-cash credit in the Combined restructuring and
integration programme primarily reflected a write back on disposal
of a site.
Total
cash payments made in Q1 2021 were £211 million (Q1 2020:
£168 million), £100 million (Q1 2020: £11 million)
relating to the Separation Preparation restructuring programme, a
further £60 million (Q1 2020: £70 million) relating to
the Consumer Healthcare Joint Venture integration programme
£33 million (Q1 2020: £53 million) under the 2018 major
restructuring programme including the settlement of certain charges
accrued in previous quarters and £18 million for the existing
Combined restructuring and integration programme (Q1 2020: £34
million).
The
analysis of Major restructuring charges by business was as
follows:
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
Pharmaceuticals
|
37
|
|
172
|
Vaccines
|
(44)
|
|
210
|
Consumer
Healthcare
|
49
|
|
74
|
|
42
|
|
456
|
Corporate
& central functions
|
68
|
|
27
|
|
|
|
|
Total
Major restructuring costs
|
110
|
|
483
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
Cost of
sales
|
34
|
|
293
|
Selling,
general and administration
|
75
|
|
106
|
Research
and development
|
2
|
|
84
|
Other
operating income
|
(1)
|
|
-
|
|
|
|
|
Total
Major restructuring costs
|
110
|
|
483
|
|
|
|
|
The
benefit in the quarter from restructuring programmes was £0.2
billion, the Consumer Healthcare Joint Venture integration was
£0.1 billion and the benefit from the Separation Preparation
restructuring programme was £0.1 billion.
The
2018 major restructuring programme, including Tesaro, is expected
to cost £1.75 billion to the end of 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
the end of 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 expected to be
£0.1 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 continues to 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 £116 million (Q1 2020:
£569 million). This included a net £107 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)
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint
venture
(including
Shionogi preferential dividends)
|
134
|
|
435
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
(53)
|
|
49
|
Contingent
consideration on former Novartis Vaccines business
|
26
|
|
(11)
|
Release
of fair value uplift on acquired Pfizer inventory
|
-
|
|
91
|
Other
adjustments
|
9
|
|
5
|
|
|
|
|
Total
transaction-related charges
|
116
|
|
569
|
|
|
|
|
The £134 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 the unwind
of the discount for £93 million and a charge of
£41 million primarily from adjustments to sales forecasts
partly offset by updated exchange rate assumptions. The £53
million credit relating to the ViiV Healthcare put option and
Pfizer preferential dividends represented a reduction in the
valuation of the put option as a result of trading performance of
peer companies and updated exchange rate assumptions.
The
ViiV Healthcare contingent consideration liability is fair valued
under IFRS. The potential impact of the COVID-19 pandemic remains
uncertain and at 31 March 2021, 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 10.
Divestments, significant legal charges and other items
Divestments
and other items also included gains from a number of asset
disposals, including the disposal of royalty rights on cabozantinib
and the disposal of a number of Consumer brands and certain other
Adjusting items. The Consumer Brands disposal programme is complete
and has delivered net proceeds of £1.1 billion. There was a
£1 million credit (Q1 2020: £5 million charge) for
significant legal matters arising in the quarter. Significant legal
cash payments were £1 million (Q1 2020: £5
million).
Separation costs
From Q2
2020, the Group started to report additional costs to prepare for
Consumer Healthcare separation. These are estimated at
£600-700 million, excluding transaction costs.
|
Cash generation
|
Cash flow
|
|
|
|
Q1 2021
|
|
Q1
2020
|
|
|
|
|
|
|
Net
cash inflow from operating activities (£m)
|
|
|
331
|
|
965
|
Free
cash (outflow)/inflow* (£m)
|
|
|
(3)
|
|
531
|
Free
cash flow growth (%)
|
|
|
>(100)%
|
|
>100%
|
Free
cash flow conversion* (%)
|
|
|
<-%
|
|
34%
|
Net
debt** (£m)
|
|
|
21,402
|
|
26,668
|
*
|
Free
cash flow and free cash flow conversion are defined on page
41.
|
**
|
Net
debt is analysed on page 40.
|
Q1 2021
The net
cash inflow from operating activities for the quarter was £331
million (Q1 2020: £965 million). The decrease primarily
reflected reduced operating profit including adverse exchange
impacts, adverse timing of returns and rebates and increased
inventory, partly offset by a reduction in trade receivables from
lower sales compared to an increase in Q1 2020.
Total
cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the quarter were £216
million (Q1 2020: £213 million), of which £189 million
was recognised in cash flows from operating activities and £27
million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax
purposes.
Free
cash outflow was £3 million for the quarter (Q1 2020:
£531 million inflow). The decrease primarily reflected reduced
operating profit including adverse exchange impacts, adverse timing
of returns and rebates, increased inventory and increased dividends
to non-controlling interests, partly offset by a reduction in trade
receivables from lower sales compared to an increase in Q1 2020,
increased proceeds from disposal of intangible assets and lower tax
payments.
|
Net debt
At 31
March 2021, net debt was £21.4 billion, compared with
£20.8 billion at 31 December 2020, comprising gross debt of
£26.2 billion and cash and liquid investments of £4.8
billion. Net debt increased due to the dividends paid to
shareholders of £0.9 billion and additional investments of
£0.1 billion, partly offset by £0.4 billion net
favourable exchange impacts from the translation of non-Sterling
denominated debt and exchange on other financing
items.
