Press Release
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the period ending 23rd July 2008
GlaxoSmithKline plc
(Name of registrant)
980 Great West Road,
Brentford,
Middlesex, TW8 9GS
(Address of principal executive offices)
Indicate by check mark if the registrant files or will file annual reports under cover Form 20-F or Form 40-F
Form 20-Fx Form 40-Fo
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yeso Nox
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorised.
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Date: July 23rd 2008 |
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GlaxoSmithKline plc (Registrant) |
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By: |
/s/ Victoria Whyte
VICTORIA WHYTE
Authorised Signatory for and on behalf of GlaxoSmithKline plc |
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Issued: Wednesday, 23rd July 2008, London, U.K.
Results announcement and interim management report
for the second quarter and half year 2008
GSK delivers Q2 business performance
EPS of 27.2p, up 5% CER
New strategic priorities announced |
Business performance results*
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Q2 2008 |
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Growth |
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H1 2008 |
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Growth |
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£m |
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CER% |
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£% |
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£m |
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CER% |
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£% |
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Turnover |
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5,874 |
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(2 |
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4 |
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11,560 |
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(2 |
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3 |
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Earnings per share |
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27.2p |
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5 |
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13 |
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52.9p |
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(3 |
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4 |
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Statutory results (including restructuring charges)
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Q2 2008 |
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Growth |
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H1 2008 |
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Growth |
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£m |
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CER% |
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£% |
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£m |
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CER% |
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£% |
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Turnover |
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5,874 |
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(2 |
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4 |
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11,560 |
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(2 |
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3 |
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Earnings per share |
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24.6p |
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(6 |
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3 |
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49.0p |
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(10 |
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(4 |
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The full results are presented under Income Statement on pages 7 and 16
Q2 business performance summary
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New strategic priorities designed to strengthen and balance GSKs
business and deliver sustainable long-term financial performance |
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GSK on track to meet financial guidance for 2008 |
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Q2 revenue down 2% CER, adversely impacted by generic competition
in the USA and lower Avandia sales |
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Significant progress in transition of pharmaceutical portfolio:
12 approvals so far in 2008 including Entereg, Kinrix, Rotarix,
Treximet (USA) and Prepandrix, Tyverb (EU); almorexant for sleep
disorders added to late-stage pipeline |
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Major new collaboration with Aspen in Emerging Markets; disposal
of 4 products for £170 million |
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Timeline for completion of remaining £6.5 billion repurchase
under current share buy-back programme extended beyond July 2009
to enable investment in strategic priorities |
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Progressive dividend policy continues with Q2 dividend of 13p, +8% |
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* |
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Business performance, which is a supplemental measure, is the primary
performance measure used by management and is presented after
excluding restructuring charges relating to the new Operational
Excellence programme, which commenced in October 2007, and significant
acquisitions. Management believes that exclusion of these items
provides a better reflection of the way in which the business is
managed and gives a more useful indication of the underlying
performance of the Group.
In order to illustrate underlying performance, it is the Groups
practice to discuss its results in terms of constant exchange rate
(CER) growth. All commentaries are presented in terms of CER growth
and compare 2008 business performance results with 2007 statutory
results, unless otherwise stated. See Accounting Presentation and
Policies on page 28. |
Chief Executive Officers Review
GlaxoSmithKline is responding well to the challenges it is facing this year.
In Q2, the robust underlying performance of the company is helping to offset
the anticipated increase in generic competition to products in the USA and a
decline in Avandia sales.
We are also responding to the wider challenges of the pharmaceutical industry
through our good progress in the development and delivery of new products from
our strong late stage pipeline. However, it is clear that these challenges
together with the evolving dynamics of our industry environment require
fundamental changes to the way we operate. Today, I have set out three new
strategic priorities for GSK, which aim to increase growth, reduce risk and
improve GSKs long-term financial performance:
1. Grow a diversified global business
2. Deliver more products of value
3. Simplify GSKs operating model
A separate press release, also issued today, explains in more depth the
thinking behind these strategic priorities and from today we will begin to
report the companys progress against these priorities.
Grow a diversified global business
We are seeing a significant change in the composition of our pharmaceuticals
portfolio, particularly in the USA, as an increasing number of products
encounter generic competition. We are very focused on effectively managing
this transition, particularly through the delivery of new products from our
late-stage pipeline (full details of which are set out on page 11).
So far this year, we have achieved 12 regulatory approvals for a broad range of
products that include Entereg, Kinrix, Rotarix, Treximet, and Prepandrix.
European approval of Tyverb, for advanced breast cancer, this quarter was also
of particular significance for GSK. This level of progress is at the forefront
of the industry and builds on the 10 product approvals we received in 2007.
At the same time, we continue to seek opportunities to drive growth in our
existing portfolio. In April, we received FDA approval for expanded use of
Advair for reduction of exacerbations in COPD, a disease forecast to be the 3rd
leading cause of mortality in the world by 2015. We also gained approval for
expanded use of Avodart, in combination with tamsulosin, in the USA and several
European countries. Reinforcing our leadership in the migraine therapy area,
we launched Treximet in the USA this quarter. Patients with migraines
typically suffer for between 4 and 72 hours and Treximet has real benefit by
offering pain relief after just 2 hours and maintains relief for 24 hours.
Regarding Avandia, whilst the outlook for future performance remains uncertain,
we continue to see supportive independent long-term data for its use as a
treatment for diabetes. At this years American Diabetes Association meeting,
two cardiovascular outcome studies involving over 20,000 years of patient
experience with Avandia in a high-risk population were presented demonstrating
no related increase in risk of mortality. Of further note, was the FDAs
decision to include long-term efficacy and safety data from GSKs ADOPT study
into the US label. These data confirmed that patients achieved greater
sustained glycemic control with Avandia compared to either metformin or
sulphonylurea.
