TIDMGSK
RNS Number : 4453J
GlaxoSmithKline PLC
27 April 2022
Issued: Wednesday, 27 April 2022, London U.K.
GSK delivers strong Q1 2022 sales of GBP9.8 billion, +32% AER, +32%
CER;
Total EPS 35.9p +67% AER, +66% CER and Adjusted EPS 32.8p +43% AER,
+43% CER
Highlights
Strong sales growth across Biopharma and Consumer Healthcare
-- Biopharma: GBP7.1 billion +40% AER, +40% CER;+14% AER, +15% CER
excluding COVID-19 solutions
- Specialty Medicines GBP3.1 billion +98% AER, +97% CER; HIV +15%
AER, +14% CER; Oncology +15% AER, +15% CER; Immuno-inflammation,
respiratory and other +18% AER, +18% CER; COVID-19 solutions
(Xevudy) sales GBP1.3 billion
- Vaccines GBP1.7 billion +36% AER, +36% CER; Shingrix GBP698 million
>100% AER, >100% CER
- General Medicines GBP2.3 billion +2% AER, +3% CER
-- Consumer Healthcare GBP2.6 billion +14% AER, +14% CER
-- Sales growth also benefited from favourable comparison to Q1 2021
Continued R&D delivery and strengthening of pipeline
-- US FDA regulatory approvals: Cabenuva treatment of virologically
supressed adolescents living with HIV; Triumeq dispersible single
tablet regimen for treatment of children with HIV
-- US FDA regulatory submission acceptance of daprodustat for anaemia
of chronic kidney disease (PDUFA action date 1 February 2023)
-- Benlysta approved in China for adults with active lupus nephritis
-- EU regulatory submission acceptance for Sanofi-GSK COVID-19 vaccine
(Vidprevtyn) and Canadian regulatory approval for Medicago-GSK
COVID-19 vaccine (Covifenz)
-- Proposed acquisition of Sierra Oncology Inc. strengthens late-stage
specialty pipeline. Momelotinib has potential to address significant
unmet medical need of myelofibrosis patients with anaemia
-- Multiple pipeline catalysts in next nine months, including phase
III data read outs for the RSV Older Adults and meningitis (MenABCWY)
vaccine candidates, Blenrep, Jemperli and otilimab, and phase IIb
data for bepirovirsen
Cost discipline supports delivery of improved operating margin and
Adjusted EPS of 32.8p
-- Total Group operating margin 28.6%. Total EPS 35.9p +67% AER, +66%
CER
-- Adjusted Group operating margin 26.7%. Adjusted EPS 32.8p +43%
AER, +43% CER. This included a contribution to growth from COVID-19
solutions of approximately +15% AER, +15% CER for Q1 2022
-- Q1 2022 cash generated from operations GBP2.8 billion. Q1 2022
free cash flow GBP1.7 billion
On track to demerge and list Haleon, a new global leader in consumer
healthcare, in July 2022
-- New growth outlooks set out in Q1 2022, for annual organic revenue
growth of 4-6% and sustainable moderate expansion of adjusted operating
margin over medium term at CER
Reconfirming 2022 guidance
-- GSK expected to deliver growth in 2022 sales of between 5% to 7%
at CER and growth in 2022 Adjusted operating profit of between
12% to 14% at CER
-- 2022 guidance excludes any contribution from COVID-19 solutions
-- Dividend of 14p declared for Q1 2022
Emma Walmsley, Chief Executive Officer, GSK:
"We have delivered strong first quarter results in this landmark
year for GSK, as we separate Consumer Healthcare and start a new
period of sustained growth. Our results reflect further good momentum
across specialty medicines and vaccines, including the return to
strong sales growth for Shingrix and continuing pipeline progress.
We also continue to see very good momentum in Consumer Healthcare,
demonstrating strong potential of this business ahead of its proposed
demerger in July, to become Haleon."
The Total results are presented in summary on page 2 and under 'Financial
performance' on page 7 and Adjusted results reconciliations are presented
on page 15. 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 20 and GBP% or AER% growth, CER% growth, free cash flow and
other non-IFRS measures are defined on page 42. GSK provides guidance
on an Adjusted results basis only, for the reasons set out on page
20. All expectations, guidance and targets regarding future performance
and dividend payments should be read together with 'Guidance, assumptions
and cautionary statements' on page 43.
Q1 2022 results
Q1 2022 Growth Growth
GBPm GBP% CER%
-------- ------- -------
Turnover 9,780 32 32
Total operating profit 2,801 65 65
Total earnings per share 35.9p 67 66
Adjusted operating profit 2,613 39 39
Adjusted earnings per
share 32.8p 43 43
Cash generated from operations 2,755 >100
Free cash flow 1,650 >100
2022 guidance
We reconfirm our guidance for new GSK in 2022, as set out below.
This guidance is provided at CER and excludes the commercial benefit
of COVID-19 solutions.
In 2022, we expect to continue to deliver on our strategic priorities.
We plan to increase targeted investment in R&D, to build on and invest
behind our top-line momentum for key growth drivers and to deliver
the demerger of our Consumer Healthcare business in July 2022. Assuming
global economies and healthcare systems approach normality as the
year progresses, we expect sales of Specialty Medicines to grow approximately
10% CER and sales of General Medicines to show a slight decrease,
primarily reflecting increased genericisation of established Respiratory
medicines. Vaccines sales are expected to grow at a low-teens percentage
at CER for the year. However, as noted at the time of announcing
full-year 2021 results, we anticipated governments' prioritisation
of COVID-19 vaccination programmes and ongoing measures to contain
the pandemic would result in some continued disruption to adult immunisations.
In the first-quarter 2022 Shingrix demonstrated strong demand recovery,
particularly in the US, as well as channel inventory build and the
benefit of a favourable comparator to Q1 2021. Despite the potential
for short-term pandemic disruption, we continue to expect strong
double-digit growth and record annual sales for Shingrix in 2022
based on strong demand in existing markets and continued geographical
expansion.
Reflecting these factors and our first-quarter 2022 results, we reconfirm
our full-year 2022 guidance for new GSK of sales growth between 5%
to 7% CER and Adjusted operating profit growth between 12% to 14%
CER compared to 2021. The guidance includes the future benefit in
royalty income from the settlement and license agreement with Gilead
Sciences, Inc. (Gilead) announced on 1 February 2022.
Medium term outlooks were provided for Consumer Healthcare at a Capital
Markets Day on 28 February 2022. Until such time as the formal criteria
for treating Consumer Healthcare as a 'Discontinued operation' have
been satisfied (currently expected in Q2 2022), GSK will continue
to present the Consumer Healthcare business within 'Continuing operations'
and will consolidate the business for reporting purposes until the
demerger has completed.
Dividend policies and expected pay-out ratios are unchanged for new
GSK and new Consumer Healthcare (subject to new Consumer Healthcare
board approval). The future dividend policies and guidance in relation
to the expected dividend pay-out in 2022 across both new GSK and
new Consumer Healthcare are provided on page 19.
2022 COVID-19 solutions expectations
In 2022, based on known binding agreements with governments, we expect
that COVID-19 solutions will contribute a similar sales level to
2021, but at a substantially reduced profit contribution due to the
increased proportion of lower margin Xevudy sales. We expect this
to reduce the new GSK Adjusted Operating profit growth (including
COVID-19 solutions in both years) by between 5% to 7%. The overwhelming
majority of expected COVID-19 solutions sales were achieved in the
first quarter this year. In April 2022, the US FDA updated Xevudy's
authorisation to reflect the increase in COVID-19 cases caused by
the Omicron BA.2 sub-variant and as a result, Xevudy is no longer
authorised to treat COVID-19 in any US region. However, we will continue
to discuss future opportunities to support governments, healthcare
systems, and patients whereby our COVID-19 solutions can address
the emergence of any new COVID-19 variant of concern.
All expectations, guidance and targets regarding future performance
and dividend payments should be read together with 'Guidance, assumptions
and cautionary statements' on page 43. If exchange rates were to
hold at the closing rates on 31 March 2022 ($1.31/GBP1, EUR1.18/GBP1
and Yen 160/GBP1) for the rest of 2022, the estimated positive impact
on 2022 Sterling turnover growth for new GSK would be 2% and if exchange
gains or losses were recognised at the same level as in 2021, the
estimated positive impact on 2022 Sterling Adjusted Operating Profit
growth for new GSK would be 3%.
Results presentation
A webcast of the quarterly results presentation hosted by Emma Walmsley,
GSK CEO, will be held at 12pm BST on 27 April 2022. Presentation
materials will be published on www.gsk.com prior to the webcast and
a transcript of the webcast will be published subsequently.
Information available on GSK's website does not form part of, and
is not incorporated by reference into, this Results Announcement.
Operating performance - Q1 2022
Turnover
Q1 2022 Growth Growth
GBPm GBP% CER%
-------- ------- -------
Specialty Medicines 3,135 98 97
Vaccines 1,669 36 36
General Medicines 2,343 2 3
-------- ------- -------
Commercial Operations 7,147 40 40
Consumer Healthcare 2,633 14 14
-------- ------- -------
Group turnover 9,780 32 32
-------- ------- -------
Total turnover in the quarter was GBP9,780 million, up 32% AER, 32%
CER, reflecting a strong performance in Commercial Operations in
the three product groups and Consumer Healthcare. Sales of Xevudy
were GBP1,307 million and contributed 25 percentage points of growth
in the quarter to Commercial Operations. Specialty Medicines included
the positive impact of international tender phasing, Vaccines benefited
from Shingrix post-pandemic recovery and retail buy-in in the US
and General Medicines reflected growth from Trelegy and recovery
of the antibiotics market.
Specialty Medicines turnover was GBP3,135 million, up 98% AER, 97%
CER, driven by consistent growth in all therapy areas including sales
of Xevudy. Sales growth was up 16% AER, 15% CER excluding Xevudy.
Vaccines turnover grew 36% AER, 36% CER to GBP1,669 million, driven
primarily by Shingrix in the US and Europe reflecting strong performance
and the benefit of a favourable comparator in Q1 2021 when sales
were impacted by COVID-19 related disruptions in several markets
and lower Centre for Disease Control (CDC) purchases.
General Medicines turnover was GBP2,343 million, up 2% AER, 3% CER,
with growth from Trelegy in all regions, recovery of the antibiotics
market and the benefit of a favourable prior period returns and rebates
(RAR) adjustment, offsetting the impact of generic competition in
US, Europe and Japan.
Consumer Healthcare grew 14% AER, 14% CER to GBP2,633 million. Total
sales grew 15% AER, 16% CER, excluding the impact of brands divested,
with strong growth across all categories.
Operating profit
Total operating profit was GBP2,801 million compared with GBP1,693
million in Q1 2021. This included GBP924 million upfront settlement
income from Gilead, increased profits on turnover growth of 32% at
CER, partly offset by higher remeasurement charges for contingent
consideration liabilities and lower profits on disposals. Adjusted
operating profit was GBP2,613 million, 39% higher than Q1 2021 at
AER and at CER. The Adjusted operating margin of 26.7% was 1.4 percentage
points higher at AER and 1.3 percentage points higher on a CER basis
than in Q1 2021. The benefit from COVID-19 solutions sales (Xevudy)
contributed approximately 11% AER, 11% CER to Adjusted Operating
profit growth.
Earnings per share
Total EPS was 35.9p compared with 21.5p in Q1 2021. This primarily
reflected leverage from significant sales growth during the quarter,
with the upfront income of GBP924 million from the settlement with
Gilead partly offset by an increase in finance costs.
Adjusted EPS was 32.8p compared with 22.9p in Q1 2021, up 43% at
AER, 43% CER, on a 39% CER increase in Adjusted operating profit
primarily reflecting sales of Specialty Medicines and Vaccines, including
COVID-19 solutions sales, tight cost control and a lower effective
tax rate. These were partly offset by higher supply chain costs,
increased R&D investment, favourable legal settlements in Q1 2021
and higher interest costs. The contribution to growth from COVID-19
solutions was approximately 15% at AER, 15% at CER.
Cash flow
The cash generated from operations for the quarter was GBP2,755 million
(Q1 2021: GBP486 million). The increase primarily reflected a significant
increase in operating profit including the upfront income from the
settlement with Gilead, favourable timing of collections and profit
share payments for Xevudy sales and a lower seasonal increase in
inventory.