At 31
March 2021, GSK had short-term borrowings (including overdrafts and
lease liabilities) repayable within 12 months of £3.2 billion
with loans of £3.4 billion repayable in the subsequent
year.
|
Returns to shareholders
|
Quarterly dividends
The
Board has declared a first interim dividend for 2021 of 19 pence
per share (Q1 2020: 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 2021 at the
current level of 80p per share, subject to any material change in
the external environment or performance expectations.
At our
investor update on 23 June we plan to set out in detail the
strategy, growth prospects and financial outlooks for New GSK,
including an in-depth review of key marketed and pipeline growth
drivers. Alongside these we will provide details of a new
distribution policy which reflects the future investment priorities
focused on delivering sustainable long-term shareholder value. We
anticipate that this new policy will deliver competitive and
attractive returns informed by appropriate earnings pay-out ratios
through the investment cycle well covered by Free Cash Flow and,
importantly, expected growth potential. We expect that aggregate
distributions for GSK will be lower than at present. This new
policy will be implemented for dividends paid in respect of
2022.
Payment of dividends
The
equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 6 July 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 20 May 2021, with a record date of 21 May
2021 and a payment date of 8 July 2021.
|
|
Paid/
payable
|
|
Pence
per
share
|
|
£m
|
|
|
|
|
|
|
2021
|
|
|
|
|
|
First
interim
|
8 July
2021
|
|
19
|
|
951
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
First
interim
|
9 July
2020
|
|
19
|
|
946
|
Second
interim
|
8
October 2020
|
|
19
|
|
946
|
Third
interim
|
14
January 2021
|
|
19
|
|
946
|
Fourth
interim
|
8 April
2021
|
|
23
|
|
1,151
|
|
|
|
|
|
|
|
|
|
80
|
|
3,989
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
Q1 2021
millions
|
|
Q1
2020
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
4,993
|
|
4,965
|
Dilutive
effect of share options and share awards
|
|
|
44
|
|
45
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,037
|
|
5,010
|
|
|
|
|
|
|
At 31
March 2021, 5,003 million shares (Q1 2020: 4,976 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 1.4 million shares under employee share schemes in
the period for proceeds of £15 million (Q1 2020: £23
million).
|
At 31
March 2021, the ESOP Trust held 27.6 million GSK shares against the
future exercise of share options and share awards. The carrying
value of £136 million has been deducted from other reserves.
The market value of these shares was £362
million.
At 31
March 2021, the company held 355.2 million Treasury shares at a
cost of £4,969 million, which has been deducted from retained
earnings.
|
Financial information
|
Income statement
|
|
|
|
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
|
|
|
|
TURNOVER
|
|
|
|
|
7,418
|
|
9,090
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
(2,480)
|
|
(3,199)
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
4,938
|
|
5,891
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
|
|
|
|
(2,427)
|
|
(2,916)
|
Research
and development
|
|
|
|
|
(1,118)
|
|
(1,187)
|
Royalty income
|
|
|
|
|
91
|
|
67
|
Other
operating income/(expense)
|
|
|
|
|
209
|
|
159
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
|
1,693
|
|
2,014
|
|
|
|
|
|
|
|
|
Finance
income
|
|
|
|
|
10
|
|
41
|
Finance
expense
|
|
|
|
|
(201)
|
|
(229)
|
Share
of after tax profits of
associates
and joint ventures
|
|
|
|
|
16
|
|
9
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION
|
|
|
|
|
1,518
|
|
1,835
|
|
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
(258)
|
|
(156)
|
Tax rate %
|
|
|
|
|
17.0%
|
|
8.5%
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION
|
|
|
|
|
1,260
|
|
1,679
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
|
|
|
|
187
|
|
114
|
Profit
attributable to shareholders
|
|
|
|
|
1,073
|
|
1,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,260
|
|
1,679
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
|
|
|
|
|
21.5p
|
|