We are also striving to maximise the value of our pharmaceuticals business
through divestment of non-core assets and product acquisitions. This quarter,
we divested four products, which no longer hold patent protection, for £170
million. We also saw the benefit of last years acquisition of Lovaza, a
treatment for adult patients with very high levels of triglycerides, which
contributed sales of £67 million.
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Issued: Wednesday, 23rd July 2008, London, U.K.
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2 |
It is our intention to unlock the geographic potential of our business,
particularly in fast-growing emerging markets. Today, we concluded a
transformational agreement with Aspen, which gives GSK priority access to
commercialise assets from its large portfolio and pipeline of brands. This is a
significant step in our new strategy to accelerate growth in emerging markets
and accompanies several other initiatives including the recent establishment of
a new dedicated business model within GSK for these countries.
GSKs Vaccines division continues to perform strongly, and with increasing
demand for preventative healthcare, GSK is well placed to benefit from this
major source of future market growth.
Our second quarter performance exemplified the breadth of GSKs current vaccine
portfolio with sales growth coming from several vaccines including those for
Hepatitis and Infanrix/Pediarix. Vaccine sales this quarter also benefited from
the timing of certain shipments to European and International markets.
This business has a strong pipeline and we are seeing good uptake of our next
generation vaccines. Sales of Rotarix for example grew strongly in the second
quarter and, following approval by the FDA in April, this vaccine will shortly
be available to provide early protection to the many thousands of infants at
risk of rotavirus in the USA.
In June, GSK won a significant tender for use of Cervarix in the UKs national
immunisation programme to protect against cervical cancer and we are making
good progress in competitive tenders across Europe. Last month we progressed
our application for Cervarix in the USA, submitting our response to questions
raised by the FDA in their Complete Response Letter. We have also decided to
submit final data from our phase III pivotal efficacy study for inclusion in
the review and product label. We expect to submit these data by the first half
of 2009.
This quarter, GSK became the first company to obtain a European licence for a
pre-pandemic H5N1 influenza vaccine, testament to our efforts in this critical
area of public health. Prepandrix has the ability to raise immune protection
against potential drift H5N1 strains, thereby providing governments with the
ability to protect people in advance or at the onset of an officially declared
influenza pandemic.
Our presence in Consumer Healthcare continues to provide us with competitive
advantage in todays healthcare environment. Budgetary pressures are leading
governments to consider wider use of over-the-counter products in established
markets; whilst economic improvement is driving increased demand in emerging
markets for these products. This latter point is clearly demonstrated by our
second quarter performance, with strong demand seen for our consumer healthcare
products in Central and Eastern Europe, India, the Middle East and Asia.
In reported terms, overall sales for Consumer Healthcare this quarter were down
1%, principally due to lower sales of alli and smoking cessation products;
excluding these items Consumer Healthcare sales grew 7% in the quarter.
We continue to see strong underlying consumer demand for alli, our new weight
loss treatment. However, reported sales this quarter were impacted by lower
demand from retailers for stock following a year-end promotion and an adverse
comparison to Q2 2007, which benefited from stocking ahead of the products
launch in June. Consumer Healthcare sales growth was also affected by
continued competition in the USA to our smoking cessation franchise. It is our
expectation that with the initiatives we have planned for these brands,
reported growth will improve in both these areas during the second half of the
year.
Sales in other areas and geographies remain strong, with the investments we
have made to globalise our brands and produce innovative brand extensions
clearly helping drive sales growth. The successful global rollouts of Sensodyne
Pronamel and Breathe Right are evidence of this, as is the launch of new
Lucozade Alert. It is our intention to accelerate this type of activity through
increased investment in the business.
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Issued: Wednesday, 23rd July 2008, London, U.K.
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3 |
Deliver more products of value
Improving GSKs R&D productivity remains our priority and a potential source of
competitive advantage. During the quarter, we saw positive progress for two
late stage assets. An FDA Oncology Drugs Advisory Committee voted unanimously
in favour of the risk-benefit profile for use of Promacta as a short-term
treatment for chronic ITP. We also submitted filings for Rezonic/Zunrisa, a new
treatment to prevent chemotherapy induced nausea and vomiting, with regulators
in the USA and Europe.
Today we have also announced significant changes in our R&D organisation.
Following a review, GSK is now focussed around 8 therapy areas:
Immuno-Inflammation, Neuroscience, Metabolic Pathways, Oncology, Respiratory,
Infectious Disease, Ophthalmology and Biopharmaceuticals.
We have also established new Drug Performance Units (DPU) within our Centres of
Excellence for Drug Discovery (CEDD). These units focus on a given biological
pathway and comprise between 5 80 scientists. They build on the success of
GSKs CEDD model and we believe will further optimise drug discovery research.
A new global Drug Discovery Investment Board, which is tasked to ensure that
investment capital is allocated in a disciplined way to competing research
teams, has been established. The Board comprises senior GSK R&D leaders and
individuals from outside the company operating in the venture capital and
Biotech/Pharma investment world.
We continue to seek access to the best science, strengthen our pipeline and
balance risk through increased collaboration with external R&D partners. In
June, we completed the acquisition of Sirtris, a world leading company in the
field of sirtuins, and started a five-year collaboration with the Immune
Disease Institute in Boston in immuno-inflammation research. As part of
continuing efforts to tap into the highest quality thinking in academia and
explore alternative drug development models, this week we signed an innovative
agreement with the University of Cambridge to develop a new potential therapy
for obesity and addictive disorders.
Finally, this month, we also made a significant addition to our late-stage
pipeline, through an agreement with Actelion to co-develop and co-commercialise
almorexant, a potential
first-in-class treatment for insomnia.
Simplify GSKs operating model
To support our first two strategic priorities and meet the demands of our
future environment it is clear that we must create a new operating model for
GSK that can support a more diverse and globalised business. We have therefore
established a new priority that focuses on simplifying our organisation.