Q1 2022 pipeline highlights (since 9 February 2022)
Trial (indication,
Medicine/vaccine presentation) Event
Regulatory approvals Cabenuva FLAIR (HIV, optional Regulatory approval
or other regulatory oral lead-in) (US)
action
--------------------- ------------------------- ----------------------
Cabenuva MOCHA (HIV, adolescent) Regulatory approval
(US)
--------------------- ------------------------- ----------------------
Triumeq HIV, paediatric, Regulatory approval
dispersible tablet (US)
--------------------- ------------------------- ----------------------
Benlysta BLISS-LN (lupus Regulatory approval
nephritis, intravenous) (China)
--------------------- ------------------------- ----------------------
Nucala Severe eosinophilic Positive CHMP opinion
asthma, 40 mg prefilled (EU)
syringe for
6-11 year olds
--------------------- ------------------------- ----------------------
Covifenz (Medicago) COVID-19 Regulatory approval
(CA)
--------------------- ------------------------- ----------------------
Regulatory submissions daprodustat ASC (anaemia Regulatory filing
or acceptances of chronic kidney acceptance (US,
disease) EU)
--------------------- ------------------------- ----------------------
COVID-19 vaccine COVID-19 Regulatory submission
candidate (Sanofi) (EU)
--------------------- ------------------------- ----------------------
Phase III data RSV maternal vaccine GRACE (RSV, maternal) Stopped enrolment
readouts or other candidate and vaccination
significant events
--------------------- ------------------------- ----------------------
COVID-19 vaccine COVID-19 Positive phase
candidate (Sanofi) III data
--------------------- ------------------------- ----------------------
Anticipated news flow
Trial (indication,
Timing Medicine/vaccine presentation) Event
H1 2022 bepirovirsen B-Clear (Hepatitis Phase IIb data
B virus) readout
--------------------------- -------------------------- ----------------------
RSV older adults RSV, older adults Phase III data
vaccine candidate readout
--------------------------- -------------------------- ----------------------
COVID-19 vaccine COVID-19 Regulatory submission
candidate (Sanofi) (US)
--------------------------- -------------------------- ----------------------
COVID-19 vaccine COVID-19 Phase III data
candidate (SK Bioscience) readout
--------------------------- -------------------------- ----------------------
COVID-19 vaccine COVID-19 Regulatory submission
candidate (SK Bioscience) (EU)
--------------------------- -------------------------- ----------------------
H2 2022 otilimab contRAst programme Phase III data
(rheumatoid arthritis) readout
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-3 (3L+ multiple Phase III data
myeloma) readout
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-3 (3L+ MM) Regulatory submission
(US, EU)
--------------------------- -------------------------- ----------------------
Jemperli RUBY (1L endometrial Phase III data
cancer) readout (interim
analysis)
--------------------------- -------------------------- ----------------------
gepotidacin EAGLE (uncomplicated Phase III data
urinary tract infection) readout (interim
analysis)
--------------------------- -------------------------- ----------------------
MenABCWY (gen 1) MenABCWY Phase III data
vaccine candidate readout
--------------------------- -------------------------- ----------------------
RSV older adults RSV, older adults Regulatory submission
vaccine candidate (US)
--------------------------- -------------------------- ----------------------
Priorix Measles-mumps-rubella Regulatory decision
(US)
--------------------------- -------------------------- ----------------------
Menveo Invasive meningococcal Regulatory decision
disease, liquid (US)
formulation
--------------------------- -------------------------- ----------------------
Rotarix Rotavirus, liquid Regulatory decision
formulation (US)
--------------------------- -------------------------- ----------------------
COVID-19 vaccine COVID-19 Regulatory decision
candidate (SK Bioscience) (EU)
--------------------------- -------------------------- ----------------------
COVID-19 vaccine COVID-19 Regulatory decision
candidate (Sanofi) (US)
--------------------------- -------------------------- ----------------------
Covifenz (Medicago) COVID-19 Regulatory submission
(US)
--------------------------- -------------------------- ----------------------
2023 otilimab contRAst programme Regulatory submission
(rheumatoid arthritis) (US, EU)
--------------------------- -------------------------- ----------------------
daprodustat ASC (anaemia Regulatory decision
of chronic kidney (US, EU)
disease)
--------------------------- -------------------------- ----------------------
linerixibat GLISTEN (cholestatic Phase III data
pruritus in primary readout
biliary cholangitis)
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-3 (3L+ MM) Regulatory decision
(US, EU)
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-8 (2L+ MM) Phase III data
readout
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-8 (2L+ MM) Regulatory submission
(US, EU)
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-7 (2L+ MM) Phase III data
readout
--------------------------- -------------------------- ----------------------
Blenrep DREAMM-7 (2L+ MM) Regulatory submission
(US, EU)
--------------------------- -------------------------- ----------------------
Jemperli RUBY (1L endometrial Regulatory submission
cancer) (US, EU)
--------------------------- -------------------------- ----------------------
letetresgene-autoleucel IGNYTE-ESO (2L+ Phase II data readout
synovial sarcoma)
--------------------------- -------------------------- ----------------------
RSV older adults RSV, older adults Regulatory decision
vaccine candidate (US)
--------------------------- -------------------------- ----------------------
MenABCWY (gen 1) MenABCWY Regulatory submission
vaccine candidate (US)
--------------------------- -------------------------- ----------------------
Malaria (fractional Malaria Phase II data readout
dose) vaccine
--------------------------- -------------------------- ----------------------
Covifenz (Medicago) COVID-19 Regulatory decision
(US)
--------------------------- -------------------------- ----------------------
Refer to pages 34 to 41 for further details on several key medicines
and vaccines in development by therapy area.
Contents Page
Q1 2022 R&D pipeline highlights 4
Financial performance 7
Commercial Operations turnover - three months ended 31 March
2022 8
Consumer Healthcare turnover - three months ended 31 March
2022 11
Cash generation 18
Returns to shareholders 19
Total and Adjusted results 20
Income statement - three months ended 31 March 2022 22
Statement of comprehensive income 23
Balance sheet 26
Statement of changes in equity 27
Cash flow statement - three months ended 31 March 2022 28
Segment information 29
Legal matters 30
Additional information 31
Reconciliation of cash flow to movements in net debt 33
Net debt analysis 33
Free cash flow reconciliation 33
R&D commentary 34
Reporting definitions 42
Guidance, assumptions and cautionary statements 43
Independent review report 44
Contacts
GSK is a science-led global healthcare company. For further information
please visit www.gsk.com/aboutus.
GSK enquiries:
Media enquiries: Tim Foley +44 (0) 20 8047 (London)
5502
Kathleen Quinn +1 202 603 5003 (Washington)
Analyst/Investor enquiries: Nick Stone +44 (0) 7717 618834 (London)
James Dodwell +44 (0) 7881 269066 (London)
Mick Readey +44 (0) 7990 339653 (London)
Joshua Williams +44 (0) 7385 415719 (London)
Jeff McLaughlin +1 215 589 3774 (Philadelphia)
Frances De Franco +1 570 236 4850 (Philadelphia)
Sonya Ghobrial +44 (0) 7392 784784 (Consumer)
Emma White +44 (0) 7823 523562 (Consumer)
Rakesh Patel +44 (0) 7552 484646 (Consumer)
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TW8 9GS
Financial performance - Q1 2022
Total results
The Total results for the Group are set out below.
Q1 2022 Q1 2021 Growth Growth
GBPm GBPm GBP% CER%
-------- -------- ------- -------
Turnover 9,780 7,418 32 32
Cost of sales (3,690) (2,480) 49 49
-------- -------- ------- -------
Gross profit 6,090 4,938 23 24
Selling, general and administration (2,844) (2,427) 17 18
Research and development (1,167) (1,118) 4 4
Royalty income 139 91 53 53
Other operating income 583 209
-------- -------- ------- -------
Operating profit 2,801 1,693 65 65
Finance income 10 10
Finance expense (212) (201)
Share of after tax (losses)/profits
of associates
and joint ventures (1) 16
Profit before taxation 2,598 1,518 71 71
Taxation (431) (258)
Tax rate % 16.6% 17.0%
-------- -------- ------- -------
Profit after taxation 2,167 1,260 72 72
-------- -------- ------- -------
Profit attributable to non-controlling
interests 365 187
Profit attributable to shareholders 1,802 1,073 68 67
-------- -------- ------- -------
2,167 1,260 72 72
-------- -------- ------- -------
Earnings per share 35.9p 21.5p 67 66
-------- -------- ------- -------
Adjusted results
The Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for Q1 2022 and Q1 2021
are set out on page 15. Definition of the Adjusted results are set
out on page 20.
Q1 2022 % of Growth Growth
GBPm turnover GBP% CER%
-------- ---------- ------- -------
Turnover 9,780 100 32 32
Cost of sales (3,471) (35.5) 55 55
Selling, general and administration (2,681) (27.4) 16 17
Research and development (1,154) (11.8) 7 7
Royalty income 139 1.4 53 53
-------- ---------- ------- -------
Adjusted operating profit 2,613 26.7 39 39
-------- ---------- ------- -------
Adjusted profit before tax 2,410 41 41
Adjusted profit after tax 1,979 42 43
Adjusted profit attributable
to shareholders 1,646 44 44
-------- ------- -------
Adjusted earnings per share 32.8p 43 43
-------- ------- -------
Operating profit by segment
Q1 2022 % of Growth Growth
GBPm turnover GBP% CER%
-------- ---------- ------- -------
Commercial Operations 3,121 43.7 27 27
Research and Development (1,095) 6 6
Consumer Healthcare 650 24.7 21 26
-------- ---------- ------- -------
Segment profit 2,676 27.4 37 38
Corporate & other unallocated
costs (63)
-------- ---------- ------- -------
Adjusted operating profit 2,613 26.7 39 39
-------- ---------- ------- -------
Turnover
Commercial Operations
Q1 2022
------------------------
Growth Growth
GBPm GBP% CER%
------ ------- -------
HIV 1,181 15 14
Oncology 127 15 15
Immuno-inflammation, respiratory and other 520 18 18
Pandemic 1,307 - -
------ ------- -------
Specialty Medicines 3,135 98 97
Meningitis 212 12 12
Influenza 18 - -
Shingles 698 >100 >100
Established Vaccines 741 8 8
Pandemic Vaccines - - -
------ ------- -------
Vaccines 1,669 36 36
Respiratory 1,535 3 3
Other General Medicines 808 - 3
------ ------- -------
General Medicines 2,343 2 3
Commercial Operations 7,147 40 40
------ ------- -------
US 3,586 62 57
Europe 1,660 32 36
International 1,901 17 20
------ ------- -------
Commercial Operations by region 7,147 40 40
------ ------- -------
Total turnover in the quarter was GBP7,147 million, up 40% AER, 40%
CER, reflecting strong performance in all three product groups. Specialty
Medicines included the positive impact of international tender phasing,
sales of Xevudy were GBP1,307 million and contributed 25 percentage
points of growth in the quarter. Vaccines benefited from Shingrix
post pandemic recovery and retail buy-in in the US. General Medicines
reflects recovery of the antibiotics market as well as the benefit
of a favourable prior period RAR adjustment.
Specialty Medicines
Specialty Medicines sales in the quarter were GBP3,135 million, up
98% AER, 97% CER, driven by consistent growth in all therapy areas
including sales of Xevudy. Sales growth was up 16% AER, 15% CER excluding
Xevudy.
HIV
HIV sales were GBP1,181 million with growth of 15% AER, 14% CER in
the quarter. Growth was driven by new HIV products Dovato, Cabenuva,
Rukobia, Juluca and Apretude and phasing. Phasing contributed approximately
two thirds of the growth, driven by Tivicay International tenders,
US customer ordering patterns and US channel inventory movement.
New HIV products delivered sales of GBP446 million up 70% AER, 69%
CER, representing 38% of the total HIV portfolio. Sales of the oral
two drug regimens Dovato and Juluca were GBP257 million and GBP133
million respectively with combined growth of 54% AER, 53% CER. Cabenuva,
the first long acting injectable, recorded quarterly sales of GBP38
million. Apretude delivered sales of GBP2 million.
Oncology
Oncology sales in the quarter were GBP127 million, up 15% AER, 15%
CER. Zejula sales of GBP98 million, up 11% AER, 11% CER, continue
to be adversely impacted by diagnosis rates, particularly in the
US. Sales of Blenrep, grew 19% AER, 19% CER to GBP25 million in the
quarter.
Immuno-inflammation, Respiratory and Other
Immuno-inflammation, Respiratory and Other sales were GBP520 million
up 18% AER, 18% CER. Benlysta sales were GBP215 million, up 21% AER,
18% CER with growth in all regions, including International sales
of GBP26 million up 53% AER, 53% CER. Nucala sales were GBP295 million,
up 16% AER, 16% CER including US sales of GBP177 million up 18% AER,
15% CER on continued strong demand and additional indications approval
and launch. International Nucala sales were GBP53 million up 26%
AER, 31% CER.
Pandemic
Sales of Xevudy were GBP1,307 million, with no sales in Q1 last year
given launch in Q2 2021. Sales were delivered in all regions, comprising
US GBP770 million, Europe GBP311 million and International GBP226
million.
Vaccines
Vaccines turnover grew 36% AER, 36% CER to GBP1,669 million, driven
primarily by Shingrix in the US and Europe reflecting strong performance
and the benefit of a favourable comparator to Q1 2021 when sales
were impacted by COVID-19 related disruptions in several markets
and lower CDC purchases.
Meningitis
Meningitis vaccines sales grew 12% AER, 12% CER% to GBP212 million
mainly driven by Bexsero (22% AER, 23% CER to GBP163 million) reflecting
higher CDC purchasing in the US.
Shingles
Shingrix grew >100% AER, >100 CER% to GBP698 million, primarily due
to channel inventory build-up and demand recovery in the US and higher
demand in Germany. Launch markets also contributed to increased sales
reflecting continued geographic expansion.
Established Vaccines
Established Vaccines grew 8% AER, 8% CER to GBP741 million mainly
as a result of higher CDC purchases of Infanrix/Pediarix and Hepatitis
vaccines, US demand and share growth for Boostrix, partially offset
by lower Synflorix, Cervarix and MMRV sales in International.
General Medicines
General Medicines sales in the quarter were GBP2,343 million, up
2% AER, 3% CER, with growth from Trelegy in all regions and the benefit
of a favourable prior period RAR adjustment, offsetting the impact
of generic competition in US, Europe and Japan.
Respiratory
Respiratory sales were GBP1,535 million, up 3% AER, 3% CER. Trelegy
sales were GBP340 million, up 37% AER, 35% CER with strong growth
in all regions. Advair/Seretide sales of GBP302 million were down
14% AER, 14% CER on US and Europe generic competition, partially
offset by growth in International on targeted promotion.
Other General Medicines
Other General Medicines sales were GBP808 million, flat at AER, up
3% CER. Augmentin sales were GBP129 million, up 42% AER, 51% CER
reflecting rebound of the antibiotic market post pandemic in the
International and Europe regions and in the US, a favourable prior
period RAR adjustment was reflected. This offsets ongoing impact
of generic competition and approximately two percentage points impact
from the divestment of GSK's cephalosporin products in Q4 2021.
By Region
US
In the US, sales were GBP3,586 million, up 62% AER, 57% CER, including
Xevudy sales of GBP770 million contributing 34 percentage points
of growth. HIV sales of GBP697 million up 17% AER, 13% CER were driven
by growth of new HIV products, customer ordering patterns and lower
channel inventory burn. New HIV products delivered sales of GBP285
million up 72% AER, 66% CER, driven by Dovato and Cabenuva. Nucala
and Benlysta both continued to grow double-digits despite some year-end
wholesaler destocking, while Oncology growth continued to be impacted
by diagnosis rates.