31.5p
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
|
|
|
21.3p
|
|
31.2p
|
|
|
|
|
|
|
|
|
Statement of comprehensive
income
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
Profit
for the period
|
1,260
|
|
1,679
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
(267)
|
|
178
|
Fair
value movements on cash flow hedges
|
(11)
|
|
(18)
|
Reclassification
of cash flow hedges to income statement
|
14
|
|
1
|
|
|
|
|
|
(264)
|
|
161
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
(34)
|
|
53
|
Fair
value movements on equity investments
|
236
|
|
(39)
|
Tax on
fair value movements on equity investments
|
54
|
|
10
|
Re-measurement
gains on defined benefit plans
|
23
|
|
1,000
|
Tax on
re-measurement gains on defined benefit plans
|
(12)
|
|
(187)
|
|
|
|
|
|
267
|
|
837
|
|
|
|
|
Other
comprehensive income for the period
|
3
|
|
998
|
|
|
|
|
Total
comprehensive income for the period
|
1,263
|
|
2,677
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
Shareholders
|
1,110
|
|
2,510
|
Non-controlling
interests
|
153
|
|
167
|
|
|
|
|
|
1,263
|
|
2,677
|
|
|
|
|
Pharmaceuticals turnover –
three months ended 31 March 2021
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
619
|
19
|
24
|
386
|
24
|
32
|
143
|
2
|
-
|
90
|
32
|
38
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Anoro Ellipta
|
117
|
-
|
4
|
63
|
-
|
10
|
36
|
-
|
(6)
|
18
|
-
|
6
|
Trelegy Ellipta
|
248
|
28
|
35
|
173
|
29
|
37
|
45
|
7
|
7
|
30
|
76
|
82
|
Nucala
|
254
|
21
|
26
|
150
|
30
|
39
|
62
|
-
|
(2)
|
42
|
27
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
1,031
|
(15)
|
(11)
|
597
|
(15)
|
(10)
|
287
|
(10)
|
(12)
|
147
|
(19)
|
(15)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Dolutegravir
products
|
990
|
(15)
|
(11)
|
576
|
(17)
|
(11)
|
280
|
(8)
|
(10)
|
134
|
(19)
|
(15)
|
Tivicay
|
301
|
(27)
|
(24)
|
163
|
(24)
|
(19)
|
75
|
(29)
|
(30)
|
63
|
(32)
|
(27)
|
Triumeq
|
436
|
(23)
|
(20)
|
256
|
(24)
|
(19)
|
121
|
(22)
|
(24)
|
59
|
(14)
|
(12)
|
Juluca
|
112
|
(7)
|
(3)
|
83
|
(12)
|
(5)
|
26
|
8
|
4
|
3
|
50
|
50
|
Dovato
|
141
|
>100
|
>100
|
74
|
64
|
76
|
58
|
>100
|
>100
|
9
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rukobia
|
7
|
-
|
-
|
7
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Cabenuva
|
2
|
-
|
-
|
2
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Other
|
32
|
(30)
|
(26)
|
12
|
(14)
|
(7)
|
7
|
(53)
|
(53)
|
13
|
(24)
|
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-
inflammation and
other specialty
|
180
|
19
|
26
|
145
|
15
|
23
|
16
|
14
|
14
|
19
|
73
|
73
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Benlysta
|
178
|
18
|
25
|
145
|
15
|
23
|
16
|
14
|
14
|
17
|
55
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
110
|
36
|
38
|
65
|
35
|
44
|
43
|
30
|
27
|
2
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Zejula
|
88
|
9
|
11
|
51
|
6
|
12
|
36
|
9
|
6
|
1
|
>100
|
>100
|
Blenrep
|
21
|
-
|
-
|
14
|
-
|
-
|
7
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New and Specialty Pharmaceuticals
|
1,940
|
(1)
|
3
|
1,193
|
-
|
7
|
489
|
(4)
|
(5)
|
258
|
(1)
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Pharmaceuticals
|
1,942
|
(20)
|
(17)
|
520
|
(8)
|
(2)
|
461
|
(27)
|
(29)
|
961
|
(22)
|
(18)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Established
Respiratory
|
1,127
|
(14)
|
(11)
|
442
|
(3)
|
4
|
258
|
(21)
|
(22)
|
427
|
(20)
|
(16)
|
Arnuity Ellipta
|
6
|
(33)
|
(33)
|
4
|
(43)
|
(43)
|
-
|
-
|
-
|
2
|
-
|
-
|
Avamys/Veramyst
|
103
|
(6)
|
-
|
-
|
-
|
-
|
16
|
(16)
|
(16)
|
87
|
(3)
|
3
|
Flixotide/Flovent
|
117
|
(5)
|
-
|
70
|
40
|
50
|
16
|
(43)
|
(43)
|
31
|
(31)
|
(29)
|
Incruse Ellipta
|
52
|
(9)
|
(7)
|
27
|
(10)
|
(3)
|
18
|
(10)
|
(10)
|
7
|
-
|
(14)
|
Relvar/Breo Ellipta
|
268
|
(6)
|
(3)
|
112
|
(3)
|
4
|
82
|
(6)
|
(8)
|
74
|
(11)
|
(7)
|
Seretide/Advair
|
351
|
(11)
|
(8)
|
117
|
10
|
17
|
95
|
(25)
|
(27)
|
139
|
(14)
|
(9)
|
Ventolin
|
189
|
(25)
|
(21)
|
112
|
(24)
|
(19)
|
25
|
(34)
|
(37)
|
52
|
(24)
|
(18)
|
Other
Respiratory
|
41
|
(52)
|
(48)
|
-
|
-
|
-
|
6
|
(25)
|
(12)
|
35
|
(55)
|
(53)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
100
|