Spanning the entire business, we have commenced a series of activities to
improve the efficiency of our operations. These activities are in addition to
the ongoing restructuring programme and are seeking to further improve
manufacturing efficiency, free up internal resource, establish new commercial
and support functions, and adopt a new pan-business approach to cost savings.
We have also commenced a project to generate substantial working capital
savings.
Financial strategy
We are committed to a more efficient balance sheet and to increasing returns to
shareholders through our progressive dividend policy. This quarters dividend
was increased 8% to 13 pence. Further available free cash flow and debt
capacity will be used to invest firstly in our new strategic priorities and
secondly in other cash returns to shareholders.
To ensure we have sufficient flexibility to deliver our priorities, we plan to
vary the pace of our remaining £6.5 billion share repurchases according to the
investment opportunities available. We therefore now anticipate the full £12
billion programme will be completed after the previously anticipated end date
of July 2009. We currently expect to repurchase around £1 billion of shares in
the last five months of this year.
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Issued: Wednesday, 23rd July 2008, London, U.K.
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4 |
Incremental investment opportunities to support our strategic priorities are
expected to include bolt-on acquisitions, other investments and
collaborations. All investment opportunities will be assessed against strict
financial criteria and against our long-term objective of increasing growth
and reducing risk for the company.
Outlook
In summary, we are responding to the challenges faced by GSK this year and are
seeing good progress, particularly in terms of pipeline output and product
approvals. In broader terms, it is clear that GSK can, and must, do more to
improve shareholder value. I believe our new strategic priorities will drive
the changes GSK needs to make and enable us to realise the opportunities we see
in the future healthcare environment.
Andrew Witty
Chief Executive Officer
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Issued: Wednesday, 23rd July 2008, London, U.K.
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5 |
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Contents |
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GlaxoSmithKline (GSK) together with its subsidiary undertakings, the Group
one of the worlds leading research-based pharmaceutical and healthcare
companies is committed to improving the quality of human life by enabling
people to do more, feel better and live longer. GlaxoSmithKlines website
www.gsk.com gives additional information on the Group. Information made
available on the website does not constitute part of this document.
An interview with Andrew Witty in video/audio is available from 2:30pm on 23rd
July 2008 on: www.gsk.com and on www.cantos.com.
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Enquiries:
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UK Media
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Philip Thomson
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(020) 8047 5502 |
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Claire Brough
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(020) 8047 5502 |
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Alice Hunt
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(020) 8047 5502 |
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Gwenan White
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(020) 8047 5502 |
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US Media
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Nancy Pekarek
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(215) 751 7709 |
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Mary Anne Rhyne
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(919) 483 2839 |
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European Analyst / Investor
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David Mawdsley
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(020) 8047 5564 |
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Sally Ferguson
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(020) 8047 5543 |
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Gary Davies
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(020) 8047 5503 |
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US Analyst / Investor
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Frank Murdolo
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(215) 751 7002 |
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Tom Curry
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(215) 751 5419 |
Brand names
Brand names appearing in italics throughout this document are trademarks of GSK or
associated companies with the exception of Levitra, a trademark of Bayer,
Bonviva/Boniva, a trademark of Roche, and Vesicare, a trademark of Astellas
Pharmaceuticals in many countries and of Yamanouchi Pharmaceuticals in certain
countries, all of which are used under licence by the Group.
Cautionary statement regarding forward-looking statements
Under the safe harbor provisions of the US Private Securities Litigation Reform Act
of 1995, the company cautions investors that any forward-looking statements or
projections made by the company, including those made in this Announcement, are
subject to risks and uncertainties that may cause actual results to differ materially
from those projected. Factors that may affect the Groups operations are described
under Risk Factors in the Business Review in the companys Annual Report on Form
20-F for 2007 and are summarised in the list on page 28.
GlaxoSmithKline plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom
Registered in England and Wales Registered number: 3888792
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Issued: Wednesday, 23rd July 2008, London, U.K.
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6 |
Income statement
Three months ended 30th June 2008
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Business |
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performance |
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Restructuring |
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Statutory |
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Q2 2007 |
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Q2 2008 |
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Growth |
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Q2 2008 |
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Q2 2008 |
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(restated) |
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£m |
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CER% |
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£m |
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£m |
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£m |
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Turnover: |
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Pharmaceuticals |
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4,923 |
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(2 |
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4,923 |
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4,759 |
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Consumer Healthcare |
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951 |
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(1 |
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951 |
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915 |
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TURNOVER |
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5,874 |
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(2 |
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5,874 |
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5,674 |
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Cost of sales |
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(1,375 |
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8 |
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(138 |
