Coronavirus Update

GlaxoSmithKline Plc - Final Year Results

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GlaxoSmithKline Plc

GSK delivers 2019 sales of £33.8 billion +10% AER, +8% CER (Pro-forma +4% CER*)

Total EPS 93.9p; +27% AER; +23% CER; Adjusted EPS 123.9p +4% AER, +1% CER

2019 financial and product highlights

Pharmaceuticals £17.6 billion +2% AER, flat CER; Vaccines £7.2 billion +21% AER, +19% CER; Consumer Healthcare £9 billion +17% AER, +17% CER (Pro-forma +2% CER*)

Shingrix sales £1.8 billion +>100% AER, +>100% CER driven by strong execution in the US

Total Respiratory sales £3,081 million +18% AER, +15% CER.  Trelegy £518 million +>100% AER, +>100% CER.  Nucala £768 million +36% AER, +33% CER

Total HIV sales £4.9 billion, +3% AER +1% CER.  Two-drug regimen sales £422 million

Total Group operating margin 20.6%.  Adjusted Group operating margin 26.6% reflecting increased R&D spending and impact of generic Advair in the US partly offset by improved Vaccines and Consumer Healthcare performance.  (Pharmaceuticals 26.2%; Vaccines 41.4%; Consumer Healthcare 20.8%)

Total EPS 93.9p +27% AER; +23% CER primarily reflecting reduced contingent consideration charges

Adjusted EPS 123.9p +4% AER, +1% CER reflecting operating performance and lower effective tax rate, partly offset by increased profit allocation to non-controlling interests

Net cash flow from operations £8.0 billion.  Free cash flow £5.1 billion

23p dividend declared for the quarter, 80p for FY19


Pipeline highlights

Continued strengthening of R&D pipeline in 2019: eight submissions, six positive pivotal trial results and four new assets progressed into pivotal trials

In 2020 expect at least six potential approvals in oncology, HIV, specialty and respiratory

Expect proof of concept readouts on several key pipeline assets including four oncology medicines and vaccines for COPD and RSV


2020 guidance

Expect Adjusted EPS to decline -1% to -4% CER

Expect 80p dividend for 2020


Preparing for two new companies

New programme initiated to prepare for separation of GSK into two companies:  New GSK, a biopharma company with an R&D approach focused on science related to the immune system, use of genetics and new technologies; and a new leader in Consumer Healthcare

As GSK increases investment in R&D and new product launches, the two-year separation programme aims to:



Drive a common approach to R&D across modalities with improved capital allocation



Align and improve capabilities and efficiencies of global support functions to support New GSK



Further optimise supply chain and portfolio, including divestments of non-core assets.  Strategic review of prescription dermatology underway



Prepare Consumer Healthcare to operate as a standalone company

Programme to target delivery of £0.7 billion of annual savings by 2022 with total costs estimated at £2.4 billion (of which £1.6 billion cash).  Programme expected to deliver improved operating performance, with meaningful improvements from 2022.  Anticipated divestment proceeds largely expected to cover programme cash costs

Additional one-time costs to prepare Consumer Healthcare for separation estimated at £600-700 million




2019 results





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The Total results are presented under 'Financial performance' on pages 11 and 26 and Adjusted results reconciliations are presented on pages 21, 22, 35 and 36.  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 60.  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 61 and 62.


Reported AER and CER growth rates include five months' results of former Pfizer consumer healthcare business.  Pro-forma CER growth rates are calculated as if the equivalent five months of Pfizer consumer healthcare business results, as reported by Pfizer, were included in the comparative period of 2018.  See "Pro-forma growth" on page 10.


Emma Walmsley, Chief Executive Officer, GSK said:

"GSK delivered a good performance in 2019 with growth in sales and earnings, together with strong cash generation.  We also made excellent progress in all three of our long-term priorities: Innovation, Performance and Trust, strengthening our pipeline, improving operational execution and reshaping the company.

"In 2020, our first priority remains Innovation, to progress our pipeline and support new product launches. Recent data readouts underpin our decision to further increase investment in R&D and these new products.  At the same time, we are again focused on operational execution, including delivering a successful integration in Consumer Healthcare, and we are also preparing for the future, starting a new two-year programme to get GSK ready for separation.

"All of this aims to support future growth, deliver significant value creation, and set up two new leading companies in biopharma and consumer healthcare, each with the opportunity to improve the health of hundreds of millions of people."


2020 guidance


We set out below earnings guidance for 2020.  This reflects our expectations for growth in key new products, and the start of a two-year period in which we will continue to increase investment in these products and in our R&D pipeline, alongside implementation of our new programme which will prepare the Group for separation.

In 2020 we expect Adjusted EPS to decline in the range of -1% to -4% at CER.  This guidance excludes any impact in 2020 from any further material divestments beyond those previously announced and any potential impact on our business from the Coronavirus outbreak.

All expectations, guidance and targets regarding future performance and dividend payments should be read together with "Outlook, assumptions and cautionary statements" on pages 61 and 62.

If exchange rates were to hold at the closing rates on 31 January 2020 ($1.31/£1, €1.19/£1 and Yen 143/£1) for the rest of 2020, the estimated negative impact on 2020 Sterling turnover growth would be around 3% and if exchange gains or losses were recognised at the same level as in 2019, the estimated negative impact on 2020 Sterling Adjusted EPS growth would be around 5%.