(10)
|
(6)
|
-
|
-
|
-
|
34
|
(11)
|
(13)
|
66
|
(10)
|
(3)
|
Augmentin
|
91
|
(46)
|
(43)
|
-
|
-
|
-
|
23
|
(60)
|
(60)
|
68
|
(39)
|
(34)
|
Avodart
|
83
|
(41)
|
(39)
|
1
|
-
|
-
|
30
|
(39)
|
(39)
|
52
|
(43)
|
(40)
|
Imigran/Imitrex
|
25
|
(26)
|
(26)
|
8
|
(47)
|
(47)
|
12
|
(8)
|
(8)
|
5
|
(17)
|
(17)
|
Lamictal
|
116
|
(15)
|
(12)
|
55
|
(20)
|
(16)
|
28
|
(13)
|
(12)
|
33
|
(8)
|
(6)
|
Seroxat/Paxil
|
33
|
(8)
|
(6)
|
-
|
-
|
-
|
8
|
(20)
|
(20)
|
25
|
(4)
|
-
|
Valtrex
|
22
|
(21)
|
(18)
|
3
|
(25)
|
(25)
|
8
|
(11)
|
(11)
|
11
|
(27)
|
(20)
|
Other
|
345
|
(26)
|
(22)
|
11
|
(52)
|
(48)
|
60
|
(40)
|
(42)
|
274
|
(20)
|
(15)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Pharmaceuticals
|
3,882
|
(12)
|
(8)
|
1,713
|
(3)
|
4
|
950
|
(17)
|
(18)
|
1,219
|
(19)
|
(14)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – three
months ended 31 March 2021
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
190
|
(16)
|
(13)
|
55
|
(31)
|
(27)
|
90
|
(5)
|
(6)
|
45
|
(10)
|
(4)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
134
|
(18)
|
(16)
|
31
|
(43)
|
(39)
|
85
|
1
|
-
|
18
|
(31)
|
(19)
|
Menveo
|
39
|
(2)
|
2
|
24
|
(8)
|
(4)
|
4
|
(56)
|
(56)
|
11
|
>100
|
>100
|
Other
|
17
|
(19)
|
(24)
|
-
|
-
|
-
|
1
|
(50)
|
(50)
|
16
|
(16)
|
(21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
18
|
(14)
|
(5)
|
-
|
-
|
-
|
-
|
-
|
-
|
18
|
(5)
|
5
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
18
|
(14)
|
(5)
|
-
|
-
|
-
|
-
|
-
|
-
|
18
|
(5)
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
327
|
(49)
|
(47)
|
269
|
(55)
|
(52)
|
31
|
55
|
50
|
27
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
327
|
(49)
|
(47)
|
269
|
(55)
|
(52)
|
31
|
55
|
50
|
27
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Vaccines
|
689
|
(24)
|
(23)
|
181
|
(45)
|
(41)
|
186
|
(20)
|
(21)
|
322
|
(7)
|
(6)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
136
|
(24)
|
(22)
|
64
|
(27)
|
(23)
|
40
|
(26)
|
(28)
|
32
|
(16)
|
(11)
|
Boostrix
|
94
|
(16)
|
(14)
|
43
|
(26)
|
(21)
|
36
|
3
|
-
|
15
|
(21)
|
(21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
95
|
(55)
|
(54)
|
51
|
(60)
|
(58)
|
24
|
(56)
|
(56)
|
20
|
(33)
|
(30)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
114
|
(25)
|
(23)
|
22
|
(46)
|
(44)
|
30
|
(3)
|
(3)
|
62
|
(22)
|
(19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
102
|
(17)
|
(17)
|
-
|
-
|
-
|
12
|
(37)
|
(37)
|
90
|
(13)
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,
Varilrix
|
63
|
11
|
12
|
-
|
-
|
-
|
32
|
10
|
10
|
31
|
11
|
14
|
Cervarix
|
45
|
>100
|
>100
|
-
|
-
|
-
|
8
|
>100
|
>100
|
37
|
>100
|
>100
|
Other
|
40
|
(38)
|
(39)
|
1
|
(94)
|
(81)
|
4
|
(33)
|
(50)
|
35
|
(17)
|
(21)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines
|
1,224
|
(32)
|
(30)
|
505
|
(50)
|
(47)
|
307
|
(12)
|
(13)
|
412
|
(7)
|
(5)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet
|
|
|
|
31 March 2021
£m
|
|
31
December 2020
£m
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
9,842
|
|
10,176
|
Right
of use assets
|
|
|
791
|
|
830
|
Goodwill
|
|
|
10,442
|
|
10,597
|
Other
intangible assets
|
|
|
29,418
|
|
29,824
|
Investments
in associates and joint ventures
|
|
|
370
|
|
364
|
Other
investments
|
|
|
3,385
|
|
3,060
|
Deferred
tax assets
|
|
|
4,312
|
|
4,287
|
Derivative
financial instruments
|
|
|
6
|
|
5
|
Other
non-current assets
|
|
|
989
|
|
1,041
|
|
|
|
|
|
|
Total non-current assets
|
|
|
59,555
|
|
60,184
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
|
|
6,216
|
|
5,996
|
Current
tax recoverable
|
|
|
691
|
|
671
|
Trade
and other receivables
|
|
|
6,492
|
|
6,952
|
Derivative
financial instruments
|
|
|
234
|
|
152
|
Liquid
investments
|
|
|
60
|
|
78
|
Cash
and cash equivalents
|
|
|
4,757
|
|
6,292
|
Assets
held for sale
|
|
|
74
|
|
106
|
|
|
|
|
|
|
Total current assets
|
|
|
18,524
|
|
20,247
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
78,079
|
|
80,431
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term
borrowings
|
|
|
(3,172)
|
|
(3,725)
|
Contingent
consideration liabilities
|
|
|
(746)
|
|
(765)
|
Trade
and other payables
|
|
|
(14,610)
|
|
(15,840)
|
Derivative