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(1,513 |
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(1,212 |
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Gross profit |
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4,499 |
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(5 |
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(138 |
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4,361 |
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4,462 |
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Selling, general and administration |
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(1,765 |
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(8 |
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(31 |
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(1,796 |
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(1,841 |
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Research and development |
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(802 |
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(1 |
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(18 |
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(820 |
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(789 |
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Other operating income |
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194 |
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194 |
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97 |
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Operating profit: |
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Pharmaceuticals |
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1,960 |
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4 |
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(186 |
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1,774 |
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1,754 |
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Consumer Healthcare |
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166 |
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(15 |
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(1 |
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165 |
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175 |
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OPERATING PROFIT |
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2,126 |
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2 |
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(187 |
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1,939 |
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1,929 |
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Finance income |
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96 |
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96 |
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77 |
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Finance expense |
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(214 |
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(214 |
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(121 |
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Share of after tax profits of associates
and joint ventures |
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15 |
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15 |
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11 |
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PROFIT BEFORE TAXATION |
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2,023 |
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(2 |
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(187 |
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1,836 |
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1,896 |
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|
|
|
|
|
|
|
Taxation |
|
|
(577 |
) |
|
|
|
|
|
|
48 |
|
|
|
(529 |
) |
|
|
(541 |
) |
Tax rate % |
|
|
28.5 |
% |
|
|
|
|
|
|
|
|
|
|
28.8 |
% |
|
|
28.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION FOR THE PERIOD |
|
|
1,446 |
|
|
|
(2 |
) |
|
|
(139 |
) |
|
|
1,307 |
|
|
|
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to minority interests |
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
21 |
|
|
|
22 |
|
Profit attributable to shareholders |
|
|
1,425 |
|
|
|
|
|
|
|
(139 |
) |
|
|
1,286 |
|
|
|
1,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,446 |
|
|
|
|
|
|
|
(139 |
) |
|
|
1,307 |
|
|
|
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
27.2p |
|
|
|
5 |
|
|
|
|
|
|
|
24.6p |
|
|
|
24.0p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
27.0p |
|
|
|
|
|
|
|
|
|
|
|
24.4p |
|
|
|
23.7p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
7 |
Operating profit business performance Q2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2008 |
|
|
Q2 2007 |
|
|
Growth |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
£m |
|
|
turnover |
|
|
£m |
|
|
turnover |
|
|
CER% |
|
|
£% |
|
Turnover |
|
|
5,874 |
|
|
|
100.0 |
|
|
|
5,674 |
|
|
|
100.0 |
|
|
|
(2 |
) |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(1,375 |
) |
|
|
(23.4 |
) |
|
|
(1,212 |
) |
|
|
(21.4 |
) |
|
|
8 |
|
|
|
13 |
|
Selling, general and administration |
|
|
(1,765 |
) |
|
|
(30.0 |
) |
|
|
(1,841 |
) |
|
|
(32.4 |
) |
|
|
(8 |
) |
|
|
(4 |
) |
Research and development |
|
|
(802 |
) |
|
|
(13.7 |
) |
|
|
(789 |
) |
|
|
(13.9 |
) |
|
|
(1 |
) |
|
|
2 |
|
Other operating income |
|
|
194 |
|
|
|
3.3 |
|
|
|
97 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
2,126 |
|
|
|
36.2 |
|
|
|
1,929 |
|
|
|
34.0 |
|
|
|
2 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business performance operating margin increased 2.2 percentage points, as
sterling operating profit increased 10% while sterling turnover increased 4%.
Cost of sales as a percentage of turnover increased by 2.0 percentage points,
reflecting generic competition to higher margin products and lower Avandia
sales.
SG&A costs as a percentage of turnover decreased 2.4 percentage points compared
with Q2 2007. SG&A fell by 8% owing to lower legal charges and the benefits
arising from the new operational excellence programme. There was a £3 million
credit from legal, reflecting a number of settlements achieved in the quarter,
compared with a £103 million charge in Q2 2007. SG&A costs excluding legal fell
by 2% compared with Q2 2007.
R&D expenditure decreased 0.2 percentage points as increased investment in
vaccines R&D was offset by savings from the operational excellence programme
elsewhere. Pharmaceuticals R&D expenditure in the quarter represented 15.7%
(Q2 2007: 16.0%) of pharmaceutical turnover.
Other operating income includes royalty income, equity investment disposals and
impairments, product disposals and fair value adjustments to financial
instruments. Other operating income was £194 million in Q2 2008 (Q2 2007: £97
million). Other operating income in Q2 2008 included royalty income of £68m
(Q2 2007: £49m), product disposals, including the disposal of non patent
protected products to Aspen, of £162 million (Q2 2007: £34 million), adverse
fair value movements on derivative financial instruments of £34 million (Q2
2007: £12 million adverse) and equity investment disposals of £5 million (Q2
2007: £21 million).
The operating profit in Consumer Healthcare fell by 15% compared with Q2 2007
as a result of the adverse comparison with last year on alli and increased
investments in new product launches.
Operating profit statutory results
Statutory operating profit for Q2 2008 was £1,939 million, up 1% in sterling
terms but down 7% CER compared with Q2 2007. This included £187 million of
restructuring charges related to the new operational excellence programme and
Reliant Pharmaceuticals; £138 million was charged to cost of sales, £31 million
to SG&A and £18 million to R&D. There were no such charges in Q2 2007.
Currency impact
The 8 percentage point difference between CER and sterling business performance
EPS growth in the quarter arose from the strength of the Euro, the Yen and a
number of other currencies against Sterling.
The Q2 2008 results are based on exchange rates disclosed on page 25. If
exchange rates were to hold at the average Q2 2008 levels for the rest of the
year, the positive currency impact on business performance EPS growth for the
full year would be around 7 percentage points.