Vaccine sales were GBP892 million, up 77% AER, 71% CER. Growth was
driven by Shingrix reflecting demand recovery and retail buy-in ahead
of a price increase. Meningitis, Hepatitis, Infanrix/Pediarix and
Boostrix sales all grew in the quarter reflecting CDC purchasing
patterns and demand recovery. General Medicines sales were GBP811
million up 7% AER, 4% CER, benefiting from a favourable prior period
RAR adjustment. Trelegy sales continued strong performance on growth
of the single inhaler triple therapy market and demand.
Europe
In Europe, sales were GBP1,660 million, up 32% AER, 36% CER, including
Xevudy sales of GBP311 million contributing 25 percentage points
of growth. HIV sales were GBP299 million up 4% AER, 8% CER driven
by Dovato. Strong double-digit growth continued in the quarter on
Benlysta, Nucala and Oncology assets.
Vaccine sales were GBP409 million, up 33% AER, 38% CER. Growth was
driven by Shingrix sales of GBP160 million, up >100% AER, >100% CER
on strong demand in Germany post pandemic and channel re-stocking.
General Medicines sales were GBP503 million down 7% AER, 4% CER,
with ongoing generic competitive pressures on Seretide, partly offset
by strong demand for Trelegy and growth of Augmentin on rebound of
the antibiotic market post the pandemic.
International
International sales were GBP1,901 million, up 17% AER, 20% CER, including
Xevudy sales of GBP226 million contributing 14 percentage points
of growth. HIV sales were GBP185 million up 26% AER, 30% CER primarily
driven by tender phasing. Combined Tivicay and Triumeq sales were
GBP148 million with growth of 21% AER and 25% CER. Nucala and Benlysta
both continued to grow strongly, due to Japan's biologicals market
growth and China's National Reimbursement Drug List approval, respectively.
Vaccine sales were GBP368 million, down 11% AER, 9% CER primarily
reflecting phasing of public tenders. General Medicines sales were
GBP1,029 million up 2% AER, 6% CER. Respiratory sales of GBP480 million
were up 1% AER, 4% CER. Strong growth of Trelegy in Japan, China
and Canada, and growth of Seretide on targeted promotion, offset
impact of generic competition and lower allergy season in Japan.
Other General Medicines sales of GBP549 million, up 4% AER, 8% CER
reflect growth of Augmentin on rebound of the antibiotic market post
the pandemic.
Consumer Healthcare turnover
Q1 2022
------------------------
Growth Growth
GBPm GBP% CER%
------ ------- -------
Oral health 740 6 9
Pain relief 639 17 17
Vitamins, minerals and supplements 407 17 15
Respiratory health 370 51 53
Digestive health and other 477 - (1)
------ ------- -------
Consumer Healthcare 2,633 14 14
------ ------- -------
US 857 20 17
Europe 627 4 8
International 1,149 15 17
------ ------- -------
Consumer Healthcare by region 2,633 14 14
------ ------- -------
In Q1 2022, Consumer Healthcare turnover grew 14% AER, 14% CER to
GBP2,633 million. Sales grew 15% AER, 16% CER, excluding the impact
of brands divested, which were entirely in the Digestive health and
other category.
Overall, the business delivered strong growth across all categories.
Sales benefited from favourable prior year comparators especially
in Respiratory health which saw a strong rebound following the historically
low cold and flu season in Q1 2021, with cold and flu sales contributing
approximately five percentage points to total growth. In addition,
advance retailer and wholesaler stock-in, and initial distributor
sell-in due to the systems cutover and distribution business model
change ahead of the demerger contributed approximately two percentage
points to total growth. Strong sales growth in Pain relief benefited
from increased demand during the Omicron wave and an improved capacity
in Vitamins, minerals and supplements.
Oral health
Oral health sales grew 6% AER, 9% CER to GBP740 million. Sensodyne
delivered high-single digit growth reflecting underlying brand strength,
continued innovation and strong growth across key markets including
the US, India, Japan, Middle East and Africa. Paradontax delivered
low double-digit growth. Denture care grew low-teens percent following
the decrease of sales during the pandemic.
Pain relief
Pain relief sales increased 17% AER, 17% CER to GBP639 million. Panadol
grew mid thirties percent due to a successful campaign aimed at post
vaccination use and increased demand during the Omicron wave. Advil
grew low thirties percent benefitting from retail stocking patterns
in the US versus a decrease in Q1 2021. Excedrin grew high-single
digits and Voltaren was stable with growth in China offset by a decrease
in Germany.
Vitamins, minerals and supplements
Vitamins, minerals and supplements sales increased 17% AER, 15% CER
to GBP407 million. Centrum grew high-teens percent, with particularly
strong growth in China due to consumer focus on immunity as a result
of the pandemic. Emergen-C grew high thirties percent versus a high
twenties percent decrease in Q1 2021. Caltrate decreased low single
digits, high single digit growth in China was insufficient to offset
a decline in the US and South East Asia.
Respiratory health
Respiratory health sales increased 51% AER, 53% CER to GBP370 million.
The category rebounded strongly from the historically low demand
for cold and flu products in Q1 2021. Cold and flu product sales
growth doubled in the US and was strong in Europe, Middle East and
Africa and Latin America, with sales ahead of pre-pandemic levels
in 2019.
Digestive health and other
Digestive health and other brands were flat AER, down 1% CER to GBP477
million. Sales grew 5% AER, 4% CER excluding the impact of brands
divested. Digestive health increased high-single digits with strong
growth in Tums and Eno partially offset by a low-single digit decrease
in Nexium. Smokers health also grew high-single digits and Skin health
grew low single-digits.
By Region
International and US sales grew high-teens percent on a CER basis
with broad growth across categories. European growth was driven by
a particularly strong rebound of cold and flu product sales ahead
of pre-pandemic sales in 2019.
Operating performance
Cost of sales
Total cost of sales as a percentage of turnover was 37.7%, 4.3 percentage
points higher at AER and 4.2 percentage points higher in CER terms
than Q1 2021. This included lower write-downs on sites from major
restructuring programmes compared to 2021.
Excluding these and other Adjusting items, Adjusted cost of sales
as a percentage of turnover was 35.5%, 5.3 percentage points higher
at AER and at CER compared with Q1 2021. This primarily reflected
higher pandemic sales (Xevudy) increasing cost of sales margin by
seven percentage points as well as the impact of increased commodity
prices and freight costs particularly in Consumer Healthcare. This
was partially offset by a favourable mix primarily from increased
sales of Shingrix in the US and Europe as well as a one-time benefit
from inventory adjustments in the quarter.
Selling, general and administration
Total SG&A costs as a percentage of turnover were 29.1%, 3.6 percentage
points lower at AER and 3.5 percentage points lower at CER than in
Q1 2021 as the growth in sales outweighed SG&A expenditure growth.
Adjusted SG&A costs as a percentage of turnover were 27.4%, 3.8 percentage
points lower at AER than in Q1 2021 and 3.6 percentage points lower
at CER. Adjusted SG&A costs increased 16% AER, 17% CER which primarily
reflected an increased level of launch investment in Specialty Medicines
particularly HIV, Vaccines and increased Consumer Healthcare brand
investment to a more normal level compared to challenging conditions
in Q1 2021. The growth in Adjusted SG&A also reflected an unfavourable
comparison to a beneficial legal settlement in 2021, exchange losses
on collaboration profit share and impairment provisions relating
to Russia and Ukraine. This growth, however was partly offset by
the continuing benefit of restructuring and tight control of ongoing
costs.
Research and development
Group R&D expenditure was GBP1,167 million (11.9% of turnover), up
4% at both AER and CER. Adjusted R&D expenditure was GBP1,154 million
(11.8% of turnover), 7% higher than Q1 2021 at both AER and CER.
Adjusted R&D expenditure excluding Consumer Healthcare was GBP1,088
million (15.2% of turnover), 6% higher at AER, 6% higher at CER,
primarily driven by increases in the Vaccines portfolio. Specialty
Medicines investment decreased with reductions in the late-stage
Specialty Medicines portfolio partly offset by increased research
investment.
In the Vaccines portfolio there has been increased investment in
RSV for older adults and meningitis due to the ongoing phase III
trials which commenced in 2021 and in Shingrix due to the combination
trial exploring the co-administration of Shingrix/Flu/COVID-19 as
well as further market expansion. There has also been a significant
increase in the level of mRNA investment.
In Specialty Medicines investment continues in Blenrep, Zejula and
otilimab but decreased primarily following termination of the Oncology
assets bintrafusp alpha and feladilimab in 2021 and following the
regulatory submission of daprodustat during Q1 2022. GSK continues
to see increased investment in Specialty Medicines due to several
early-stage assets progressing to phase I.
Consumer Healthcare adjusted R&D spend was GBP66 million in the quarter.
Royalty income
Royalty income was GBP139 million (Q1 2021: GBP91 million), up 53%
AER, 53% CER, primarily reflecting higher sales of Gardasil and royalty
income from Gilead under the settlement and licensing agreement with
Gilead announced on 1 February 2022 (see page 21).
Other operating income/(expense)
Net other operating income was GBP583 million (Q1 2021: GBP209 million)
including GBP924 million upfront income received from the settlement
with Gilead. This was partly offset by accounting charges of GBP335
million (Q1 2021: GBP107 million) arising from the re-measurement
of contingent consideration liabilities and the liabilities for the
Pfizer put option and Pfizer and Shionogi preferential dividends
in ViiV Healthcare. This included a re-measurement charge of GBP256
million (Q1 2021: GBP134 million) for the contingent consideration
liability due to Shionogi & Co. Limited (Shionogi), including the
unwinding of the discount for GBP101 million and a charge for GBP155
million primarily from changes to exchange rates as well as adjustments
to sales forecasts.
Operating profit
Total operating profit was GBP2,801 million compared with GBP1,693
million in Q1 2021. This included the GBP924 million upfront settlement
income from Gilead as well as increased profits on turnover growth
of 32% at CER, partly offset by higher remeasurement charges for
contingent consideration liabilities and lower profits on disposals.
Adjusted operating profit was GBP2,613 million, 39% higher than Q1
2021 at AER and at CER on a turnover increase of 32% CER. The Adjusted
operating margin of 26.7% was 1.4 percentage points higher at AER
and 1.3 percentage points higher at CER than in Q1 2021. This primarily
reflected sales growth of 32% CER which was significantly higher
than growth in SG&A and R&D with continued tight cost control and
restructuring benefits. The benefit from COVID-19 solutions sales
(Xevudy) contributed approximately 11% AER, 11% CER to Adjusted Operating
profit growth.
Excluding Consumer Healthcare, Adjusted operating profit was GBP1,963
million, 46% higher than Q1 2021 at AER and 44% at CER and the Adjusted
operating margin was 27.5% which was 1.1 percentage points higher
at AER and 0.8 percentage points higher at CER than in Q1 2021. This
primarily reflected the benefit from COVID-19 solutions sales (Xevudy),
which contributed approximately 16% AER, 15% CER to Adjusted operating
profit growth and reduced the Adjusted operating margin by approximately
2.6 percentage points at AER and 2.5 percentage points at CER. Adjusted
operating profit growth also includes leverage from strong sales
growth with margin improvement from sales mix, primarily Shingrix.
Contingent consideration cash payments 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 2022 amounted to GBP211 million (Q1 2021: GBP221 million).
These included cash payments made to Shionogi of GBP208 million (Q1
2021: GBP216 million).
Adjusted operating profit by business
Commercial Operations operating profit was GBP3,121 million, up 27%
AER and CER on a turnover increase of 40% CER. The operating margin
of 43.7% was 4.3 percentage points lower at both AER and CER than
in Q1 2021. This primarily reflected strong sales of lower margin
Xevudy in the quarter, increased investment behind launches in Specialty
Medicines including HIV and Vaccines plus higher commodity, freight
and distribution costs as well as an adverse comparison to a favourable
legal settlement in Q1 2021. This was partly offset by continued
tight control of ongoing costs, benefits from continued restructuring
and increased royalty income from Gardasil sales and, following the
settlement with Gilead in February 2022, Biktarvy sales.
R&D segment operating expenses were GBP1,095 million, up 6% AER,
6% CER, primarily driven by increased investment in Vaccines including
priority investments for RSV Older Adult, MenABCWY and mRNA.
Consumer Healthcare operating profit was GBP650 million, up 21% AER,
26% CER on a turnover increase of 14% CER. The operating margin of
24.7% was 1.5 percentage points higher at AER and 2.3 percentage
points higher on a CER basis than in Q1 2021. This reflected strong
leverage from volume growth and price increases, supply chain efficiencies
and incremental synergy benefits from the Pfizer Joint Venture partially
offset by increased brand investment, increased commodity and freight
costs as well as new costs in 2022 associated with starting to run
Consumer Healthcare as a standalone company.
Net finance costs
Total net finance costs were GBP202 million compared with GBP191
million in Q1 2021. Adjusted net finance costs were GBP202 million
compared with GBP190 million in Q1 2021. The increase primarily reflected
higher interest expense on debt due to adverse movements in exchange
rates and the newly issued Consumer Healthcare bond debt.
Share of after tax profits of associates and joint ventures
The share of after tax loss of associates and joint ventures was
GBP1 million (Q1 2021: GBP16 million profit).
Taxation
The charge of GBP431 million represented an effective tax rate on
Total results of 16.6% (Q1 2021: 17.0%) and reflected the different
tax effects of the various Adjusting items. Tax on Adjusted profit
amounted to GBP431 million and represented an effective Adjusted
tax rate of 17.9% (Q1 2021: 18.6%).
Issues related to taxation are described in Note 14, 'Taxation' in
the Annual Report 2021. The Group continues to believe it has made
adequate provision for the liabilities likely to arise from periods
that are open and not yet agreed by relevant 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 GBP365 million (Q1 2021: GBP187 million). The increase was primarily
due to an increased allocation of ViiV Healthcare profits of GBP227
million (Q1 2021: GBP76 million), including the Gilead upfront settlement
income partly offset by increased credits for re-measurement of contingent
consideration liabilities.