financial instruments
|
|
|
(226)
|
|
(221)
|
Current
tax payable
|
|
|
(660)
|
|
(545)
|
Short-term
provisions
|
|
|
(861)
|
|
(1,052)
|
|
|
|
|
|
|
Total current liabilities
|
|
|
(20,275)
|
|
(22,148)
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Long-term
borrowings
|
|
|
(23,047)
|
|
(23,425)
|
Corporation
tax payable
|
|
|
(175)
|
|
(176)
|
Deferred
tax liabilities
|
|
|
(3,566)
|
|
(3,600)
|
Pensions
and other post-employment benefits
|
|
|
(3,468)
|
|
(3,650)
|
Other
provisions
|
|
|
(672)
|
|
(707)
|
Derivative
financial instruments
|
|
|
(20)
|
|
(10)
|
Contingent
consideration liabilities
|
|
|
(5,062)
|
|
(5,104)
|
Other
non-current liabilities
|
|
|
(784)
|
|
(803)
|
|
|
|
|
|
|
Total non-current liabilities
|
|
|
(36,794)
|
|
(37,475)
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
(57,069)
|
|
(59,623)
|
|
|
|
|
|
|
NET ASSETS
|
|
|
21,010
|
|
20,808
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
|
|
1,346
|
|
1,346
|
Share
premium account
|
|
|
3,296
|
|
3,281
|
Retained
earnings
|
|
|
6,700
|
|
6,755
|
Other
reserves
|
|
|
3,523
|
|
3,205
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
14,865
|
|
14,587
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
6,145
|
|
6,221
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
|
21,010
|
|
20,808
|
|
|
|
|
|
|
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 2021
|
1,346
|
3,281
|
6,755
|
3,205
|
14,587
|
6,221
|
20,808
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
1,073
|
|
1,073
|
187
|
1,260
|
Other
comprehensive (expense)/income
for
the period
|
|
|
(255)
|
292
|
37
|
(34)
|
3
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income for the period
|
|
|
818
|
292
|
1,110
|
153
|
1,263
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(236)
|
(236)
|
Contributions
from non-controlling interests
|
|
|
|
|
|
7
|
7
|
Dividends
to shareholders
|
|
|
(946)
|
|
(946)
|
|
(946)
|
Shares
issued
|
|
15
|
|
|
15
|
|
15
|
Realised
after tax profits on disposal of
equity
investments
|
|
|
29
|
(29)
|
-
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(55)
|
55
|
-
|
|
-
|
Share-based
incentive plans
|
|
|
99
|
|
99
|
|
99
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 31 March 2021
|
1,346
|
3,296
|
6,700
|
3,523
|
14,865
|
6,145
|
21,010
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
At 1
January 2020
|
1,346
|
3,174
|
4,530
|
2,355
|
11,405
|
6,952
|
18,357
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
1,565
|
|
1,565
|
114
|
1,679
|
Other
comprehensive income/(expense)
for
the period
|
|
|
998
|
(53)
|
945
|
53
|
998
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income/(expense) for
the
period
|
|
|
2,563
|
(53)
|
2,510
|
167
|
2,677
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(119)
|
(119)
|
Contribution
from non-controlling interests
|
|
|
|
|
|
3
|
3
|
Dividends
to shareholders
|
|
|
(941)
|
|
(941)
|
|
(941)
|
Shares
issued
|
-
|
23
|
|
|
23
|
|
23
|
Realised
after tax losses on disposal of equity investments
|
|
|
(41)
|
41
|
-
|
|
-
|
Shares
acquired by ESOP Trusts
|
|
78
|
362
|
(440)
|
-
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(217)
|
217
|
-
|
|
-
|
Share-based
incentive plans
|
|
|
97
|
|
97
|
|
97
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 31
March 2020
|
1,346
|
3,275
|
6,353
|
2,120
|
13,094
|
7,003
|
20,097
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Cash flow statement – three months ended 31 March
2021
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
|
|
Profit after tax
|
1,260
|
|
1,679
|
|
Tax on
profits
|
258
|
|
156
|
|
Share
of after tax profits of associates and joint ventures
|
(16)
|
|
(9)
|
|
Net
finance expense
|
191
|
|
188
|
|
Depreciation,
amortisation and other adjusting items
|
361
|
|
194
|
|
Increase
in working capital
|
(539)
|
|
(1,340)
|
|
Contingent
consideration paid
|
(192)
|
|
(186)
|
|
(Decrease)/increase
in other net liabilities (excluding contingent
consideration
paid)
|
(837)
|
|
544
|
|
|
|
|
|
|
Cash generated from operations
|
486
|
|
1,226
|
|
Taxation
paid
|
(155)
|
|
(261)
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
331
|
|
965