2008 earnings guidance
GSK continues to expect a mid-single digit percentage decline in business
performance EPS at constant exchange rates.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
8 |
Turnover
Pharmaceuticals
including vaccines
Three months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
USA |
|
|
Europe |
|
|
Rest of World |
|
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
Respiratory |
|
|
1,383 |
|
|
|
4 |
|
|
|
616 |
|
|
|
4 |
|
|
|
497 |
|
|
|
|
|
|
|
270 |
|
|
|
12 |
|
Seretide/Advair |
|
|
964 |
|
|
|
6 |
|
|
|
473 |
|
|
|
2 |
|
|
|
355 |
|
|
|
4 |
|
|
|
136 |
|
|
|
31 |
|
Flixotide/Flovent |
|
|
158 |
|
|
|
(3 |
) |
|
|
68 |
|
|
|
5 |
|
|
|
43 |
|
|
|
(7 |
) |
|
|
47 |
|
|
|
(9 |
) |
Serevent |
|
|
66 |
|
|
|
(11 |
) |
|
|
16 |
|
|
|
(11 |
) |
|
|
34 |
|
|
|
(11 |
) |
|
|
16 |
|
|
|
(12 |
) |
Veramyst |
|
|
17 |
|
|
|
89 |
|
|
|
14 |
|
|
|
56 |
|
|
|
1 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
Flixonase/Flonase |
|
|
65 |
|
|
|
13 |
|
|
|
33 |
|
|
|
32 |
|
|
|
16 |
|
|
|
(13 |
) |
|
|
16 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-virals |
|
|
751 |
|
|
|
(5 |
) |
|
|
355 |
|
|
|
(2 |
) |
|
|
218 |
|
|
|
(12 |
) |
|
|
178 |
|
|
|
(2 |
) |
HIV |
|
|
361 |
|
|
|
(6 |
) |
|
|
142 |
|
|
|
(10 |
) |
|
|
164 |
|
|
|
(2 |
) |
|
|
55 |
|
|
|
(7 |
) |
Epzicom/Kivexa |
|
|
104 |
|
|
|
24 |
|
|
|
39 |
|
|
|
6 |
|
|
|
54 |
|
|
|
33 |
|
|
|
11 |
|
|
|
71 |
|
Combivir |
|
|
104 |
|
|
|
(15 |
) |
|
|
41 |
|
|
|
(18 |
) |
|
|
44 |
|
|
|
(19 |
) |
|
|
19 |
|
|
|
|
|
Trizivir |
|
|
50 |
|
|
|
(23 |
) |
|
|
23 |
|
|
|
(25 |
) |
|
|
24 |
|
|
|
(13 |
) |
|
|
3 |
|
|
|
(60 |
) |
Agenerase, Lexiva |
|
|
38 |
|
|
|
9 |
|
|
|
18 |
|
|
|
|
|
|
|
16 |
|
|
|
8 |
|
|
|
4 |
|
|
|
>100 |
|
Epivir |
|
|
34 |
|
|
|
(20 |
) |
|
|
11 |
|
|
|
(8 |
) |
|
|
15 |
|
|
|
(19 |
) |
|
|
8 |
|
|
|
(33 |
) |
Ziagen |
|
|
26 |
|
|
|
(7 |
) |
|
|
11 |
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
5 |
|
|
|
(29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valtrex |
|
|
277 |
|
|
|
19 |
|
|
|
195 |
|
|
|
22 |
|
|
|
36 |
|
|
|
10 |
|
|
|
46 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zeffix |
|
|
47 |
|
|
|
|
|
|
|
4 |
|
|
|
33 |
|
|
|
6 |
|
|
|
20 |
|
|
|
37 |
|
|
|
(6 |
) |
Relenza |
|
|
3 |
|
|
|
(97 |
) |
|
|
2 |
|
|
|
(94 |
) |
|
|
1 |
|
|
|
(96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central nervous system |
|
|
818 |
|
|
|
(4 |
) |
|
|
547 |
|
|
|
(6 |
) |
|
|
143 |
|
|
|
1 |
|
|
|
128 |
|
|
|
1 |
|
Lamictal |
|
|
323 |
|
|
|
18 |
|
|
|
268 |
|
|
|
22 |
|
|
|
38 |
|
|
|
(3 |
) |
|
|
17 |
|
|
|
|
|
Imigran/Imitrex |
|
|
173 |
|
|
|
2 |
|
|
|
139 |
|
|
|
2 |
|
|
|
24 |
|
|
|
|
|
|
|
10 |
|
|
|
|
|
Seroxat/Paxil |
|
|
127 |
|
|
|
(18 |
) |
|
|
16 |
|
|
|
(47 |
) |
|
|
31 |
|
|
|
(13 |
) |
|
|
80 |
|
|
|
(7 |
) |
Wellbutrin |
|
|
97 |
|
|
|
(27 |
) |
|
|
89 |
|
|
|
(30 |
) |
|
|
3 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
Requip |
|
|
58 |
|
|
|
(37 |
) |
|
|
18 |
|
|
|
(69 |
) |
|
|
31 |
|
|
|
27 |
|
|
|
9 |
|
|
|
>100 |
|
Treximet |
|
|
8 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular and urogenital |
|
|
435 |
|
|
|
(5 |
) |
|
|
251 |
|
|
|
(14 |
) |
|
|
129 |
|
|
|
12 |
|
|
|
55 |
|
|
|
15 |
|
Avodart |
|
|
92 |
|
|
|
33 |
|
|
|
55 |
|
|
|
38 |
|
|
|
28 |
|
|
|
19 |
|
|
|
9 |
|
|
|
50 |
|
Lovaza |
|
|
67 |
|
|
|
|
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
Coreg |
|
|
44 |
|
|
|
(78 |
) |
|
|
43 |
|
|
|
(78 |
) |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
(100 |
) |
Coreg CR |
|
|
39 |
|
|
|
>100 |
|
|
|
38 |
|
|
|
>100 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
(100 |
) |
Coreg IR |
|
|
5 |
|
|
|
(97 |
) |
|
|
5 |
|
|
|
(97 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fraxiparine |
|
|
58 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
46 |
|
|
|
3 |
|
|
|
12 |
|
|
|
71 |
|
Arixtra |
|
|
36 |
|
|
|
31 |
|
|
|
16 |
|
|
|
21 |
|
|
|
17 |
|
|
|
50 |
|
|
|
3 |
|
|
|
|
|
Vesicare |
|
|
16 |
|
|
|
25 |
|
|
|
16 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Levitra |
|
|
13 |
|
|
|
18 |
|
|
|
13 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metabolic |
|
|
285 |
|
|
|
(35 |
) |
|
|
139 |
|
|
|
(44 |
) |
|
|
73 |
|
|
|
(19 |
) |
|
|
73 |
|
|
|
(23 |
) |
Avandia products |
|
|
194 |
|
|
|
(46 |
) |
|
|
104 |
|
|
|
(54 |
) |
|
|
49 |
|
|
|
(31 |
) |
|
|
41 |
|
|
|
(33 |
) |
Avandia |
|
|
125 |
|
|
|
(51 |
) |
|
|
72 |
|
|
|
(57 |
) |
|
|
20 |
|
|
|
(40 |
) |
|
|
33 |
|
|
|
(36 |
) |
Avandamet |
|
|
61 |
|
|
|
(33 |
) |
|
|
25 |
|
|
|
(44 |
) |
|
|
28 |
|
|
|
(23 |
) |
|
|
8 |
|
|
|
(11 |
) |
Bonviva/Boniva |
