UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the
month of June 2021
Commission
File Number 001-15170
GlaxoSmithKline plc
(Translation
of registrant's name into English)
980 Great West Road, Brentford, Middlesex, TW8 9GS
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F . . . .X. . . . Form 40-F . . . . . . . .
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): ____
Issued: 23 June 2021, London UK - LSE announcement
New GSK to deliver step-change in growth and performance over next
ten years driven by high-quality Vaccines and Specialty Medicines
portfolio and late-stage pipeline
●
Sales growth more than 5% and adjusted operating
profit growth more than 10% CAGR 2021-26[1]
●
Sales
ambition of more than £33 billion (CER) by 2031
●
Strategic
focus to prevent and treat disease, with R&D leveraging science
of the immune system, human genetics and advanced
technologies
●
Strengthened
balance sheet post separation supports investment in
growth
●
Cash
generated from operations expected to exceed £10 billion by
2026
●
2022
aggregate dividend from GSK and New Consumer Healthcare expected to
amount to 55p
●
New
GSK progressive dividend policy starting at 45p in
2023
●
Leading
ESG performance to be maintained and key target for New
GSK
●
New
GSK to positively impact health of >2.5 billion people next 10
years
●
Demerger
to create new world leader in consumer healthcare confirmed
mid-2022
Notes on basis of preparation, assumptions and cautionary
statements and on reporting definitions on pages 5-7.
At an update to investors today, GlaxoSmithKline plc (GSK LSE &
NYSE) will provide details of its strategy, outlook for growth and
plans to create shareholder value, following the planned demerger
in mid-2022 of its Consumer Healthcare business. The resulting New
GSK will be a growth company with new ambitions for patients and
shareholders and an overarching purpose to unite science, talent
and technology to get ahead of disease together.
Emma Walmsley, Chief Executive Officer, said: "The benefits of the huge transformation we
have driven since 2017 are now clear. We have strengthened our
R&D and commercial execution, and transformed our group
structure and capital allocation, while driving a profound cultural
change with new leadership.
"Together, we are now ready to deliver a step-change in growth for
New GSK and unlock the value of Consumer Healthcare. With world
class capabilities across prevention and treatment of disease, New
GSK is exceptionally well positioned to positively impact people's
health and to deliver strong performance and value to shareholders
through the decade."
Key elements of the investor update are summarised
below:
Strategic transformation
In 2017, GSK commenced a significant corporate transformation to
address historic long-standing issues that have affected
performance. Major progress has been achieved across the business
to improve performance, strengthen capabilities and prepare GSK for
a new future.
The company has substantially strengthened its R&D performance
and productivity. Since 2017, GSK has delivered 11 major product
approvals* and doubled the number of assets in Phase III and
registration to 22. Commercial execution has been transformed with
new and specialty products now reaching £10 billion in annual
sales. Meanwhile changes to the Group's portfolio and network
within Vaccines and Pharma have led to annual cost savings delivery
of £0.5 billion and proceeds from divestment of non-core
brands of £1.4 billion.
Following two successful global mergers, a new world-leading
consumer healthcare business, with a radically transformed
portfolio and sector-leading profitability has also been
created.
All of this has been achieved with acknowledged sector leadership
in ESG performance.
In addition, there has been significant cultural and leadership
change across the company, to improve accountability and raise
levels of ambition. 85% of the top 125 leaders are new in role
since 2017 and new incentives and governance have been implemented
in all key areas of the company.
These changes now provide the platform for GSK to separate
and create two new global companies which will have major
impacts on human health and can deliver compelling performance and
attractive returns and value to
shareholders.
New GSK financial outlooks
2021-2026 outlook
Over the next five-year period, New GSK expects to deliver sales
growth and adjusted operating profit growth of more than 5% and
more than 10%, respectively, CAGR at constant exchange rates (with
2021 as the base year). Profit growth is expected to be underpinned
by a combination of strong revenue growth from new vaccines and
specialty medicines, improving operational performance and benefits
from the transformation of recent years. These financial outlooks
exclude any contribution from COVID-19 related
revenues.