The allocation of Adjusted earnings to non-controlling interests
amounted to GBP333 million (Q1 2021: GBP246 million). The increase
in allocation primarily reflected an increase in allocation of Consumer
Healthcare Joint Venture profits of GBP154 million (Q1 2021: GBP114
million) and an increase allocation of ViiV Healthcare profits of
GBP113 million (Q1 2021: GBP108 million), as well as higher net profits
in some of the Group's other entities with non-controlling interests.
Earnings per share
Total EPS was 35.9p compared with 21.5p in Q1 2021. This primarily
reflected leverage from significant sales growth during the quarter
and income of GBP924 million from the settlement with Gilead partly
offset by an increase in finance costs.
Adjusted EPS was 32.8p compared with 22.9p in Q1 2021, up 43% AER
43% CER, on a 39% CER increase in Adjusted operating profit primarily
reflecting increased sales of Specialty Medicines and Vaccines including
COVID-19 solutions sales, tight cost control and a lower effective
tax rate. These were partly offset by higher supply chain costs,
increased R&D investment, favourable legal settlements in Q1 2021
and higher interest costs. The contribution to growth from COVID-19
solutions was approximately 15% AER, 15% CER.
Currency impact on Q1 2022 results
The results for Q1 2022 are based on average exchange rates, principally
GBP1/$1.34, GBP1/EUR1.19 and GBP1/Yen 156. Comparative exchange rates
are given on page 31. The period-end exchange rates were GBP1/$1.31,
GBP1/EUR1.18 and GBP1/Yen 160.
In Q1 2022, turnover was up 32% AER and CER. Total EPS was 35.9p
compared with 21.5p in Q1 2021. Adjusted EPS was 32.8p compared with
22.9p in Q1 2021, up 43% at both AER and CER. The currency impact
was largely neutral reflecting the strengthening in Sterling against
the Euro and Japanese Yen offset by the weakening of Sterling against
the US Dollar. Exchange gains or losses on the settlement of intercompany
transactions had a one percent favourable impact on the neutral currency
impact on Adjusted EPS.
Adjusting items
The reconciliations between Total results and Adjusted results for
Q1 2022 and Q1 2021 are set out below.
Three months ended 31 March 2022
Divest-
ments,
significant
legal
Intangible Intangible Major Trans- and Sepa-
Total amort- impair- restruct- action- other ration Adjusted
results isation ment uring related items costs results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Turnover 9,780 9,780
Cost of sales (3,690) 174 17 16 12 (3,471)
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Gross profit 6,090 174 17 16 12 6,309
Selling, general
and
administration (2,844) 37 9 117 (2,681)
Research and
development (1,167) 23 (16) 6 (1,154)
Royalty income 139 139
Other operating
income/(expense) 583 335 (940) 22 -
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Operating profit 2,801 197 1 59 347 (931) 139 2,613
Net finance cost (202) (202)
Share of after
tax
losses of
associates and
joint
ventures (1) (1)
Profit before
taxation 2,598 197 1 59 347 (931) 139 2,410
Taxation (431) (40) 1 (14) (53) 132 (26) (431)
Tax rate % 16.6% 17.9%
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Profit after
taxation 2,167 157 2 45 294 (799) 113 1,979
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Profit
attributable
to
non-controlling
interests 365 (32) 333
Profit
attributable
to shareholders 1,802 157 2 45 326 (799) 113 1,646
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Earnings per
share 35.9p 3.1p - 0.9p 6.5p (15.9)p 2.3p 32.8p
------- ----------- ----------- ---------- -------- ------------ ------- ---------
Weighted average
number
of shares
(millions) 5,020 5,020
------- ---------
Three months ended 31 March 2021
Divest-
ments,
significant
legal
Intangible Intangible Major Trans- and Sepa-
Total amort- impair- restruct- action- other ration Adjusted
results isation ment uring related items costs results
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------- ----------- ----------- ---------- -------- ------------ ------- ---------
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 cost (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
------- ---------
Major restructuring and integration
Total Major restructuring charges incurred in Q1 2022 were GBP59
million (Q1 2021: GBP110 million), analysed as follows:
Q1 2022 Q1 2021
---------------------- ----------------------
Non- Non-
Cash cash Total Cash cash Total
GBPm GBPm GBPm GBPm GBPm GBPm
------ ------ ------ ------ ------ ------
Separation Preparation
restructuring
programme 13 38 51 79 9 88
Consumer Healthcare Joint
Venture
integration programme 2 4 6 40 4 44
Legacy programmes 1 1 2 7 (29) (22)
------ ------ ------ ------ ------ ------
16 43 59 126 (16) 110
------ ------ ------ ------ ------ ------
Cash charges of GBP13 million under the Separation Preparation programme
primarily arose from the restructuring of some administrative functions
as well as commercial pharmaceuticals and R&D functions. The non-cash
charges of GBP38 million primarily reflected the write-down of assets
in administrative locations and R&D sites.
Total cash payments made in Q1 2022 were GBP171 million (Q1 2021:
GBP211 million), GBP120 million (Q1 2021: GBP100 million) relating
to the Separation Preparation restructuring programme, a further
GBP31 million (Q1 2021: GBP60 million) relating to the Consumer Healthcare
Joint Venture integration programme and GBP20 million (Q1 2021: GBP51
million) relating to other legacy programmes including the settlement
of certain charges accrued in previous quarters.
The analysis of Major restructuring charges by Income statement line
was as follows:
Q1 2022 Q1 2021
GBPm GBPm
-------- --------
Cost of sales 16 34
Selling, general and administration 37 75
Research and development 6 2
Other operating income - (1)
Total Major restructuring costs 59 110
-------- --------
The benefit in the quarter from restructuring programmes was GBP0.1
billion, primarily relating to the Separation Preparation restructuring
programme.
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 human 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
-- Prepare Consumer Healthcare to operate as a standalone company
The programme continues to target delivery of GBP0.8 billion of annual
savings by 2022 and GBP1.0 billion by 2023, with total costs estimated
at GBP2.4 billion, of which GBP1.6 billion is expected to be cash
costs. The proceeds of divestments have largely covered the cash
costs of the programme.
The completion of the Consumer Healthcare Joint Venture with Pfizer
has realised substantial cost synergies and largely delivered the
expected total annual cost savings of GBP0.5 billion by 2021. In
February 2022, at the Haleon Capital Markets Day, the projected savings
from this programme were announced as increased by GBP0.1 billion
to GBP0.6 billion by 2022. The cash costs are expected to be GBP0.7
billion and non-cash charges are expected to be GBP0.1 billion, plus
an additional capital expenditure of GBP0.2 billion. Up to 25% of
the cost savings are intended to be reinvested in the business to
support innovation and other growth opportunities.
Transaction-related adjustments
Transaction-related adjustments resulted in a net charge of GBP347
million (Q1 2021: GBP116 million). This included a net GBP332 million
accounting charge for the re-measurement of contingent consideration
liabilities and the liabilities for the Pfizer put option and Pfizer
and Shionogi preferential dividends in ViiV Healthcare.
Q1 2022 Q1 2021
Charge/(credit) GBPm GBPm
-------- --------
Contingent consideration on former Shionogi-ViiV
Healthcare joint Venture
(including Shionogi preferential dividends) 256 134
ViiV Healthcare put options and Pfizer preferential
dividends 32 (53)
Contingent consideration on former Novartis Vaccines
business 44 26
Other adjustments 15 9
-------- --------
Total transaction-related charges 347 116
-------- --------
The GBP256 million charge relating to the contingent consideration
for the former Shionogi-ViiV Healthcare joint venture represented
an increase in the valuation of the contingent consideration due
to Shionogi, as a result of the unwind of the discount for GBP101
million and a charge of GBP155 million primarily from exchange rates
as well as adjustments to sales forecasts. The GBP32 million charge
relating to the ViiV Healthcare put option and Pfizer preferential
dividends represented an increase in the valuation of the put option
primarily as a result of updated exchange rates and adjustments to
sales forecasts.
The ViiV Healthcare contingent consideration liability is fair valued
under IFRS. An explanation of the accounting for the non-controlling
interests in ViiV Healthcare is set out on page 21.
Divestments, significant legal charges, and other items
Divestments, significant legal charges and other items primarily
included the GBP924 million upfront settlement income received from
Gilead, as well as gains from a number of asset disposals, fair value
gains on investments and certain other Adjusting items.
Separation costs
From Q2 2020, the Group started to report additional costs to prepare
for establishment of the Consumer Healthcare business as an independent
entity ("Separation costs"). Total separation costs incurred in Q1
2022 were GBP139 million (Q1 2021: GBP35 million). This includes
GBP22 million relating to transaction costs incurred in connection
with the demerger and preparatory admission costs related to the
listing of Consumer Healthcare.
Total separation costs are estimated to be GBP600-700 million, excluding
transaction costs.
Cash generation
Cash flow
Q1 2022 Q1 2021
-------- --------
Cash generated from operations (GBPm) 2,755 486
Net cash inflow from operating activities (GBPm) 2,542 331
Free cash flow* (GBPm) 1,650 (3)
Free cash flow growth (%) >100% >(100)%
Free cash flow conversion* (%) 92% <-%
Net debt** (GBPm) 19,351 21,402
-------- --------
Free cash flow and free cash flow conversion are defined on page
* 42 .
** Net debt is analysed on page 33.
Q1 2022
Cash generated from operating activities for the quarter was GBP2,755
million (Q1 2021: GBP486 million). The increase primarily reflected
a significant increase in operating profit including the upfront
income from the settlement with Gilead, favourable timing of collections
and profit share payments for Xevudy sales and a lower seasonal increase
in inventory.
Total cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the quarter were GBP208 million
(Q1 2021: GBP216 million), of which GBP183 million was recognised
in cash flows from operating activities and GBP25 million was recognised
in contingent consideration paid within investing cash flows. These
payments are deductible for tax purposes.
Free cash inflow was GBP1,650 million for the quarter (Q1 2021: GBP3
million outflow). The increase primarily reflected the significant
increase in operating profit including the upfront income from the
settlement with Gilead, favourable timing of collections and profit
share payments for Xevudy sales and lower seasonal increase in inventory.
This was partially offset by lower proceeds from disposals and higher
purchases of intangible asset, as well as higher tax payments and
capital expenditure.
Net debt
At 31 March 2022, net debt was GBP19.4 billion, compared with GBP19.8
billion at 31 December 2021, comprising gross debt of GBP33.3 billion
which increased primarily due to the debt issuance for Consumer Healthcare,
cash and liquid investments of GBP11.0 billion and cash advances
and a short-term loan to a subsidiary of Pfizer Inc. of GBP2.9 billion,
reflecting an on-lend of a portion of the cash received from the
proceeds of the Consumer Healthcare bond issuance in line with Pfizer's
shareholding of the Consumer Healthcare Joint Venture. Net debt reduced
due to GBP1.7 billion free cash flow partly offset by the dividends
paid to shareholders of GBP1.0 billion, GBP0.2 billion of net adverse
exchange impacts from the translation of non-Sterling denominated
debt and exchange on other financing items and additional investments
of GBP0.1 billion.
At 31 March 2022, GSK had short-term borrowings (including overdrafts
and lease liabilities) repayable within 12 months of GBP4.1 billion
with loans of GBP3.9 billion repayable in the subsequent year.
Returns to shareholders
Quarterly dividends
The Board has declared a first interim dividend for 2022 of 14 pence
per share (Q1 2021: 19 pence per share).
As set out at the new GSK Investor Update in June 2021, from 2022
GSK will adopt a progressive dividend policy targeting a dividend
pay-out ratio equivalent to 40 to 60% over the investment cycle.
The dividend policy, the total expected cash distribution, and the
respective dividend pay-out ratios for new GSK and new Consumer Healthcare
remain unchanged.
GSK expects to declare a 27p per share dividend payable by the current
group for the first half. This comprises 22p per share for new GSK
and 5p per share representing Consumer Healthcare during the first
half whilst part of the group. For the second half of 2022, new GSK
continues to expect to declare a 22p per share dividend. As previously
communicated, new GSK would expect to declare a dividend of 45p per
share for 2023.
Following separation, the dividend policy for the new Consumer Healthcare
company will be the responsibility of its Board of Directors and
is expected to be guided by a 30 to 50 per cent pay-out ratio. We
expect a second-half dividend from the new Consumer Healthcare company
equivalent to a pay-out of around 3p per share, subject to its Board's
decisions on the intra-year phasing of dividend payments.
In aggregate, this would represent on the full year 2022 basis the
equivalent of a Group dividend of around 52p per share. Dividends
payable by Consumer Healthcare will only be receivable by shareholders
who remain invested in Consumer Healthcare post-separation and at
the appropriate record dates.
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 29 June 2022. 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 19 May 2022, with a record date of 20
May 2022 and a payment date of 1 July 2022.
Pence
Paid/ per
payable share GBPm
------------- ------- -----
2022
First interim 1 July 2022 14 704
2021
First interim 8 July 2021 19 951
7 October
Second interim 2021 19 951
13 January
Third interim 2022 19 952
Fourth interim 7 April 2022 23 1,157
--- ------
80 4,011
--- ------
Weighted average number of shares
Q1 2022 Q1 2021
millions millions
---------- ----------
Weighted average number of shares
- basic 5,020 4,993
Dilutive effect of share options and
share awards 48 44
---------- ----------
Weighted average number of shares
- diluted 5,068 5,037
---------- ----------
At 31 March 2022, 5,030 million shares (Q1 2021: 5,003 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 1.8 million shares under employee share schemes in the period
for proceeds of GBP17 million (Q1 2021: GBP15 million).
At 31 March 2022 , the ESOP Trust held 53.2 million GSK shares against
the future exercise of share options and share awards. The carrying
value of GBP403 million has been deducted from other reserves. The
market value of these shares was GBP882 million.
At 31 March 2022, the company held 304.9 million Treasury shares
at a cost of GBP4,265 million, which has been deducted from retained
earnings.
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 42.
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
and capitalised development costs)
-- 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 GBP25 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 settlement income; 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 include costs to establish Consumer Healthcare
as an independent business, as well as admission listing and demerger
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. 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. 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 page 15.
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 and cabotegravir-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 2021.