|
|
56 |
|
|
|
47 |
|
|
|
36 |
|
|
|
38 |
|
|
|
18 |
|
|
|
60 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-bacterials |
|
|
329 |
|
|
|
(1 |
) |
|
|
39 |
|
|
|
(20 |
) |
|
|
140 |
|
|
|
(2 |
) |
|
|
150 |
|
|
|
7 |
|
Augmentin |
|
|
129 |
|
|
|
(1 |
) |
|
|
8 |
|
|
|
(47 |
) |
|
|
57 |
|
|
|
|
|
|
|
64 |
|
|
|
13 |
|
Altabax |
|
|
4 |
|
|
|
(20 |
) |
|
|
4 |
|
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology and emesis |
|
|
117 |
|
|
|
(11 |
) |
|
|
57 |
|
|
|
(24 |
) |
|
|
41 |
|
|
|
6 |
|
|
|
19 |
|
|
|
12 |
|
Hycamtin |
|
|
35 |
|
|
|
18 |
|
|
|
19 |
|
|
|
19 |
|
|
|
12 |
|
|
|
|
|
|
|
4 |
|
|
|
100 |
|
Zofran |
|
|
31 |
|
|
|
(49 |
) |
|
|
4 |
|
|
|
(84 |
) |
|
|
16 |
|
|
|
(13 |
) |
|
|
11 |
|
|
|
(29 |
) |
Tykerb |
|
|
22 |
|
|
|
75 |
|
|
|
11 |
|
|
|
20 |
|
|
|
8 |
|
|
|
>100 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines |
|
|
577 |
|
|
|
34 |
|
|
|
124 |
|
|
|
19 |
|
|
|
276 |
|
|
|
41 |
|
|
|
177 |
|
|
|
37 |
|
Hepatitis |
|
|
167 |
|
|
|
23 |
|
|
|
66 |
|
|
|
43 |
|
|
|
72 |
|
|
|
3 |
|
|
|
29 |
|
|
|
35 |
|
Infanrix/Pediarix |
|
|
167 |
|
|
|
13 |
|
|
|
49 |
|
|
|
(4 |
) |
|
|
94 |
|
|
|
26 |
|
|
|
24 |
|
|
|
16 |
|
Fluarix, FluLaval |
|
|
5 |
|
|
|
25 |
|
|
|
|
|
|
|
100 |
|
|
|
(1 |
) |
|
|
|
|
|
|
6 |
|
|
|
|
|
Flu-prepandemic |
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35 |
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
Cervarix |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
Rotarix |
|
|
35 |
|
|
|
>100 |
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
|
33 |
|
|
|
25 |
|
|
|
>100 |
|
Boostrix |
|
|
18 |
|
|
|
21 |
|
|
|
9 |
|
|
|
29 |
|
|
|
7 |
|
|
|
20 |
|
|
|
2 |
|
|
|
|
|
Other |
|
|
228 |
|
|
|
(6 |
) |
|
|
1 |
|
|
|
(67 |
) |
|
|
81 |
|
|
|
19 |
|
|
|
146 |
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
4,923 |
|
|
|
(2 |
) |
|
|
2,129 |
|
|
|
(8 |
) |
|
|
1,598 |
|
|
|
4 |
|
|
|
1,196 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
Pharmaceutical turnover includes co-promotion income.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
9 |
Regional pharmaceuticals including vaccines
|
|
|
|
|
|
|
|
|
|
|
Q2 2008 |
|
|
|
£m |
|
|
CER% |
|
USA |
|
|
2,129 |
|
|
|
(8 |
) |
Europe |
|
|
1,598 |
|
|
|
4 |
|
Rest of World |
|
|
1,196 |
|
|
|
4 |
|
Asia Pacific/Japan |
|
|
464 |
|
|
|
|
|
Emerging Markets |
|
|
563 |
|
|
|
15 |
|
|
|
|
|
|
|
4,923 |
|
|
|
(2 |
) |
|
|
|
As a result of the review of the strategic direction of the Group, the regional
reporting structure within the Pharmaceuticals business has been realigned.
The Group has also taken the opportunity to review the allocation of entities
and costs between the Pharmaceuticals and Consumer Healthcare businesses.
Comparative information has been restated onto a consistent basis and the
effect of the restatement is available on the companys website.
Q2 Pharmaceuticals turnover including vaccines update
Total pharmaceutical turnover for the second quarter fell by 2% to £4.9 billion. In the United States, turnover fell 8% to £2.1 billion,
impacted by increased generic competition and a reduction in Avandia sales. Excluding these products US turnover grew 13%. In Europe,
turnover was up 4% to £1.6 billion, with improving sales growth from vaccines and newer products. Sales in Emerging Markets were up 15% to
£563 million and in Asia Pacific sales were level at £464 million.
Key product movements impacting turnover growth for the quarter:
|
|
Sales of Seretide/Advair, for asthma and COPD, were £964 million, up 6%. In the USA, sales grew 2% to
£473 million. The asthma controller market in the USA has declined slightly year over year while the
use of short acting inhalers such as albuterol has increased. GSK has recently focused its asthma
sales force on communication of the newly revised treatment guidelines which recommend combination
therapy for those asthma patients who use rescue inhalers such as albuterol daily. Use of Advair for
treatment of COPD continues to grow, and in April GSK received FDA approval for the expanded use of
Advair for reduction of exacerbations in COPD. Advair is the only currently available treatment
approved for this use. |
|
|
|
Vaccines sales grew 34% to £577 million, driven by strong US sales of hepatitis vaccines (up 43% to £66
million). Also contributing to sales growth this quarter were sales of GSKs recently introduced
pre-pandemic flu vaccine of £34 million. Q2 vaccine sales also benefited from the timing of certain
shipments. |
|
|
|
Sales of Lamictal grew 18% to £323 million in the quarter and sales of Valtrex grew 19% to £277 million.