The company expects to improve adjusted operating margin from the
mid-20s% in 2021 to over 30% by 2026. Improved sales growth, sales
mix benefits and realisation of cost savings from previously
announced programmes are all expected to contribute to margin
improvements. GSK has identified a further £200 million of
annual savings from the Separation Preparation (Future Ready)
programme and has revised its cost savings target from £800
million to £1 billion with no extra costs for delivery. All
restructuring programmes will complete in 2022 and no further major
restructuring programmes are planned.
2026-2031 ambition
By 2031, New GSK aims to deliver sales of more than £33
billion (at constant exchange rates). Achievement of this
ambition is driven by commercial execution of New GSK's current
late-stage pipeline. The company estimates that certain assets in
late-stage development have the potential in aggregate to deliver
peak year sales of more than £20 billion on a non-risk
adjusted basis+.
The £33 billion sales ambition is before any significant
revenue contribution from early-stage pipeline assets or any
contribution from business development. Importantly, New GSK
aims to grow sales through to 2031 despite the anticipated loss of
exclusivity for dolutegravir in 2028/29.
The new outlooks and ambition will be incorporated into existing
incentive plans by the remuneration
committee in due
course.
Maximising Vaccines and Specialty Medicines
New GSK will prioritise R&D and commercial investment in
Vaccines and Specialty Medicines, which are expected to grow to
around three-quarters of company sales by 2026. As part of its
2021-26 outlook, Vaccines is expected to grow sales at a high
single-digit % CAGR and Specialty Medicines at a double-digit %
CAGR.
The company is focused across four core therapeutic areas (TAs):
Infectious Diseases, HIV, Oncology and Immunology/Respiratory. In
addition, New GSK will remain open to opportunities outside these
core TAs where there are scale opportunities rooted in immune
science and genetic validation.
Capturing the increasing opportunities now seen across the
prevention and treatment of disease offers significant scientific
and commercial opportunities for New GSK. At the heart of this is
the company's R&D focus on the science of the immune system,
human genetics and advanced technologies; and its world-leading
capabilities in vaccine and pharmaceutical
development.
The company currently has a pipeline of 20 vaccines and 42
medicines - many of which are potential best or first in class
opportunities.
Optimising General Medicines
A newly defined General Medicines product group will contain all of
New GSK's primary care brands, including older established products
as well as the inhaled respiratory portfolio. General Medicines
will have differing performance profiles by region and brand, with
growth expected most in emerging markets. Overall General Medicines
is expected to show broadly stable sales over the period 2021-26
(CER).
General Medicines will be optimised for profitability and cash
generation to support investment in Vaccines and Specialty
Medicines. As part of this approach, further streamlining of the
portfolio is expected through divestment or partnering of
non-priority brands.
Strengthened balance sheet to support growth and returns to
shareholders
Following separation of the Consumer Healthcare business, New GSK
is expected to have a net debt/adjusted EBITDA leverage ratio of
less than 2 times. This, together with expected stronger cash
flow generation, will provide additional flexibility to
support future investments in growth. By 2026, cash generated from
operations for New GSK is expected to exceed £10
billion.
New GSK's capital allocation priorities will be: to strengthen the
pipeline, including through targeted bolt-on and in-licensing
business development transactions; to invest behind successful
product launches; to enhance sustainability of its operations; and
to underpin its progressive dividend policy.
In 2022, GSK shareholders will receive dividends from GSK and New
Consumer Healthcare due to the expected mid-year timing of the
demerger. Together, these are expected to amount to approximately
55p per share for the year, assuming a New Consumer Healthcare
dividend at the lower end of the previously announced 30-50%
pay-out ratio range and subject to approval from the Board of New
Consumer Healthcare. This pro-forma full year 2022 dividend would
be a 31% reduction compared to the expected 2021 dividend of 80p
per share.
New GSK will adopt a progressive dividend policy targeting a
dividend pay-out ratio equivalent to 40-60%, starting at 45p per
share in 2023, the company's first full year of
operation.
Strong focus on ESG performance and to impact the health of more
than 2.5 billion people
Maintaining a sector leading ESG performance will be an integral
part of New GSK's strategy and a key goal for the new
company.