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, dolutegravir and cabotegravir. 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 GBP659 million. Subsequent re-measurements are reflected within
other operating income/(expense) and within Adjusting items in the
income statement in each period.
On 1 February 2022, ViiV Healthcare reached agreement with Gilead
to settle the global patent infringement litigation relating to the
commercialisation of Gilead's Biktarvy. Under the terms of the global
settlement and licensing agreement, Gilead made an upfront payment
of $1.25 billion to ViiV Healthcare in February 2022. In addition,
Gilead will also pay a 3% royalty on all future US sales of Biktarvy
and in respect of the bictegravir component of any other future bictegravir-containing
products sold in the US. These royalties will be payable by Gilead
to ViiV Healthcare from 1 February 2022 until the expiry of ViiV
Healthcare's US Patent No. 8,129,385 on 5 October 2027. Gilead's
obligation to pay royalties does not extend into any period of regulatory
paediatric exclusivity, if awarded.
Cash payments to settle the contingent consideration are made to
Shionogi by ViiV Healthcare each quarter, based on the actual sales
performance and other income 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 2022 were GBP208 million.
As 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 57 and 58 of the Annual Report
2021.
Financial information
Income statements
Q1 2022 Q1 2021
GBPm GBPm
-------- --------
TURNOVER 9,780 7,418
Cost of sales (3,690) (2,480)
-------- --------
Gross profit 6,090 4,938
Selling, general and administration (2,844) (2,427)
Research and development (1,167) (1,118)
Royalty income 139 91
Other operating income 583 209
-------- --------
OPERATING PROFIT 2,801 1,693
Finance income 10 10
Finance expense (212) (201)
Share of after tax (losses)/profits of associates
and joint ventures (1) 16
-------- --------
PROFIT BEFORE TAXATION 2,598 1,518
Taxation (431) (258)
Tax rate % 16.6% 17.0%
-------- --------
PROFIT AFTER TAXATION 2,167 1,260
-------- --------
Profit attributable to non-controlling interests 365 187
Profit attributable to shareholders 1,802 1,073
-------- --------
2,167 1,260
-------- --------
EARNINGS PER SHARE 35.9p 21.5p
-------- --------
Diluted earnings per share 35.6p 21.3p
-------- --------
Statement of comprehensive income
Q1 2022 Q1 2021
GBPm GBPm
-------- --------
Profit for the period 2,167 1,260
Items that may be reclassified subsequently to income
statement:
Exchange movements on overseas net assets and net
investment hedges 267 (267)
Reclassification of exchange movements on liquidation
or disposal of
overseas subsidiaries and associates
Fair value movements on cash flow hedges 194 (11)
Reclassification of cash flow hedges to income statement (1) 14
Deferred tax on fair value movements on cash flow
hedges (44) -
416 (264)
-------- --------
Items that will not be reclassified to income statement:
Exchange movements on overseas net assets of non-controlling
interests 4 (34)
Fair value movements on equity investments (543) 236
Tax on fair value movements on equity investments 47 54
Re-measurement gains on defined benefit plans 313 23
Tax on re-measurement losses on defined benefit
plans (73) (12)
-------- --------
(252) 267
-------- --------
Other comprehensive income for the period 164 3
-------- --------
Total comprehensive income for the period 2,331 1,263
-------- --------
Total comprehensive income for the period attributable
to:
Shareholders 1,962 1,110
Non-controlling interests 369 153
-------- --------
2,331 1,263
-------- --------
Specialty Medicines turnover - three months ended 31 March 2022
Total US Europe International
----------------- ----------------- ---------------- -----------------
Growth Growth Growth Growth
---------- ---------- ---------- ----------
GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER%
----- ---- ---- ----- ---- ---- ---- ---- ---- ----- ---- ----
HIV 1,181 15 14 697 17 13 299 4 8 185 26 30
----- ---- ---- ----- ---- ---- ---- ---- ---- ----- ---- ----
Dolutegravir
products 1,102 11 11 641 11 8 287 3 6 174 30 34
Tivicay 320 6 7 160 (2) (5) 65 (13) (11) 95 51 57
Triumeq 392 (10) (11) 245 (4) (7) 94 (22) (20) 53 (10) (8)
Juluca 133 19 18 99 19 16 30 15 23 4 33 33
Dovato 257 82 82 137 85 78 98 69 76 22 >100 >100
Rukobia 16 >100 >100 15 >100 >100 1 >100 >100 - - -
Cabenuva 38 >100 >100 32 >100 >100 6 - - - - -
Apretude 2 - - 2 - - - - - - - -
Other 23 (28) (19) 7 (42) (33) 5 (29) (14) 11 (15) (8)
Oncology 127 15 15 69 6 3 54 26 30 4 >100 >100
----- ---- ---- ----- ---- ---- ---- ---- ---- ----- ---- ----
Zejula 98 11 11 51 - (4) 43 19 22 4 >100 >100
Blenrep 25 19 19 16 14 14 9 29 29 - - -
Jemperli 4 >100 >100 2 - - 2 >100 >100 - - -
Immuno-
inflammation,
respiratory
and other 520 18 18 347 18 14 84 8 13 89 35 38
----- ---- ---- ----- ---- ---- ---- ---- ---- ----- ---- ----
Benlysta 215 21 18 170 17 14 19 19 19 26 53 53
Nucala 295 16 16 177 18 15 65 5 10 53 26 31
Pandemic 1,307 - - 770 - - 311 - - 226 - -
----- ---- ---- ----- ---- ---- ---- ---- ---- ----- ---- ----
Xevudy 1,307 - - 770 - - 311 - - 226 - -
Specialty Medicines 3,135 98 97 1,883 97 91 748 83 88 504 >100 >100
----- ---- ---- ----- ---- ---- ---- ---- ---- ----- ---- ----
Vaccines turnover - three months ended 31 March 2022
Total US Europe International
----------------- ---------------- ---------------- -----------------
Growth Growth Growth Growth
---------- ---------- ---------- ----------
GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER%
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Meningitis 212 12 12 99 80 75 83 (8) (6) 30 (33) (29)
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Bexsero 163 22 23 66 >100 >100 79 (7) (5) 18 - 11
Menveo 42 8 5 33 37 33 3 (25) (25) 6 (45) (45)
Other 7 (59) (59) - - - 1 - - 6 (63) (63)
Influenza 18 - - 1 >100 >100 - - - 17 (6) (6)
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Fluarix, FluLaval 18 - - 1 >100 >100 - - - 17 (6) (6)
Shingles 698 >100 >100 490 82 77 160 >100 >100 48 78 70
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Shingrix 698 >100 >100 490 82 77 160 >100 >100 48 78 70
Established
Vaccines 741 8 8 302 67 61 166 (11) (8) 273 (15) (14)
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Infanrix, Pediarix 175 29 27 112 75 70 29 (27) (25) 34 6 6
Boostrix 126 34 33 70 63 58 33 (8) (6) 23 53 53
Hepatitis 122 28 27 78 53 47 29 21 25 15 (25) (20)
Rotarix 117 3 5 35 59 55 32 7 10 50 (19) (15)
Synflorix 81 (21) (19) - - - 6 (50) (42) 75 (17) (16)
Priorix, Priorix
Tetra, Varilrix 47 (25) (25) - - - 28 (12) (9) 19 (39) (42)
Cervarix 29 (36) (38) - - - 4 (50) (50) 25 (32) (35)
Other 44 10 13 7 >100 >100 5 25 25 32 (9) (3)
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Pandemic vaccines - - - - - - - - - - - -
Pandemic adjuvant - - - - - - - - - - - -
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Vaccines 1,669 36 36 892 77 71 409 33 38 368 (11) (9)
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
General Medicines turnover - three months ended 31 March 2022
Total US Europe International
----------------- ---------------- ---------------- -----------------
Growth Growth Growth Growth
---------- ---------- ---------- ----------
GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER%
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Respiratory 1,535 3 3 722 6 3 333 (2) 1 480 1 4
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Arnuity Ellipta 13 >100 >100 11 >100 >100 - - - 2 - -
Anoro Ellipta 98 (16) (15) 41 (35) (37) 38 6 8 19 6 11
Avamys/Veramyst 94 (9) (5) - - - 16 - 6 78 (10) (7)
Flixotide/Flovent 127 9 8 85 21 17 18 12 12 24 (23) (16)
Incruse Ellipta 50 (4) (6) 26 (4) (4) 16 (11) (6) 8 14 (14)
Relvar/Breo
Ellipta 275 3 3 120 7 4 83 1 5 72 (3) -
Seretide/Advair 302 (14) (14) 84 (28) (30) 73 (23) (21) 145 4 5
Trelegy Ellipta 340 37 35 238 38 34 53 18 20 49 63 70
Ventolin 201 6 6 117 4 1 30 20 24 54 4 10
Other Respiratory 35 (15) (10) - - - 6 - 17 29 (17) (11)
Other General
Medicines 808 - 3 89 14 12 170 (16) (13) 549 4 8
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Dermatology 92 (8) (5) - - - 27 (21) (18) 65 (2) 2
Augmentin 129 42 51 - - - 36 57 65 93 37 46
Avodart 81 (2) (1) - - - 27 (10) (10) 54 4 6
Lamictal 120 3 3 59 7 4 26 (7) (4) 35 6 9
Other 386 (8) (5) 30 36 36 54 (39) (36) 302 (3) 1
General Medicines 2,343 2 3 811 7 4 503 (7) (4) 1,029 2 6
----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----
Commercial Operations turnover - three months ended 31 March 2022
Total US Europe International
------------------- ------------------ ----------------- --------------------
Growth Growth Growth Growth
----------- ---------- ---------- -------------
GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER% GBPm GBP% CER%
----- ---- ---- ----- ---- ---- ----- ---- ---- ----- ---- -------
Commercial
Operations 7,147 40 40 3,586 62 57 1,660 32 36 1,901 17 20
----- ---- ---- ----- ---- ---- ----- ---- ---- ----- ---- -------
Balance sheet
31 March 31 December
2022 2021
GBPm GBPm
----------- -----------
ASSETS
Non-current assets
Property, plant and equipment 9,964 9,932
Right of use assets 740 740
Goodwill 10,705 10,552
Other intangible assets 30,468 30,079
Investments in associates and joint
ventures 83 88
Other investments 1,656 2,126
Deferred tax assets 5,263 5,218
Derivative financial instruments 16 18
Other non-current assets 1,806 1,676
----------- -----------
Total non-current assets 60,701 60,429
----------- -----------
Current assets
Inventories 6,003 5,783
Current tax recoverable 497 486
Trade and other receivables 8,300 7,860
Derivative financial instruments 176 188
Liquid investments and short term
loans to third parties 3,010 61
Cash and cash equivalents 10,967 4,274
Assets held for sale 35 22
----------- -----------
Total current assets 28,988 18,674
----------- -----------
TOTAL ASSETS 89,689 79,103
----------- -----------
LIABILITIES
Current liabilities
Short-term borrowings (4,102) (3,601)
Contingent consideration liabilities (971) (958)
Trade and other payables (17,577) (17,554)
Derivative financial instruments (152) (227)
Current tax payable (783) (489)
Short-term provisions (693) (841)
----------- -----------
Total current liabilities (24,278) (23,670)
----------- -----------
Non-current liabilities
Long-term borrowings (29,226) (20,572)
Corporation tax payable (184) (180)
Deferred tax liabilities (3,668) (3,556)
Pensions and other post-employment
benefits (2,940) (3,113)
Other provisions (643) (630)
Derivative financial instruments (23) (1)
Contingent consideration liabilities (5,198) (5,118)
Other non-current liabilities (897) (921)
----------- -----------
Total non-current liabilities (42,779) (34,091)
----------- -----------
TOTAL LIABILITIES (67,057) (57,761)
----------- -----------
NET ASSETS 22,632 21,342
----------- -----------
EQUITY
Share capital 1,347 1,347
Share premium account 3,436 3,301
Retained earnings 9,637 7,944
Other reserves 1,761 2,463
----------- -----------
Shareholders' equity 16,181 15,055
Non-controlling interests 6,451 6,287
----------- -----------
TOTAL EQUITY 22,632 21,342
----------- -----------
Statement of changes in equity
Share- Non-
Share Share Retained Other holder's controlling Total
capital premium earnings reserves equity interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- ---------- ---------- ---------- ------------- --------
At 1 January 2022 1,347 3,301 7,944 2,463 15,055 6,287 21,342
Profit for the period 1,802 1,802 365 2,167
Other comprehensive
income/(expense) for
the period 507 (347) 160 4 164
---------- ---------- ---------- ------------- --------
Total comprehensive
income/(expense)
for the period 2,309 (347) 1,962 369 2,331
---------- ---------- ---------- ------------- --------
Distributions to
non-controlling
interests (213) (213)
Contributions from
non-controlling
interests 8 8
Dividends to
shareholders (952) (952) (952)
Shares issued 17 17 17
Shares acquired by
ESOP Trusts 118 704 (822) - -
Realised after tax
losses on disposal
of equity investments (10) 10 - -
Write-down on shares
held by ESOP
Trusts (457) 457 - -
Share-based incentive
plans 99 99 99
At 31 March 2022 1,347 3,436 9,637 1,761 16,181 6,451 22,632
--------- --------- ---------- ---------- ---------- ------------- --------
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
--------- --------- ---------- ---------- ---------- ------------- --------
Cash flow statement
Q1 2022 Q1 2021
GBPm GBPm
-------- --------
Profit after tax 2,167 1,260
Tax on profits 431 258
Share of after tax (losses)/profits of associates
and joint ventures 1 (16)
Net finance expense 202 191
Depreciation, amortisation and other adjusting items 704 361
Decrease in working capital (671) (539)
Contingent consideration paid (185) (192)
Increase/(decrease) in other net liabilities (excluding
contingent
consideration paid) 106 (837)
-------- --------
Cash generated from operations 2,755 486
Taxation paid (213) (155)
-------- --------
Net cash inflow from operating activities 2,542 331
-------- --------
Cash flow from investing activities
Purchase of property, plant and equipment (222) (201)
Proceeds from sale of property, plant and equipment 6 37
Purchase of intangible assets (379) (153)
Proceeds from sale of intangible assets 9 328
Purchase of equity investments (45) (103)
Proceeds from sale of equity investments - 44
Contingent consideration paid (26) (29)
Disposal of businesses 1 3
Cash advances and loans to third parties (2,947) -
Interest received 10 8
Decrease in liquid investments - 18
Net cash outflow from investing activities (3,593) (48)
-------- --------
Cash flow from financing activities
Issue of share capital 17 15
Shares acquired by ESOP Trusts (5) -
Increase in long-term loans 9,205 -
Repayment of short-term loans (249) (5)
Repayment of lease liabilities (59) (49)
Interest paid (85) (95)
Dividends paid to shareholders (952) (946)
Distributions to non-controlling interests (213) (236)
Contributions from non-controlling interests 8 7
Other financing items 306 (67)
-------- --------
Net cash inflow/(outflow) from financing activities 7,973 (1,376)
-------- --------
Increase/(decrease) in cash and bank overdrafts
in the period 6,922 (1,093)
-------- --------
Cash and bank overdrafts at beginning of the period 3,817 5,262
Exchange adjustments 12 (35)
Increase/(decrease) in cash and bank overdrafts 6,922 (1,093)
-------- --------
Cash and bank overdrafts at end of the period 10,751 4,134
-------- --------
Cash and bank overdrafts at end of the period comprise:
Cash and cash equivalents 10,967 4,757
Overdrafts (216) (623)
-------- --------
10,751 4,134
-------- --------
Segment information
Operating segments are reported based on the financial information
provided to the Chief Executive Officer and the responsibilities
of the GSK Leadership Team (GLT). GSK has revised its operating segments
from Q1 2022. Previously, GSK reported results under four segments:
Pharmaceuticals; Pharmaceuticals R&D; Vaccines and Consumer Healthcare.