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
Purchase
of property, plant and equipment
|
(201)
|
|
(197)
|
|
Proceeds
from sale of property, plant and equipment
|
37
|
|
6
|
|
Purchase
of intangible assets
|
(153)
|
|
(147)
|
|
Proceeds
from sale of intangible assets
|
328
|
|
113
|
|
Purchase
of equity investments
|
(103)
|
|
(26)
|
|
Proceeds
from sale of equity investments
|
44
|
|
45
|
|
Contingent
consideration paid
|
(29)
|
|
(29)
|
|
Disposal
of businesses
|
3
|
|
146
|
|
Investment
in associates and joint ventures
|
-
|
|
(1)
|
|
Interest
received
|
8
|
|
18
|
|
Decrease
in liquid investments
|
18
|
|
-
|
|
Dividends
from associates and joint ventures
|
-
|
|
14
|
|
|
|
|
|
|
Net cash outflow from investing activities
|
(48)
|
|
(58)
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
Issue
of share capital
|
15
|
|
23
|
|
Repayment
of short-term loans
|
(5)
|
|
(116)
|
|
Repayment
of lease liabilities
|
(49)
|
|
(53)
|
|
Interest
paid
|
(95)
|
|
(96)
|
|
Dividends
paid to shareholders
|
(946)
|
|
(941)
|
|
Distributions
to non-controlling interests
|
(236)
|
|
(119)
|
|
Contributions
from non-controlling interests
|
7
|
|
3
|
|
Other
financing items
|
(67)
|
|
247
|
|
|
|
|
|
|
Net cash outflow from financing activities
|
(1,376)
|
|
(1,052)
|
|
|
|
|
|
|
Decrease in cash and bank overdrafts in the period
|
(1,093)
|
|
(145)
|
|
|
|
|
|
|
Cash
and bank overdrafts at beginning of the period
|
5,262
|
|
4,831
|
|
Exchange
adjustments
|
(35)
|
|
42
|
|
Decrease
in cash and bank overdrafts
|
(1,093)
|
|
(145)
|
|
|
|
|
|
|
Cash and bank overdrafts at end of the period
|
4,134
|
|
4,728
|
|
|
|
|
|
|
Cash
and bank overdrafts at end of the period comprise:
|
|
|
|
|
|
Cash
and cash equivalents
|
4,757
|
|
4,769
|
|
Cash
and cash equivalents reported in assets held for sale
|
-
|
|
483
|
|
|
|
|
|
|
|
4,757
|
|
5,252
|
|
Overdrafts
|
(623)
|
|
(524)
|
|
|
|
|
|
|
4,134
|
|
4,728
|
|
|
|
|
|
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
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
3,882
|
|
4,396
|
|
(12)
|
|
(8)
|
Vaccines
|
1,224
|
|
1,805
|
|
(32)
|
|
(30)
|
Consumer
Healthcare
|
2,312
|
|
2,862
|
|
(19)
|
|
(16)
|
|
|
|
|
|
|
|
|
|
7,418
|
|
9,063
|
|
(18)
|
|
(15)
|
Corporate
and other unallocated turnover
|
-
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
7,418
|
|
9,090
|
|
(18)
|
|
(15)
|
|
|
|
|
|
|
|
|
Operating profit by
segment
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
1,910
|
|
2,018
|
|
(5)
|
|
-
|
Pharmaceuticals
R&D
|
(791)
|
|
(835)
|
|
(5)
|
|
(1)
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
1,119
|
|
1,183
|
|
(5)
|
|
2
|
Vaccines
|
306
|
|
858
|
|
(64)
|
|
(60)
|
Consumer
Healthcare
|
535
|
|
766
|
|
(30)
|
|
(25)
|
|
|
|
|
|
|
|
|
Segment
profit
|
1,960
|
|
2,807
|
|
(30)
|
|
(25)
|
Corporate
and other unallocated costs
|
(79)
|
|
(132)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
1,881
|
|
2,675
|
|
(30)
|
|
(23)
|
Adjusting
items
|
(188)
|
|
(661)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
1,693
|
|
2,014
|
|
(16)
|
|
(8)
|
|
|
|
|
|
|
|
|
Finance
income
|
10
|
|
41
|
|
|
|
|
Finance
costs
|
(201)
|
|
(229)
|
|
|
|
|
Share
of after tax profits of associates
and
joint ventures
|
16
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
1,518
|
|
1,835
|
|
(17)
|
|
(9)
|
|
|
|
|
|
|
|
|
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 2020. At
31 March 2021, the Group’s aggregate provision for legal and
other disputes (not including tax matters described on page 20) was
£0.2 billion (31 December 2020: £0.3
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 this
quarter.
|
Additional
information
|
Accounting policies and basis of preparation
|
This
unaudited Results Announcement contains condensed financial
information for the three months ended
31 March 2021, and should be read in conjunction with the Annual
Report 2020, which was prepared in accordance with
International Financial Reporting Standards as adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
This Results Announcement has been prepared applying consistent
accounting policies to those applied by the Group in the Annual
Report 2020.