The company intends to take a focused approach to ESG, driven by
its strengths and to address the key challenges faced by the
industry over the long-term. New GSK will prioritise resources
across six areas it sees as material to its business:
pricing/access, global health, inclusion and diversity, the
environment, product governance and operating
standards.
Accountabilities for these six areas will be at executive level and
New GSK expects to further strengthen the alignment of incentives
and remuneration to delivery of ESG performance, with increased
visibility in corporate reporting.
This approach to ESG will support delivery of sustainable
performance and long-term growth; build trust with stakeholders;
reduce risk to operations; and enable delivery of very positive
social impact.
A critical measure of success for New GSK will be health impact at
scale. This is at the core of the company's purpose and it expects
to positively impact the health of more than 2.5 billion people
around the world over the next 10 years.
Consumer Healthcare separation
The separation of Consumer Healthcare is expected in mid-2022 and
the GSK Board's clear priorities are to unlock the potential of New
GSK and Consumer Healthcare, strengthen New GSK's balance sheet and
maximise value for shareholders.
The new Consumer Healthcare company will have a portfolio which
generated annual sales of more than £10 billion in 2020 and is
well-positioned for further growth. Driven by brands, innovation,
leading-edge science and human understanding to deliver better
everyday health, the company will have nine global power brands
holding category leadership positions and major sales presences in
the US and China. Altogether the business offers strong prospects
for sustainable sales and profit growth, high cash generation and
delivery of attractive returns for shareholders.
Subject to approval from shareholders, the separation will be by
way of a demerger of at least 80% of GSK's 68% holding in the
Consumer Healthcare business to GSK shareholders, with the new
Consumer Healthcare company shares expected to attain a premium
listing on the London Stock Exchange, with ADRs to be listed in the
US. The company intends to structure the demerger in a manner
that is tax efficient for UK and US shareholders, as compared to
alternative separation options, and is seeking confirmation of such
treatment from the relevant tax authorities. Details of the
expected tax treatment will be provided in the circular sent to
shareholders in connection with the approval of the
demerger.
New GSK will retain up to 20% of GSK's holding in the new Consumer
Healthcare company as a short-term financial investment, which it
intends to monetise in a timely manner to further strengthen New
GSK's balance sheet and help fund certain pension benefit
obligations. Prior to the demerger, New GSK is also expected
to receive a dividend of up to £8 billion from Consumer
Healthcare. As previously stated, the new Consumer Healthcare
company is expected to have a net debt/adjusted EBITDA leverage
ratio of up to 4.0 times. GSK plans to target an investment grade
credit rating for the new Consumer Healthcare company.
A comprehensive update on the prospects for New Consumer Healthcare
is planned for investors in early 2022.
The Board of GSK is preparing for two new independent boards
following separation. A process has started to form a board of
directors for the new Consumer Healthcare company, which will
include the appropriate mix of skills and experience to represent
and maximise the value of this business for
shareholders.
In addition, and building on recent non-executive
appointments, further appointments are also expected to the
Board of GSK prior to the separation to increase biopharmaceuticals
and scientific experience for New GSK.