From the first quarter 2022, GSK reports results under three segments:
Commercial Operations; Total R&D and Consumer Healthcare, and members
of the GLT are responsible for each segment. Comparative information
in this announcement has been retrospectively restated on a consistent
basis.
R&D investment is essential for the sustainability of the business.
However for segment reporting the Commercial operating profits exclude
allocations of globally funded R&D.
The Total 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 includes R&D activities across
Specialty Medicines, including HIV and Vaccines. It includes R&D
and some SG&A costs relating to regulatory and other functions.
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.
Turnover by segment
Q1 2022 Q1 2021 Growth Growth
GBPm GBPm GBP% CER%
-------- -------- ------- -------
Commercial Operations 7,147 5,106 40 40
Consumer Healthcare 2,633 2,312 14 14
-------- -------- ------- -------
Total turnover 9,780 7,418 32 32
-------- -------- ------- -------
Operating profit by segment
Q1 2022 Q1 2021 Growth Growth
GBPm GBPm GBP% CER%
-------- -------- ------- -------
Commercial Operations 3,121 2,451 27 27
Research and Development (1,095) (1,030) 6 6
Consumer Healthcare 650 535 21 26
-------- -------- ------- -------
Segment profit 2,676 1,956 37 38
Corporate and other unallocated
costs (63) (75)
-------- -------- ------- -------
Adjusted operating profit 2,613 1,881 39 39
Adjusting items 188 (188)
-------- -------- ------- -------
Total operating profit 2,801 1,693 65 65
Finance income 10 10
Finance costs (212) (201)
Share of after tax (losses)/profits
of
associates and joint ventures (1) 16
Profit before taxation 2,598 1,518 71 71
-------- -------- ------- -------
Adjusting items reconciling segment profit and operating profit comprise
items not specifically allocated to segment profit. These include
impairment and amortisation of intangible assets; major restructuring
costs, which include impairments of tangible assets and computer
software; transaction-related adjustments related to significant
acquisitions; proceeds and costs of disposals of associates, products
and businesses, significant legal charges and expenses on the settlement
of litigation and government investigations, other operating income
other than royalty income and other items, and separation costs.
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 2021.
At 31 March 2022, the Group's aggregate provision for legal and other
disputes (not including tax matters described on page 14) was GBP0.2
billion (31 December 2021: GBP0.2 billion).
The Group may become involved in significant legal proceedings in
respect of which it is not possible to meaningfully assess whether
the outcome will result in a probable outflow, or to quantify or
reliably estimate the liability, 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.
Significant developments since the date of the Annual Report 2021
are as follows:
Dovato
In September 2019, ViiV Healthcare received a paragraph IV letter
from Cipla Ltd. (Cipla) relating to Dovato and challenging only the
crystal form patent. On 4 November 2019, ViiV Healthcare filed suit
against Cipla in the US District Court for the District of Delaware.
In March 2022, the parties reached a settlement, thereby concluding
the matter.
Juluca
In January 2020, ViiV Healthcare received a paragraph IV letter from
Lupin Ltd. (Lupin) relating to Juluca and challenging the crystal
form patent as well as a patent relating to the combination of dolutegravir
and rilpivirine that expires on 24 January 2031. On 28 February 2020,
ViiV Healthcare filed suit against Lupin on both patents. In March
2022, the parties reached a settlement, thereby concluding the matter.
Additional information
Accounting policies and basis of preparation
This unaudited Results Announcement contains condensed financial
information for the three months ended 31 March 2022, and should
be read in conjunction with the Annual Report 2021, which was prepared
in accordance with United Kingdom adopted International Financial
Reporting Standards. This Results Announcement has been prepared
applying consistent accounting policies to those applied by the Group
in the Annual Report 2021.
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 2021.
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 2021 were published
in the Annual Report 2021, 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 its principal risks have been assessed, with appropriate
mitigation plans put in place. GSK is encouraged by the uptake in
demand in the first quarter for its medicines and vaccines, particularly
Shingrix. Overall, the Company remains confident in the underlying
demand for its medicines and vaccines. GSK is encouraged by the rate
at which COVID-19 vaccinations and boosters have been administered
worldwide, providing support for healthcare systems ahead of the
anticipated return to normal. This continues, however, to be a dynamic
situation with the risk of future variants of concern unknown; these
variants of concern could potentially impact GSK's trading results,
clinical trials, supply continuity, and its employees materially.
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 2022 Q1 2021 2021
-------- -------- -----
Average rates:
US$/GBP 1.34 1.38 1.38
Euro/GBP 1.19 1.14 1.16
Yen/GBP 156 146 151
Period-end rates:
US$/GBP 1.31 1.38 1.35
Euro/GBP 1.18 1.17 1.19
Yen/GBP 160 152 155
During Q1 2022 average Sterling exchange rates were stronger against
the Yen and the Euro but weaker against the US Dollar compared with
the same period in 2021. Period-end Sterling exchange rates were
stronger against the Euro and the Yen and weaker against the US Dollar
compared with the 2021 period-end rates.
Name change
GSK announces that it will change its company name to GSK plc from
GlaxoSmithKline plc from a date in mid-May. A subsequent announcement
will be made when the name change becomes effective. The company's
stock ticker on the LSE and NYSE ("GSK") will not change. No action
is required on the part of any equity holders with respect to their
rights as an equity holder.
Net assets
The book value of net assets increased by GBP1,290 million from GBP21,342
million at 31 December 2021 to GBP22,632 million at 31 March 2022.
This primarily reflected the Total profit for the period, the re-measurement
gains on the defined benefit plans plus an increase in intangible
assets, other non-current assets and trade receivables. These increases
were partially offset by the decrease in fair value of equity investments
and the dividends paid during the period. Cash and cash equivalents
and long term borrowings increased due to the Consumer Healthcare
bond debt issuance.
The carrying value of investments in associates and joint ventures
at 31 March 2022 was GBP83 million (31 December 2021: GBP88 million),
with a market value of GBP83 million (31 December 2021: GBP88 million).
At 31 March 2022, the net deficit on the Group's pension plans was
GBP914 million compared with GBP1,129 million at 31 December 2021.
The decrease in the net deficit primarily relate to increase in the
rates used to discount UK pension liabilities from 2.0% to 2.8%,
and US pension liabilities from 2.7% to 3.7%, partly offset by an
increase in the UK inflation rate from 3.2% to 3.5%, increase in
the US cash balance credit rate from 2.0% to 2.4% and lower UK asset
values.
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 GBP1,040 million (31 December
2021: GBP1,008 million).
Contingent consideration amounted to GBP6,169 million at 31 March
2022 (31 December 2021: GBP6,076 million), of which GBP5,607 million
(31 December 2021: GBP5,559 million) represented the estimated present
value of amounts payable to Shionogi relating to ViiV Healthcare
and GBP529 million (31 December 2021: GBP479 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 2022, GBP947 million (31 December 2021: GBP937
million) is expected to be paid within one year.
Movements in contingent consideration are as follows :
ViiV
Healthcare Group
Q1 2022 GBPm GBPm
------------ ------
Contingent consideration at beginning of the period 5,559 6,076
Re-measurement through income statement 256 304
Cash payments: operating cash flows (183) (185)
Cash payments: investing activities (25) (26)
Contingent consideration at end of the period 5,607 6,169
------------ ------
ViiV
Healthcare Group
Q1 2021 GBPm GBPm
------------ ------
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
------------ ------
Contingent liabilities
There were contingent liabilities at 31 March 2022 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 30.
Business acquisitions
On 13 April 2022, GSK announced it had reached agreement to acquire
Sierra Oncology, Inc. a California-based, late-stage biopharmaceutical
company focused on targeted therapies for the treatment of rare forms
of cancer, for $55 per share of common stock in cash representing
an approximate total equity value of $1.9 billion (GBP1.5 billion).
Under the terms of the agreement, the acquisition will be effected
through a one-step merger in which the shares of Sierra Oncology
outstanding will be cancelled and converted into the right to receive
$55 per share in cash. Subject to customary conditions, including
the approval of the merger by at least a majority of the issued and
outstanding shares of Sierra Oncology, and the expiration or earlier
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, the transaction is expected to close in
the third quarter of 2022 or before.
Reconciliation of cash flow to movements in net debt
Q1 2022 Q1 2021
GBPm GBPm
--------- ---------
Net debt at beginning of the period (19,838) (20,780)
Increase/(decrease) in cash and bank overdrafts 6,922 (1,093)
Decrease in liquid investments - (18)
Net decrease in short-term loans 249 5
Increase in long-term loans (9,205) -
Repayment of lease liabilities 59 49
Cash advances and loans to third parties 2,947 -
Exchange adjustments (427) 466
Other non-cash movements (58) (31)
--------- ---------
Decrease in net debt 487 (622)
--------- ---------
Net debt at end of the period (19,351) (21,402)
--------- ---------
Net debt analysis
31 March 31 December
2022 2021
GBPm GBPm
--------- ------------
Liquid investments 63 61
Cash and cash equivalents 10,967 4,274
Cash advances and loans to third parties 2,947 -
Short-term borrowings (4,102) (3,601)
Long-term borrowings (29,226) (20,572)
---------
Net debt at end of the period (19,351) (19,838)
--------- ------------
Free cash flow reconciliation
Q1 2022 Q1 2021
GBPm GBPm
-------- --------
Net cash inflow from operating activities 2,542 331
Purchase of property, plant and equipment (222) (201)
Proceeds from sale of property, plant and equipment 6 37
Purchase of intangible assets (379) (153)
Proceeds from disposals of intangible assets 9 328
Net finance costs (75) (87)
Dividends from joint ventures and associates - -
Contingent consideration paid (reported in investing
activities) (26) (29)
Distributions to non-controlling interests (213) (236)
Contributions from non-controlling interests 8 7
Free cash flow 1,650 (3)
-------- --------
R&D commentary
GSK focuses on the science of the immune system, human genetics,
and advanced technologies to develop Specialty Medicines and Vaccines
in four core therapeutic areas - Infectious Diseases, HIV, Oncology
and Immunology. GSK remains open to opportunities outside of these
core therapy areas, specifically those opportunities that are aligned
to the Company's focus on the science of the immune system and human
genetic validation. The table below highlights medicines and vaccines
in late-stage (phase III) development by therapy area:
Pipeline overview
Medicines and vaccines 21 Infectious Diseases (11)
in phase III development
(including major lifecycle
innovation or under
regulatory review)
-- Bexsero infants (US) vaccine
-- COVID-19 (Medicago) vaccine candidate
-- COVID-19 (Sanofi) vaccine candidate
-- COVID-19 (SK Bioscience) vaccine
candidate
-- MenABCWY (1st gen) vaccine candidate
-- Menveo liquid vaccine
-- MMR (US) vaccine
-- Rotarix liquid (US) vaccine
-- RSV older adults vaccine candidate
-- gepotidacin (bacterial topoisomerase
inhibitor) uUTI
and GC
-- Xevudy (sotrovimab/VIR-7831) COVID-19
Oncology (4)
-- Blenrep (anti-BCMA ADC) multiple
myeloma
-- Jemperli (PD-1 antagonist) 1L
endometrial cancer
-- Zejula (PARP inhibitor) 1L ovarian,
lung and breast cancer
-- letetresgene-autoleucel (NY-ESO-1
TCR) synovial sarcoma/myxoid/round
cell liposarcoma
Immunology (4)
-- latozinemab (AL001, anti-sortilin)
frontotemporal dementia
-- depemokimab (LA anti-IL5 antagonist)
asthma, eosinophilic granulomatosis
with polyangiitis , chronic rhinosinusitis
with nasal polyps
-- Nucala chronic obstructive pulmonary
disease
-- otilimab (aGM-CSF inhibitor) rheumatoid
arthritis
Opportunity driven (2)
-- daprodustat (HIF-PHI) anaemia of
chronic kidney disease
-- linerixibat (IBATi) cholestatic
pruritus in primary biliary cholangitis
Total vaccines and medicines
in all phases of clinical
development 64
---
Total projects in clinical
development (inclusive
of all phases and indications) 79
--- -------------------------------------------------
Our key growth assets by therapy area
The following outlines several key medicines and vaccines by therapy
area that will help drive growth for GSK to meet its outlooks and
ambition for 2021-2026 and beyond.