Sales of Lovaza, which was acquired by GSK in 2007, were £67 million for the quarter. |
|
|
|
Global Avandia sales declined 46% in the quarter to £194 million, with the largest decline in the US
market with sales down 54% to £104 million. |
|
|
|
Generic competition to Wellbutrin (down 27% to £97 million) increased this quarter with the
introduction of a generic version of the 150mg dose. Sales of Zofran (down 49% to £31 million) also
continue to be impacted by generic competition. |
|
|
|
Requip, for Parkinsons disease/Restless Legs Syndrome, declined 37% to £58 million, following the
introduction of generic competition in the USA in May. GSK received FDA approval for Requip XL, a once
a day treatment for Parkinsons disease, in June and will launch the product in July. |
|
|
|
Coreg IR sales declined 97% to £5 million, due to generic competition in the USA. Sales of Coreg CR,
which was launched last year, were £39 million. |
|
|
|
Sales of Relenza, an anti-viral treatment for influenza were lower than the comparative quarter of 2007
at £3 million, reflecting the variable timings of tender orders from governments. |
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
10 |
GSKs late-stage pharmaceuticals and vaccines pipeline
The following table is provided as part of GSKs quarterly update to show
events and changes to the late stage pipeline during the quarter and up to the
date of announcement.
|
|
|
|
|
|
|
|
|
Cardiovascular & Metabolic |
|
USA |
|
EU |
|
News update in the quarter |
Arixtra
|
|
Acute Coronary
Syndromes
|
|
Filed
|
|
Approved |
|
|
Volibris
|
|
PAH Class II/III
|
|
n/a
|
|
Approved
|
|
Approved in Europe on 25th April |
Avandamet XR
|
|
Type II diabetes
|
|
Ph III
|
|
Ph III |
|
|
Avandia + statin
|
|
Type II diabetes
|
|
Ph III
|
|
Ph III |
|
|
Coreg CR + ACEi
|
|
Hypertension
|
|
Ph III
|
|
n/a
|
|
Filing under review |
|
|
|
|
|
|
|
|
|
MIGU |
|
|
|
|
|
|
|
|
Entereg
|
|
Post operative ileus
|
|
Approved
|
|
n/a
|
|
Approved in USA on 20th May |
Avodart
|
|
co-Rx with a blocker
|
|
Approved
|
|
Approved
|
|
Approved in Europe on 18th
April and in USA on 19th June |
|
|
Prostate cancer
prevention
|
|
Ph III
|
|
Ph III |
|
|
belimumab
|
|
Lupus
|
|
Ph III
|
|
Ph III |
|
|
mepolizumab
|
|
HES
|
|
Ph III
|
|
Ph III |
|
|
ofatumumab
|
|
RA
|
|
Ph III
|
|
Ph III |
|
|
|
|
|
|
|
|
|
|
|
Neurosciences |
|
|
|
|
|
|
|
|
Requip XL
|
|
Parkinsons disease
|
|
Approved
|
|
Approved
|
|
Approved in USA on 17th June |
Treximet
|
|
Migraine
|
|
Approved
|
|
n/a
|
|
Approved in USA on 15th April |
Lamictal XR
|
|
Epilepsy
|
|
Filed
|
|
n/a
|
|
Response to FDA Approvable
letter submitted on 10th July |
Lunivia
|
|
Sleep disorders
|
|
n/a
|
|
Filed |
|
|
Solzira
|
|
RLS
|
|
Ph III
|
|
Ph III |
|
|
rosiglitazone XR
|
|
Alzheimers disease
|
|
Ph III
|
|
Ph III |
|
|
almorexant
|
|
Primary insomnia
|
|
Ph III
|
|
Ph III
|
|
GSK entered agreement with
Actelion on 14th July |
|
|
|
|
|
|
|
|
|
Oncology |
|
|
|
|
|
|
|
|
Tykerb/Tyverb
|
|
Refactory breast
cancer
|
|
Approved
|
|
Approved
|
|
Approved in Europe on 13th June |
|
|
Adjuvant breast
cancer
|
|
Ph III
|
|
Ph III
|
|
Neo-ALTTO study started on
12th May |
|
|
Head & Neck cancer
|
|
Ph III
|
|
Ph III |
|
|
Rezonic/Zunrisa
|
|
CINV/PONV
|
|
Filed
|
|
Filed
|
|
Filed in USA on 29th May and in
Europe on 2nd July |
Promacta/Revolade
|
|
Short term ITP
|
|
Filed
|
|
Ph III
|
|
FDA ODAC unanimous vote in
favour of the risk-benefit
profile for short-term
treatment in patients with
chronic ITP. PDUFA extended to
19th September |
|
|
Long term ITP
|
|
Ph III
|
|
Ph III |
|
|
|
|
Hepatitis C
|
|
Ph III
|
|
Ph III |
|
|
|
|
|
|
|
|
|
|
|
Armala
|
|
Renal cell cancer
|
|
Ph III
|
|
Ph III |
|
|
Armala + Tykerb
|
|
Inflammatory breast
cancer
|
|
Ph III
|
|
Ph III |
|
|
elesclomol
|
|
Metastatic melanoma
|
|
Ph III
|
|
Ph III |
|
|
ofatumumab
|
|
CLL / NHL
|
|
Ph III
|
|
Ph III |
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
11 |
|
|
|
|
|
|
|
|
|
Respiratory |
|
USA |
|
EU |
|
News updates in the quarter |
Seretide/Advair
|
|
COPD
|
|
Approved
|
|
Approved
|
|
COPD exacerbation claim
approved in USA on 30th April |
|
|
|
|
|
|
|
|
|
Vaccines |
|
|
|
|
|
|
|
|
Rotarix
|
|
Rotavirus prophylaxis
|
|
Approved
|
|
Approved
|
|
Approved in USA on 3rd April
and positive ACIP on 25th
June |
Kinrix
|
|
DTaP-IPV prophylaxis
|
|
Approved
|
|
n/a
|
|
Approved in USA on 24th June
and positive ACIP on 26th
June |
Cervarix
|
|
HPV prophylaxis
|
|
Filed
|
|
Approved
|
|
Response to FDA CR letter
submitted in June. 6.4 year
data published at ESPID on
14th May |
Prepandrix
|
|
H5N1 pandemic
influenza
prophylaxis
|
|
Ph III
|
|
Approved
|
|
Approved in Europe on 15th May |
Synflorix
|
|
S pneumoniae and
NTHib prophylaxis
|
|
Ph III
|
|
Filed
|
|
Phase III data presented at
ISPPD 8th -12th June.