*Major product approvals 2017-21
Asset
|
Indication(s)
|
Approved
|
Trelegy
Ellipta
|
COPD
|
2017
|
Shingrix
|
Shingles
vaccine
|
2017
|
Juluca
|
HIV
|
2017
|
Kozenis
|
Plasmodium vivax (P. vivax) malaria
|
2018
|
Dovato
|
HIV
|
2019
|
Zejula
(1st line
maintenance/PRIMA)
|
1st line
maintenance ovarian cancer
|
2020
|
Duvroq
|
Anaemia
due to chronic kidney disease
|
2020
|
Rukobia
|
HIV
|
2020
|
Blenrep
|
Relapsed
or refractory multiple myeloma
|
2020
|
Cabenuva
|
LA
HIV
|
2020
|
Jemperli[2]
|
Recurrent
or advanced dMMR endometrial cancer
|
2021
|
+See "Basis
of preparation, assumptions, and cautionary statement" section on
pages 5-7. Assets in late-stage
development with the potential in aggregate to deliver peak year
sales of more than £20 billion on a non-risk adjusted
basis
Asset
|
Indication(s)
|
cabotegravir
LA
|
HIV
PrEP
|
daprodustat
(HIF-PHI)
|
Anaemia
|
Blenrep (BCMA ADC)
|
Multiple
myeloma[3]
|
Jemperli (PD-1 antagonist)[4]
|
1L
endometrial cancer
|
gepotidacin
(2140944)
|
uUTI
and GC
|
RSV
vaccine
|
RSV
older adults/other[5]
|
MenABCWY
vaccine
|
Meningitis
|
otilimab
(3196165, aGM-CSF inhibitor)
|
Rheumatoid
arthritis
|
depemokimab
(GSK '294, LA anti-IL5 antagonist)
|
Asthma
|
Zejula (PARP inhibitor)
|
1L
ovarian cancer with dostarlimab
|
HBV ASO
(GSK '836)
|
Hepatitis
B
|
Basis of preparation, assumptions and cautionary
statement
Assumptions relating to the 2021-2026 sales and adjusted operating
profit growth outlooks, 2026 cash generated from operations
outlook, 2031 sales ambition and 2021-2023 dividend
expectations
In outlining the growth outlooks for the period 2021-2026, the 2026
cash generated from operations outlook, the 2031 sales ambition and
the 2021-2023 dividend expectations (the "Relevant Statements"),
GSK has made certain assumptions about the healthcare sector
(including regarding possible governmental, legislative and
regulatory reform), the different markets and competitive landscape
in which it operates and the delivery of revenues and financial
benefits from its current portfolio, its development pipeline of
drugs and vaccines, its restructuring programmes and its plans for
the separation of Consumer Healthcare, details of which are set out
in this document.
GSK expects and assumes the next several years to be challenging
for the healthcare industry with continued uncertainty related to
the impact of the COVID-19 pandemic on adult vaccinations and
continued pressure on pricing of pharmaceuticals. GSK assumes
no premature loss of exclusivity for key products over the
period. GSK also expects volume demand for its products to
increase, particularly for Shingrix in the US, as healthcare
systems are expected to return to normal following disruption from
governments' prioritisation of COVID-19 vaccination programmes and
ongoing measures to contain the pandemic, and for Shingrix in
China.
The assumptions underlying the Relevant Statements include:
successful delivery of the ongoing and planned integration and
restructuring plans and the planned demerger of Consumer
Healthcare; the delivery of revenues and financial benefits from
its current and development pipeline portfolio of drugs and
vaccines (which have been assessed for this purpose on a
risk-adjusted basis, as described further below); regulatory
approvals of the pipeline portfolio of drugs and vaccines that
underlie these expectations (which have also been assessed for this
purpose on a risk-adjusted basis, as described further below); no
material interruptions to supply of the Group's products; no
material mergers, acquisitions or disposals or other material
business development transactions; 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
shareholdings in ViiV Healthcare.
The Relevant Statements also factor in all divestments and product
exits announced to date as well as material costs for investment in
new product launches and R&D. Pipeline risk-adjusted sales are
based on the latest internal estimate of the probability of
technical and regulatory success for each asset in
development.
Notwithstanding the Relevant Statements, there is still uncertainty
as to whether our assumptions, targets, outlooks expectations and
ambitions will be achieved, including based on the other
assumptions outlined above.
The statement that GSK estimates that certain assets in late-stage
development have the potential to deliver peak year sales of more
than £20 billion on a non-risk adjusted basis is an
aggregation, across the relevant portfolio of assets, of the
maximum sales that GSK considers might be achieved from each
such asset (including from lifecycle innovation) in the year that
that asset attains its highest sales level, in all cases before
taking into account any risks that could impair GSK's ability to
reach that level of sales for that asset, including risks relating
to technical and regulatory success, trial outcomes, launch dates
and execution, exclusivity periods and the impact of changes in the
market and healthcare landscape for that
asset. The aggregation is of the peak year sales
of each individual asset within the portfolio and not for one
particular year. Accordingly, the statement of estimated
non-risk adjusted potential peak year sales of the relevant assets
in late-stage development does not comprise, is wholly different in
nature to, and is subject to very significantly higher levels of
uncertainty than the Relevant Statements. As such,
while GSK does not expect to achieve the aggregate amount of those
estimated non-risk adjusted peak year sales, a risk-adjusted
assessment of sales of relevant assets during the relevant periods
is (as stated above) taken into account, where relevant, within the
Relevant Statements.