Infectious Diseases
bepirovirsen (HBV ASO)
GSK is investigating bepirovirsen for the treatment of chronic hepatitis
B both as a monotherapy (B-Clear) and in combination with existing
treatments (B-Together) with the aim to explore additional combinations
in the future. In April 2022, the Company began the first phase II
combination trial of bepirovirsen and a hepatitis B virus targeted
immunotherapy.
Key trials for bepirovirsen:
Trial name (population) Phase Design Timeline Status
B-Clear bepirovirsen IIb A multi-centre, randomised, Trial start: Active,
monotherapy partial-blind parallel cohort Q3 2020 not recruiting
(chronic hepatitis study to assess the efficacy
B) and safety of treatment with
bepirovirsen in participants
NCT04449029 with chronic hepatitis B
virus
------ ---------------------------------- ------------- ----------------
B-Together bepirovirsen II A multi-centre, randomised, Trial start: Active,
sequential combination open label study to assess Q1 2021 not recruiting
therapy with the efficacy and safety of
Peg-interferon sequential treatment with
phase II (chronic bepirovirsen followed by
hepatitis B) Pegylated Interferon Alpha
2a in participants with chronic
NCT04676724 hepatitis B virus
------ ---------------------------------- ------------- ----------------
Bepirovirsen II A study on the safety, efficacy Trial start: Active,
sequential combination and immune response following Q2 2022 recruiting
therapy with sequential treatment with
targeted immunotherapy an anti-sense oligonucleotide
(chronic hepatitis against chronic hepatitis
B) B (CHB) and chronic hepatitis
B targeted immunotherapy
NCT05276297 (CHB-TI) in CHB patients
receiving nucleos(t)ide analogue
(NA) therapy
------ ---------------------------------- ------------- ----------------
gepotidacin (bacterial topoisomerase inhibitor)
First in class novel antibiotic for the treatment of uncomplicated
urinary tract infections (uUTI) and gonorrhea. Interim analysis for
EAGLE is scheduled in the second half of 2022.
Key phase III trials for gepotidacin:
Trial name (population) Phase Design Timeline Status
EAGLE-1 (uncomplicated III A randomised, multi-centre, Trial start: Recruiting
urogenital gonorrhea) open-label study in adolescent Q4 2019
and adult participants comparing
NCT04010539 the efficacy and safety of
gepotidacin to ceftriaxone
plus azithromycin in the
treatment of uncomplicated
urogenital gonorrhea caused
by neisseria gonorrhoeae
------ ---------------------------------- ------------- -----------
EAGLE-2 (f emales III A randomised, multi-centre, Trial start: Recruiting
with uUTI / parallel-group, double-blind, Q4 2019
acute cystitis) double-dummy study in adolescent
and adult female participants
NCT04020341 comparing the efficacy and
safety of gepotidacin to
nitrofurantoin in the treatment
of uncomplicated urinary
tract infection (acute cystitis)
------ ---------------------------------- ------------- -----------
EAGLE-3 (f emales III A randomised, multi-centre, Trial start: Recruiting
with uUTI / parallel-group, double-blind, Q4 2019
acute cystitis) double-dummy study in adolescent
and adult female participants
NCT04187144 comparing the efficacy and
safety of gepotidacin to
nitrofurantoin in the treatment
of uncomplicated urinary
tract infection (acute cystitis)
------ ---------------------------------- ------------- -----------
MenABCWY vaccine candidate:
GSK is developing two MenABCWY pentavalent (5-in-1) vaccines, the
first generation is in late-stage development, the second generation
in an earlier stage. The goal is to help protect against all five
major disease-causing serogroups. Phase III pivotal results from
the first generation MenABCWY vaccine are expected in the second
half of this year.
Key phase III trials for MenABCWY vaccine candidate:
Trial name (population) Phase Design Timeline Status
MenABCWY - 019 IIIb A randomised, controlled, Trial start: Recruiting
observer-blind study to evaluate Q1 2021
NCT04707391 safety and immunogenicity
of GSK's meningococcal ABCWY
vaccine when administered
in healthy adolescents and
adults, previously primed
with meningococcal ACWY vaccine
------ ------------------------------------- ------------- ----------------
MenABCWY - V72 III A randomised, controlled, Trial start: Active,
72 observer-blind study to demonstrate Q3 2020 not recruiting
effectiveness, immunogenicity
NCT04502693 and safety of GSK's meningococcal
Group B and combined ABCWY
vaccines when administered
to healthy adolescents and
young adults
------ ------------------------------------- ------------- ----------------
RSV vaccine candidates
In February 2022, GSK stopped enrolment and vaccination in trials
evaluating its potential respiratory syncytial virus (RSV) maternal
vaccine candidate in pregnant women. This decision does not impact
the ongoing phase III trial for RSV older adults (60 years and above).
This trial remains on track with an anticipated data readout in the
first half of 2022.
Key phase III trials for RSV older adult and maternal vaccine candidates:
Trial name (population) Phase Design Timeline Status
RSV OA-004 III A randomised, open-label, Trial start: Active,
multi-country study to evaluate not recruiting
the immunogenicity, safety,
reactogenicity and persistence
of a single dose of the RSVPreF3
OA investigational vaccine
and different revaccination
schedules in adults aged
60 years and above
( Adults >=60 Q1 2021
yo)
NCT04732871
------ -------------------------------------- ------------------ -----------------
RSV OA-006 III A randomised, placebo-controlled, Trial start: Active,
observer-blind, multi-country not recruiting
study to demonstrate the
efficacy of a single dose
of GSK's RSVPreF3 OA investigational
vaccine in adults aged 60
years and above
( Adults >=60 Q2 2021
yo)
NCT04886596
------ -------------------------------------- ------------------ -----------------
RSV OA-007 III An open-label, randomised, Trial start: Complete;
controlled, multi-country results
study to evaluate the immune anticipated
response, safety and reactogenicity to be shared
of RSVPreF3 OA investigational 2022+
vaccine when co-administered
with FLU-QIV vaccine in adults
aged 60 years and above
( Adults >=60 Q2 2021
yo)
NCT04841577
------ -------------------------------------- ------------------ -----------------
RSV OA-009 III A randomised, double-blind, Trial start: Active,
multi-country study to evaluate not recruiting
consistency, safety, and
reactogenicity of 3 lots
of RSVPreF3 OA investigational
vaccine administrated as
a single dose in adults aged
60 years and above
( Adults >=60 Q4 2021
yo)
NCT05059301
------ -------------------------------------- ------------------ -----------------
GRACE (pregnant III A randomised, double-blind, Trial start: Stopped
women aged 14-49 placebo-controlled multi-country Q4 2020 enrolment
yo) study to demonstrate efficacy and vaccination
of a single dose of unadjuvanted Trial stopped
NCT04605159 RSV maternal vaccine, administered enrolment
IM to pregnant women 18 to and vaccination:
49 years of age, for prevention Q1 2022
of RSV associated LRTIs in
their infants up to 6 months
of age
------ -------------------------------------- ------------------ -----------------
HIV
cabotegravir
In March 2022, the US Food and Drug Administration (FDA) approved
an updated label for Cabenuva (cabotegravir, rilpivirine) that streamlines
the initiation process for the first and only complete long-acting
HIV treatment by allowing people to start directly with injections
without an optional oral lead-in period. Additionally, the US FDA
also approved Cabenuva for the treatment of HIV-1 in virologically
suppressed adolescents (HIV-1 RNA less than 50 copies per millilitre
[c/mL]) who are 12 years of age or older and weigh at least 35kg
on a stable antiretroviral regimen, with no history of treatment
failure, and with no known or suspected resistance to either cabotegravir
or rilpivirine.
At the Conference on Retroviruses and Opportunistic Infections 2022,
held virtually on 12-16 February, GSK presented data demonstrating
further evidence for the long-acting regimen of Cabenuva administered
every two months. This included the ATLAS-2M 152-week efficacy and
safety findings for the treatment of HIV-1 in virologically suppressed
adults, which builds upon previous 96-week efficacy and safety data.
An investigator-sponsored analysis of adolescent perspectives toward
the long-acting regimen was also presented.
Key phase III trials for cabotegravir:
Trial name (population) Phase Design Timeline Status
HPTN 083 III A double-blind safety and Trial start: Active;
( HIV uninfected efficacy study of injectable Q4 2016 not recruiting;
cisgender men cabotegravir compared to primary
and transgender daily oral tenofovir disoproxil endpoint
women who have fumarate/emtricitabine (TDF/FTC), met (superiority)
sex with men) for Pre-Exposure Prophylaxis
in HIV-uninfected cisgender
NCT02720094 men and transgender women
who have sex with men
------ ----------------------------------- ------------- -----------------------
HPTN 084 III A double-blind safety and Trial start: Active;
( HIV uninfected efficacy study of long-acting Q4 2017 not recruiting;
women who are injectable cabotegravir compared primary
at high risk to daily oral TDF/FTC for endpoint
of acquiring Pre-Exposure Prophylaxis met (superiority)
HIV) in HIV-Uninfected women
NCT03164564
------ ----------------------------------- ------------- -----------------------
ATLAS III A randomised, multi-centre, Trial start: Active;
parallel-group, non-inferiority, Q4 2016 not recruiting;
NCT02951052 open-label study evaluating primary
the efficacy, safety, and endpoint
tolerability of switching met (non-inferiority)
to long-acting cabotegravir
plus long-acting rilpivirine
from current INI- NNRTI-,
or PI-based antiretroviral
regimen in HIV-1-infected
adults who are virologically
suppressed
------ ----------------------------------- ------------- -----------------------
ATLAS-2M IIIb A randomised, multi-centre, Trial start: Active;
parallel-group, non-inferiority, Q4 2017 not recruiting;
NCT03299049 open-label study evaluating primary
the efficacy, safety, and endpoint
tolerability of long-acting met (non-inferiority)
cabotegravir plus long-acting
rilpivirine administered
every 8 weeks or every 4
weeks in HIV-1-infected adults
who are virologically suppressed
------ ----------------------------------- ------------- -----------------------
FLAIR III A randomised, multi-centre, Trial start: Active;
parallel-group, open-label Q4 2016 not recruiting;
NCT02938520 study evaluating the efficacy, primary
safety, and tolerability endpoint
of long-acting intramuscular met (non-inferiority)
cabotegravir and rilpivirine
for maintenance of virologic
suppression following switch
from an integrase inhibitor
single tablet regimen in
HIV-1 infected antiretroviral
therapy naive adult participants
------ ----------------------------------- ------------- -----------------------
Oncology
Blenrep (belantamab mafodotin)
GSK is continuing the DREAMM clinical development programme evaluating
the potential of Blenrep in a broader multiple myeloma (MM) patient
population, including as a monotherapy and in combination with standard
and novel therapies in earlier lines of treatment.
Trial name (population) Phase Design Timeline Status
DREAMM-3 (3L/4L+ III An open-label, randomised Trial start: Recruiting
MM pts who have study to evaluate the efficacy Q2 2020
failed Len + and safety of single agent
PI) belantamab mafodotin compared
to pomalidomide plus low
NCT04162210 dose dexamethasone (pom/dex)
in participants with relapsed/refractory
multiple myeloma
------ ------------------------------------------ ------------- ----------------
DREAMM-7 ( 2L+ III A multi-centre, open-label, Trial start: Active,
MM pts) randomised study to evaluate Q2 2020 not recruiting
the efficacy and safety of
NCT04246047 the combination of belantamab
mafodotin, bortezomib, and
dexamethasone (B-Vd) compared
with the combination of daratumumab,
bortezomib and dexamethasone
(D-Vd) in participants with
relapsed/refractory multiple
myeloma
------ ------------------------------------------ ------------- ----------------
DREAMM-8 ( 2L+ III A multi-centre, open-label, Trial start: Recruiting
MM pts) randomised study to evaluate Q4 2020
the efficacy and safety of
NCT04484623 belantamab mafodotin in combination
with pomalidomide and dexamethasone
(B-Pd) versus pomalidomide
plus bortezomib and dexamethasone
(P-Vd) in participants with
relapsed/refractory multiple
myeloma
------ ------------------------------------------ ------------- ----------------
Jemperli (dostarlimab)
New data for Jemperli was presented at the Society of Gynaecologic
Oncology (SGO) 2022 Annual Meeting on Women's Cancer, held on 18-21
March, in Phoenix, Arizona. A GARNET trial subgroup presentation
included a post-hoc analysis evaluating the antitumour activity and
safety of Jemperli in patients with endometrial cancer by age subgroups.
Additionally, a Jemperli indirect treatment comparison compared the
clinical effectiveness of Jemperli in combination with doxorubicin,
a chemotherapy medicine, in the treatment of advanced or recurrent
endometrial cancer, which may help further contextualize how Jemperli
fits in the recurrent or advanced mismatch repair-deficient (dMMR)
endometrial cancer treatment landscape.
Key phase III trials for Jemperli:
Trial name (population) Phase Design Timeline Status
RUBY III A randomised, double-blind, Trial start: Recruiting
ENGOT-EN6 multi-centre study of dostarlimab Q3 2019
GOG-3031 ( 1L (TSR-042) plus carboplatin-paclitaxel
Stage III or with and without niraparib
IV endometrial maintenance versus placebo
cancer) plus carboplatin-paclitaxel
in patients with recurrent
NCT03981796 or primary advanced endometrial
cancer
------ --------------------------------------- ------------- -----------
Zejula (niraparib)
New data presented at the SGO 2022 Annual Meeting on Women's Cancer
included both the OVARIO and ROYAL trials. OVARIO featured an updated
analysis from this phase II study evaluating Zejula in combination
with bevacizumab, an anti-vascular endothelial growth factor antibody
(VEGFA) targeted cancer medicine, as first-line maintenance therapy
in patients with ovarian cancer following platinum-based chemotherapy
and bevacizumab. ROYAL was a real-world evidence study examining
the evolution of the ovarian cancer treatment paradigm in the US
and Europe from 2017 to 2020. The findings from this study showed
that the use of 1L maintenance PARP inhibitor monotherapy increased
over time and the use of VEGF inhibitor monotherapy decreased over
time. These findings also showed that many patients with advanced
ovarian cancer did not receive 1L maintenance therapy and treatment
patterns vary by country. In addition, GSK's alliance partner Zai
Lab Limited presented a late-breaking oral presentation of the PRIME
phase III trial, which evaluated Zejula (independently manufactured
by Zai Lab) in Chinese patients with newly diagnosed advanced ovarian
cancer using an individualised starting dose. Zejula demonstrated
a statistically significant and clinically meaningful improvement
in progression-free survival (PFS) with a tolerable safety profile
in the overall study population, regardless of biomarker status,
when compared to placebo.