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 2020.
|
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 2020 were published
in the Annual Report 2020, 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. In the first quarter of 2021, as
anticipated, the pandemic impacted Group performance primarily in
demand for Vaccines as a result of governments’
prioritisation of COVID-19 vaccination programmes and of ongoing
containment measures impacting customers’ ability and
willingness to access vaccination services across all regions. We
remain confident in the underlying demand for our Vaccine products
and are encouraged by the rate at which COVID-19 vaccinations are
being deployed in many countries, particularly the US and UK, which
provides support for healthcare systems returning to normal. We
continue to monitor the situation closely, as this continues to be
a very dynamic and uncertain situation, with the ultimate severity,
duration and impact unknown at this point including potential
impacts on trading results, clinical trials, supply continuity and
our employees. The situation could change at any time and there can
be no assurance that the COVID-19 pandemic 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:
|
|
|
|
Q1 2021
|
|
Q1
2020
|
|
2020
|
||
|
|
|
|
|
|
|
|
||
Average
rates:
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
|
|
1.38
|
|
1.29
|
|
1.29
|
|
|
Euro/£
|
|
|
1.14
|
|
1.17
|
|
1.13
|
|
|
Yen/£
|
|
|
146
|
|
140
|
|
137
|
|
|
|
|
|
|
|
|
||
Period-end
rates:
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
|
|
1.38
|
|
1.24
|
|
1.36
|
|
|
Euro/£
|
|
|
1.17
|
|
1.13
|
|
1.11
|
|
|
Yen/£
|
|
|
152
|
|
134
|
|
141
|
During Q1 2021 average Sterling exchange rates were stronger
against the US Dollar and the Yen but weaker against the Euro
compared with the same period in 2020. Period-end Sterling exchange
rates were stronger against the US Dollar, the Euro and the Yen
compared with the 2020 period-end rates.
|
Net assets
|
The
book value of net assets increased by £202 million from
£20,808 million at 31 December 2020 to £21,010 million at
31 March 2021. This primarily reflected the Total profit for the
period and the increase in the fair value of equity investments
exceeding the adverse exchange movements and the dividends paid
during the period.
The
carrying value of investments in associates and joint ventures at
31 March 2021 was £370 million (31 December 2020: £364
million), with a market value of £340 million (31 December
2020: £364 million).
At 31
March 2021, the net deficit on the Group’s pension plans was
£2,112 million compared with £2,104 million at 31
December 2020. The increase in the net deficit primarily arose from
lower UK assets and an increase in the UK inflation rate from 2.8%
to 3.2% partly offset by increases in the rates used to discount UK
pension liabilities from 1.4% to 2.1%, and US pension liabilities
from 2.3% to 3.0%. 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 £907 million (31 December
2020: £960 million).
Contingent
consideration amounted to £5,808 million at 31 March 2021 (31
December 2020: £5,869 million), of which £5,277 million
(31 December 2020: £5,359 million) represented the estimated
present value of amounts payable to Shionogi relating to ViiV
Healthcare and £496 million (31 December 2020: £477
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 31 March 2021, £723 million (31 December 2020: £745
million) is expected to be paid within one year.
|
Movements
in contingent consideration are as follows:
|
Q1
2021
|
ViiV Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the period
|
5,359
|
|
5,869
|
Re-measurement
through income statement
|
134
|
|
160
|
Cash
payments: operating cash flows
|
(189)
|
|
(192)
|
Cash
payments: investing activities
|
(27)
|
|
(29)
|
|
|
|
|
Contingent
consideration at end of the period
|
5,277
|
|
5,808
|
|
|
|
|
Q1 2020
|
ViiV
Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the period
|
5,103
|
|
5,479
|
Re-measurement
through income statement
|
435
|
|
436
|
Cash
payments: operating cash flows
|
(185)
|
|
(186)
|
Cash
payments: investing activities
|
(28)
|
|
(29)
|
|
|
|
|
Contingent
consideration at end of the period
|
5,325
|
|
5,700
|
|
|
|
|
Contingent liabilities
|
There
were contingent liabilities at 31 March 2021 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 37.