All outlook and ambition statements are given on a constant
currency basis and use 2021 forecast exchange rates as a base,
assuming a continuation of Q1 2021 closing rates (£1/$1.38,
£1/€1.17, £1/Yen 152). 2021-2026 outlook refers to
the 5 years to 2026 with 2021 as the base year.
Assumptions and cautionary statement regarding forward looking
statements
The Group's management believes that the assumptions outlined above
are reasonable, and that the targets, outlooks, ambitions and
expectations described in this document are achievable based on
those assumptions. However, given the forward-looking nature of
these assumptions, targets and expectations, 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
continued COVID-19 pandemic and ongoing challenges and
uncertainties posed by the COVID-19 pandemic for businesses and
governments around the world, changes in legislation, regulation,
government actions or intellectual property protection, product
development and approvals, 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 'aim', 'ambition', '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 document.
Reporting definitions
A number of adjusted measures are used to report the performance of
our business, which are non-IFRS measures. Adjusted
results, CER 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. These measures are
defined and reconciliations to the nearest IFRS measure are
available in our first quarter 2021 earnings release and Annual
Report on Form 20-F for FY 2020.
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 and outlooks for Total results, including
Total Operating Profit and Total Operating Margin 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. Therefore a
reconciliation of the guidance for Adjusted results to equivalent
guidance for Total results is not available without unreasonable
effort.
Compound Annual Growth Rate (CAGR) is defined as the compound
annual growth rate and shows the annualised average rate of revenue
or profit growth between two given years, at constant currency,
assuming growth takes place at an exponentially compounded
rate.
Adjusted EBITDA is defined as Adjusted Earnings before interest and
tax, depreciation and amortisation.
About GSK
GSK is a science-led global healthcare company with a special
purpose: to help people do more, feel better, live longer. For
further information please visit www.gsk.com/about-us.
GSK enquiries:
|
|
|
|
Media
enquiries:
|
Tim
Foley
|
+44 (0)
20 8047 5502
|
(London)
|
|
Madeleine
Breckon
|
+44 (0)
20 8047 5502
|
(London)
|
|
Simon
Moore
|
+44 (0)
20 8047 5502
|
(London)
|
|
Kristen
Neese
|
+1 804
217 8147
|
(Philadelphia)
|
|
Kathleen
Quinn
|
+1 202
603 5003
|
(Washington
DC)
|
|
|
|
|
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)
|
Inside information
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of GSK is Victoria Whyte, Company Secretary.
Registered in England & Wales:
No.
3888792
Registered Office:
980
Great West Road
Brentford,
Middlesex
TW8
9GS
[1] 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, constant
exchange rate (CER%) growth and other non-IFRS measures are defined
and reconciliations to the nearest IFRS measure are available in
our first quarter 2021 earnings release and in our Annual Report on
Form 20-F for FY 2020 and in the "Reporting definition" section of
this document on page 7. GSK provides guidance and outlooks
on an Adjusted results basis only, for the reasons set out on page
7. All expectations, ambitions, targets and other statements
regarding future performance should be read together with the
"Basis of preparation, assumptions and cautionary statements" and
"Reporting definition" sections of this document on pages
5-7.
[2] Tesaro
asset
[3] Blenrep for earlier
lines of therapy for multiple myeloma
[4] Tesaro
asset
[5] Maternal and
paediatric
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorised.
|
GlaxoSmithKline plc
|
|
(Registrant)
|
|
|
Date:
June 23, 2021
|
|
|
|
|
By:/s/ VICTORIA
WHYTE
--------------------------
|
|
|
|
Victoria Whyte
|
|
Authorised
Signatory for and on
|
|
behalf
of GlaxoSmithKline plc
|