Key phase III trials for Zejula:
Trial name (population) Phase Design Timeline Status
ZEAL-1L ( maintenance III A randomised, double-blind, Trial start: Recruiting
for 1L advanced placebo-controlled, multi-centre Q4 2020
NSCLC) study comparing niraparib
plus pembrolizumab versus
NCT04475939 placebo plus pembrolizumab
as maintenance therapy in
participants whose disease
has remained stable or responded
to first-line platinum-based
chemotherapy with pembrolizumab
for Stage IIIB/IIIC or IV
non-small cell lung cancer
------ ----------------------------------- ------------- ----------------
ZEST ( Her2- III A randomised double-blinded Trial start: Recruiting
with BRCA-mutation, study comparing the efficacy Q2 2021
or TNBC) and safety of niraparib to
placebo in participants with
NCT04915755 either HER2-negative BRCA-mutated
or triple-negative breast
cancer with molecular disease
based on presence of circulating
tumour DNA after definitive
therapy
------ ----------------------------------- ------------- ----------------
FIRST ( 1L ovarian III A randomised, double-blind, Trial start: Active,
cancer maintenance) comparison of platinum-based Q4 2018 not recruiting
therapy with dostarlimab
NCT03602859 (TSR-042) and niraparib versus
standard of care platinum-based
therapy as first-line treatment
of stage III or IV nonmucinous
epithelial ovarian cancer
------ ----------------------------------- ------------- ----------------
Immunology
depemokimab (LA anti-IL5 antagonist)
In Q1 2022, GSK began initiating three additional phase III trials
for depemokimab in eosinophil diseases, one in eosinophilic granulomatosis
with polyangiitis (EGPA) and two in chronic rhinosinusitis with nasal
polyps (CRSwNP) . A fourth study in hypereosinophilic syndrome (HES)
will be initiating in Q2 2022.
Key phase III trials for depemokimab:
Trial name (population) Phase Design Timeline Status
SWIFT-1 (severe III A 52-week, randomised, double-blind, Trial start: Recruiting
eosinophilic placebo-controlled, parallel-group, Q1 2021
asthma) multi-centre study of the
efficacy and safety of d
NCT04719832 epemokimab adjunctive therapy
in adult and adolescent participants
with severe uncontrolled
asthma with an eosinophilic
phenotype
------ -------------------------------------- ------------- -----------
SWIFT-2 (SEA) III A 52-week, randomised, double-blind, Trial start: Recruiting
placebo-controlled, parallel-group, Q1 2021
NCT04718103 multi-centre study of the
efficacy and safety of d
epemokimab adjunctive therapy
in adult and adolescent participants
with severe uncontrolled
asthma with an eosinophilic
phenotype
------ -------------------------------------- ------------- -----------
NIMBLE (SEA) III A 52-week, randomised, double-blind, Trial start: Recruiting
double-dummy, parallel group, Q1 2021
NCT04718389 multi-centre, non-inferiority
study assessing exacerbation
rate, additional measures
of asthma control and safety
in adult and adolescent severe
asthmatic participants with
an eosinophilic phenotype
treated with d epemokimab
compared with mepolizumab
or benralizumab
------ -------------------------------------- ------------- -----------
ANCHOR-1 (CRSwNP) III Efficacy and safety of depemokimab Initiating Initiating
in participants with CRSwNP
NCT05274750
------ -------------------------------------- ------------- -----------
ANCHOR-2 (CRSwNP) III Efficacy and safety of depemokimab Initiating Initiating
in participants with CRSwNP
NCT05281523
------ -------------------------------------- ------------- -----------
OCEAN (EGPA) III Efficacy and safety of depemokimab Initiating Initiating
compared with mepolizumab
NCT05263934 in adults with relapsing
or refractory EGPA
------ -------------------------------------- ------------- -----------
otilimab (aGM-CSF inhibitor)
GSK is investigating otilimab, an anti-GM-CSF monoclonal antibody,
as a potential new treatment for rheumatoid arthritis (RA). We expect
to report results from three phase III studies by the end of 2022.
Key phase III trials for otilimab:
Trial name (population) Phase Design Timeline Status
contRAst-1 III A 52-week, multi-centre, Trial start: Active,
( Moderate to randomised, double blind, Q2 2019 not recruiting
severe RA MTX-IR efficacy and safety study
patients ) comparing otilimab with placebo
and with tofacitinib, in
NCT03980483 combination with methotrexate
in participants with moderately
to severely active rheumatoid
arthritis who have an inadequate
response to methotrexate
------ ------------------------------------- ------------- ----------------
contRAst-2 (Moderate III A 52-week, multi-centre, Trial start: Active,
to severe RA randomised, double blind, Q2 2019 not recruiting
DMARD-IR patients) efficacy and safety study,
comparing otilimab with placebo
NCT03970837 and with tofacitinib in combination
with conventional synthetic
DMARDs, in participants with
moderately to severely active
rheumatoid arthritis who
have an inadequate response
to conventional synthetic
DMARDs or biologic
------ ------------------------------------- ------------- ----------------
contRAst-3 ( III A 24-week, multi-centre, Trial start: Complete;
Moderate to randomised, double-blind, Q4 2019 results
severe RA patients efficacy and safety study, anticipated
IR to biologic comparing otilimab with placebo to be shared
DMARD and/or and with sarilumab, in combination H2 2022
JAKs ) with conventional synthetic
DMARDs, in participants with
NCT04134728 moderately to severely active
rheumatoid arthritis who
have an inadequate response
to biological DMARDs and/or
Janus Kinase inhibitors
------ ------------------------------------- ------------- ----------------
Opportunity driven
daprodustat (oral hypoxia-inducible factor prolyl hydroxylase inhibitor)
The European Medicines Agency (EMA) validated the marketing authorisation
application (MAA) and the US FDA accepted the New Drug Application
(NDA) for daprodustat based on the positive data from the ASC
phase III clinical trial programme. The programme included five pivotal
trials assessing the efficacy and safety of daprodustat for the treatment
of anaemia of chronic kidney disease (CKD). The data confirmed the
potential of daprodustat as a new oral medicine for patients with
anaemia of CKD in both non-dialysis and dialysis settings. The data
were previously presented in November 2021 at the American Society
of Nephrology's Kidney Week 2021 and simultaneously published in
the New England Journal of Medicine.
Trial name (population) Phase Design Timeline Status
ASC-D ( Dialysis III A randomised, open-label Reported Complete;
subjects with (sponsor-blind), active-controlled, primary
anaemia of CKD) parallel-group, multi-centre, endpoint
event driven study in dialysis met
NCT02879305 subjects with anemia associated
with chronic kidney disease
to evaluate the safety and
efficacy of daprodustat compared
to recombinant human erythropoietin,
following a switch from erythropoietin-stimulating
agents
------ ---------------------------------------------------- --------- ----------
ASC-ID ( III A 52-week open-label (sponsor-blind), Reported Complete;
Incident Dialysis randomised, active-controlled, primary
subjects with parallel-group, multi-centre endpoint
anaemia of CKD) study to evaluate the efficacy met
and safety of daprodustat
NCT03029208 compared to recombinant human
erythropoietin in subjects
with anaemia of chronic kidney
disease who are initiating
dialysis
------ ---------------------------------------------------- --------- ----------
ASC-TD ( III A randomised, double-blind, Reported Complete;
Dialysis subjects active-controlled, parallel-group, primary
with anaemia multi-centre study in hemodialysis endpoint
of CKD) participants with anaemia met
of chronic kidney disease
NCT03400033 to evaluate the efficacy,
safety and pharmacokinetics
of three-times weekly dosing
of daprodustat compared to
recombinant human erythropoietin,
following a switch from recombinant
human erythropoietin or its
analogs
------ ---------------------------------------------------- --------- ----------
ASC-ND ( III A randomised, open-label Reported Complete;
Non-dialysis (sponsor-blind), active-controlled, primary
subjects with parallel-group, multi-centre, endpoint
anaemia of CKD) event driven study in non-dialysis met
subjects with anaemia of
NCT02876835 chronic kidney disease to
evaluate the safety and efficacy
of daprodustat compared to
darbepoetin alfa
------ ---------------------------------------------------- --------- ----------
ASC-NHQ ( III A 28-week, randomised, double-blind, Reported Complete;
Non-dialysis placebo-controlled, parallel-group, primary
subjects with multi-centre, study in recombinant endpoint
anaemia of CKD) human erythropoietin (rhEPO) met
naïve non-dialysis participants
NCT03409107 with anemia of chronic kidney
disease to evaluate the efficacy,
safety and effects on quality
of life of daprodustat compared
to placebo
------ ---------------------------------------------------- --------- ----------
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 20 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 33.
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. GBP% or AER% represents
growth at actual exchange rates.
Net debt
Net debt is defined as total borrowings less cash, cash equivalents,
liquid investments, and short-term loans to third parties that are
subject to an insignificant risk of change in value.
COVID-19 solutions
COVID-19 solutions include the sales of pandemic adjuvant and other
COVID-19 solutions including vaccine manufacturing and Xevudy and
the associated costs but does not include reinvestment in R&D. This
categorisation is used by management and we believe is helpful to
investors through providing clarity on the results of the Group by
showing the contribution to growth from COVID-19 solutions.
New GSK
New GSK refers to the current GSK group excluding the Consumer Healthcare
business that is intended to be (or will have been) demerged.
General Medicines
General Medicines are usually prescribed in the primary care or community
settings by general healthcare practitioners. For GSK, this includes
medicines in inhaled respiratory, dermatology, antibiotics and other
diseases.
Specialty Medicines
Specialty Medicines are typically prescription medicines used to
treat complex or rare chronic conditions. For GSK, this comprises
medicines in infectious diseases, HIV, oncology, immunology and respiratory.
Organic revenue growth
Organic growth represents revenue growth as determined under IFRS
excluding the impact of acquisitions, divestments and closures of
brands or businesses, revenue attributable to manufacturing service
agreements relating to divestments and the closure of sites or brands,
at CER.
Biopharma
Biopharma refers to sales in Commercial Operations.
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.
Guidance, assumptions and cautionary statements
2022 guidance
For new GSK we expect sales to grow between 5% to 7% CER and Adjusted
operating profit to grow between 12% to 14% CER as compared with
2021. This guidance is provided at CER and excludes the commercial
benefit of COVID-19 solutions.
Assumptions related to 2022 guidance
In outlining the guidance for 2022, 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 also assumes that the demerger of our Consumer Healthcare business
will be delivered in July 2022 and this guidance relates only to
new GSK.
The Group has made planning assumptions for 2022 that healthcare
systems will approach normality as the year progresses, and we expect
sales of Specialty Medicines to grow approximately 10% CER and sales
of General Medicines to show a slight decrease, primarily reflecting
increased genericisation of established Respiratory medicines. Vaccines
sales are expected to grow at a low teens percentage at CER for the
year. However, as noted at the time of announcing full-year 2021
results, we anticipated governments' prioritisation of COVID-19 vaccination
programmes and ongoing measures to contain the pandemic would result
in some continued disruption to adult immunisations. In the first-quarter
2022 Shingrix demonstrated strong demand recovery, particularly in
the US, as well as channel inventory build and the benefit of a favourable
comparator to Q1 2021. Despite the potential for short-term pandemic
disruption, we continue to expect strong double-digit growth and
record annual sales for Shingrix in 2022 based on strong demand in
existing markets and continued geographical expansion. Guidance also
includes the future benefit in royalty income from the settlement
and license agreement with Gilead announced on 1 February 2022.
These planning assumptions as well as operating profit 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) and no change in the Group's shareholdings in ViiV Healthcare.
The assumptions also assume no material changes in the healthcare
environment or unexpected significant changes in pricing as a result
of government or competitor action. The 2022 guidance factors in
all divestments and product exits announced to date.
The Group's guidance assumes successful delivery of the Group's integration
and restructuring plans. It also assumes that the separation programme
to deliver the demerger of the Consumer Healthcare business is 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 guidance, outlooks, ambitions and expectations
described in this report are achievable based on those assumptions.
However, given the forward-looking nature of these guidance, outlooks,
ambitions 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 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 '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.
All outlooks, ambitions considerations should be read together with;
for Haleon the section "Assumptions and cautionary statement and
regarding forward-looking statements" on page 163 of the Haleon Capital
Markets Day all presentation slides dated 28 February 2022, and for
GSK pages 5-7 of the Stock Exchange announcement relating to an update
to investors dated 23 June 2021 and the Guidance, assumptions and
cautionary statements of our Q2 2021 earnings release.
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 2021 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 of
the Company for the three months ended 31 March 2022.
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 2022 on pages 22 to 23;
-- the balance sheet as at 31 March 2022 on page 26;
-- the statement of changes in equity for the three month period
then ended on page 27;
-- the cash flow statement for the three month period then ended
on page 28 and;
-- the accounting policies and basis of preparation and the explanatory
notes to the condensed financial information on pages 24 to 25
and 29 to 33 that have been prepared applying consistent accounting
policies to those applied by the Group in the Annual Report 2021,
which was prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the United Kingdom.
We have read the other information contained in the Results Announcement,
including the non-IFRS measures contained on pages 24 to 25 and 29
to 33, 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 2021, which are prepared
in accordance with IFRS as adopted by the United Kingdom.
Our responsibility
Our responsibility is to express to the Company a conclusion on the
interim 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 2022 are not prepared,
in all material respects in accounting policies set out in the accounting
policies and basis of preparation section on page 31.
Deloitte LLP
Statutory Auditor
London, United Kingdom
27 April 2022
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END
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