|
Reconciliation of cash flow to
movements in net debt
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
Net
debt at beginning of the period
|
(20,780)
|
|
(25,215)
|
|
|
|
|
Decrease
in cash and bank overdrafts
|
(1,093)
|
|
(145)
|
Decrease
in liquid investments
|
(18)
|
|
-
|
Net
decrease in short-term loans
|
5
|
|
116
|
Repayment
of lease liabilities
|
49
|
|
53
|
Exchange
adjustments
|
466
|
|
(1,454)
|
Other
non-cash movements
|
(31)
|
|
(23)
|
|
|
|
|
Increase
in net debt
|
(622)
|
|
(1,453)
|
|
|
|
|
Net
debt at end of the period
|
(21,402)
|
|
(26,668)
|
|
|
|
|
Net debt analysis
|
|
31 March 2021
£m
|
|
31
December
2020
£m
|
|
|
|
|
Liquid
investments
|
60
|
|
78
|
Cash
and cash equivalents
|
4,757
|
|
6,292
|
Short-term
borrowings
|
(3,172)
|
|
(3,725)
|
Long-term
borrowings
|
(23,047)
|
|
(23,425)
|
|
|
|
|
Net
debt at end of the period
|
(21,402)
|
|
(20,780)
|
|
|
|
|
Free cash flow
reconciliation
|
|
|
|
Q1 2021
£m
|
|
Q1
2020
£m
|
|
|
|
|
|
|
Net
cash inflow from operating activities
|
|
|
331
|
|
965
|
Purchase
of property, plant and equipment
|
|
|
(201)
|
|
(197)
|
Proceeds
from sale of property, plant and equipment
|
|
|
37
|
|
6
|
Purchase
of intangible assets
|
|
|
(153)
|
|
(147)
|
Proceeds
from disposals of intangible assets
|
|
|
328
|
|
113
|
Net
finance costs
|
|
|
(87)
|
|
(78)
|
Dividends
from joint ventures and associates
|
|
|
-
|
|
14
|
Contingent
consideration paid (reported in investing activities)
|
|
(29)
|
|
(29)
|
|
Distributions
to non-controlling interests
|
|
|
(236)
|
|
(119)
|
Contributions
from non-controlling interests
|
|
|
7
|
|
3
|
|
|
|
|
|
|
Free
cash (outflow)/inflow
|
|
|
(3)
|
|
531
|
|
|
|
|
|
|
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 9 and other non-IFRS measures
are defined below.
Free cash flow
Free
cash flow is defined as the net cash inflow/outflow 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 40.
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 Q1 2020
included three months of results of the former Pfizer consumer
healthcare business from 1 January 2020.
The
Group has presented in this Results Announcement pro-forma growth
rates at CER in Q1 2020 for sales excluding brands divested/under
review for Consumer Healthcare and sales for certain categories of
consumer healthcare products taking account of this transaction.
Pro-forma growth rates for the quarter are calculated comparing
reported results for Q1 2020, calculated applying the exchange
rates used in the comparative period, with the results for Q1 2019
adjusted to include the equivalent three months of results of the
former Pfizer consumer healthcare business during Q1 2019, as
consolidated (in US$) and included in Pfizer’s US GAAP
results.
2 year Compound Annual Growth Rate
CAGR is defined as the compound annual growth rate and shows the
annualised average rate of pro-forma revenue growth between two
given years, assuming growth takes place at an exponentially
compounded rate. For Consumer Healthcare, the 2 year revenue CAGR
has been shared showing the annualised average rate of pro-forma
revenue growth between 2019 and 2021.
|
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
|
2021 guidance
Our
guidance range for 2021 is a decline of mid to high-single digit
percent adjusted EPS at CER.
Assumptions related to 2021 guidance
In
outlining the guidance for 2021, 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.
The
Group has made planning assumptions for 2021 that healthcare
systems and consumer trends will approach normality in the second
half of the year, and we expect turnover to be flat to low single
digit growth for the Pharmaceuticals and Vaccines businesses and
low to mid-single digit growth for Consumer Healthcare excluding
brands divested/under review. These planning assumptions as well as
earnings guidance and dividend expectations assume no material
interruptions to supply of the Group’s products, no material
mergers, acquisitions or disposals, 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 assume no material changes in the healthcare environment. The
2021 guidance factors in all divestments and product exits
announced to date, including product divestments planned in
connection with the formation of the Consumer Healthcare Joint
Venture with Pfizer, and the non-core divestments planned to fund
the cash costs of the Separation Preparation restructuring
programme.
The
Group’s guidance assumes successful delivery of the
Group’s integration and restructuring plans. It also assumes
that the integration and investment programmes following the
creation of the Consumer Healthcare Joint Venture with Pfizer 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 guidance is given on
a constant currency basis.
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 forward-looking nature of these assumptions 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 2020 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.
|
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 months ended 31 March 2021.
|
What we have reviewed
|
|
The
condensed financial information comprises:
|
|
●
|
the
income statement and statement of comprehensive income for the
three month period ended 31 March 2021 on pages 29 to
30;
|
●
|
the
balance sheet as at 31 March 2021 on page 33;
|
●
|
the
statement of changes in equity for the three month period then
ended on page 34;
|
●
|
the
cash flow statement for the three month period then ended on page
35; and
|
●
|
the
accounting policies and basis of preparation and the explanatory
notes to the condensed financial information on pages 31 to 32 and
36 to 39 that have been prepared applying consistent accounting
policies to those applied by the Group in the Annual Report 2020,
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 31 to 32 and 36
to 39, 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 2020, 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 months ended 31 March 2021 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 38.
Deloitte LLP
Statutory
Auditor
London,
United Kingdom
28
April 2021
|
|
GlaxoSmithKline plc
|
|
(Registrant)
|
|
|
Date: April
28, 2021
|
|
|
|
|
By:/s/ VICTORIA
WHYTE
--------------------------
|
|
|
|
Victoria Whyte
|
|
Authorised
Signatory for and on
|
|
behalf
of GlaxoSmithKline plc
|