US filing under review |
MAGE-A3
|
|
NSCLC
|
|
Ph III
|
|
Ph III |
|
|
HibMenCY-TT
|
|
MenCY and Hib
prophylaxis
|
|
Ph III
|
|
n/a |
|
|
MenACWY
|
|
MenACWY prophylaxis
|
|
Ph III
|
|
Ph III |
|
|
New
|
|
Influenza
|
|
Ph III |
|
Ph III |
|
|
generation flu
|
|
prophylaxis
|
|
|
|
|
|
|
Simplirix
|
|
Genital herpes
prophylaxis
|
|
Ph III
|
|
Ph III |
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
12 |
Turnover
Consumer Healthcare
Three months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
USA |
|
|
Europe |
|
|
Rest of World |
|
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
OVER-THE-COUNTER MEDICINES |
|
|
443 |
|
|
|
(9 |
) |
|
|
143 |
|
|
|
(30 |
) |
|
|
134 |
|
|
|
4 |
|
|
|
166 |
|
|
|
11 |
|
Panadol franchise |
|
|
78 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
17 |
|
|
|
14 |
|
|
|
61 |
|
|
|
10 |
|
Smoking cessation products |
|
|
65 |
|
|
|
(15 |
) |
|
|
47 |
|
|
|
(8 |
) |
|
|
13 |
|
|
|
(33 |
) |
|
|
5 |
|
|
|
(17 |
) |
Tums |
|
|
22 |
|
|
|
5 |
|
|
|
19 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
Cold sore franchise |
|
|
19 |
|
|
|
20 |
|
|
|
9 |
|
|
|
50 |
|
|
|
9 |
|
|
|
14 |
|
|
|
1 |
|
|
|
(50 |
) |
Breathe Right |
|
|
18 |
|
|
|
42 |
|
|
|
10 |
|
|
|
|
|
|
|
5 |
|
|
|
100 |
|
|
|
3 |
|
|
|
|
|
alli |
|
|
18 |
|
|
|
(76 |
) |
|
|
17 |
|
|
|
(76 |
) |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORAL HEALTHCARE |
|
|
298 |
|
|
|
3 |
|
|
|
50 |
|
|
|
(7 |
) |
|
|
169 |
|
|
|
5 |
|
|
|
79 |
|
|
|
7 |
|
Aquafresh franchise |
|
|
107 |
|
|
|
(3 |
) |
|
|
18 |
|
|
|
(21 |
) |
|
|
66 |
|
|
|
4 |
|
|
|
23 |
|
|
|
|
|
Sensodyne franchise |
|
|
87 |
|
|
|
9 |
|
|
|
15 |
|
|
|
7 |
|
|
|
43 |
|
|
|
8 |
|
|
|
29 |
|
|
|
13 |
|
Dental healthcare |
|
|
66 |
|
|
|
7 |
|
|
|
15 |
|
|
|
|
|
|
|
27 |
|
|
|
9 |
|
|
|
24 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUTRITIONAL HEALTHCARE |
|
|
210 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
134 |
|
|
|
6 |
|
|
|
76 |
|
|
|
21 |
|
Lucozade |
|
|
107 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
95 |
|
|
|
9 |
|
|
|
12 |
|
|
|
25 |
|
Horlicks |
|
|
48 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
43 |
|
|
|
16 |
|
Ribena |
|
|
43 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
34 |
|
|
|
3 |
|
|
|
9 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
951 |
|
|
|
(1 |
) |
|
|
193 |
|
|
|
(25 |
) |
|
|
437 |
|
|
|
5 |
|
|
|
321 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
Q2 Consumer Healthcare turnover update
Overall Consumer Healthcare sales declined 1% to £951 million, with US sales down 25% due to lower reported sales of alli and continued
competition to GSKs smoking control franchise. European and Rest of World sales grew 5% and 13%, respectively. Excluding sales of alli
and smoking cessation products, Q2 Consumer Healthcare sales grew 7%.
Key product movements impacting turnover growth for the quarter:
|
|
Panadol sales grew 11% to £78 million, aided by new consumer and physician communication campaigns. |
|
|
|
GSKs smoking cessation franchise continued to be impacted by strong competition from prescription
treatments and retailers own-label brands in the USA, with overall sales declining 15% to £65
million. GSK has a series of initiatives underway to improve growth of these brands. |
|
|
|
Sales of Breathe Right strips grew 42% to £18 million following further launches of the brand in the
Rest of World markets. |
|
|
|
Q2 sales of alli were £18 million impacted by lower demand from retailers for stock following a
year-end promotion and an adverse comparison with Q2 2007 (sales of £76 million) when the product was
launched. Based on retail market data, underlying demand for alli was estimated to be £23 million in
Q2. |
|
|
|
Sales of Sensodyne grew 9% to £87 million benefiting from the successful launch of Sensodyne Pronamel. |
|
|
|
Sales benefited from strong growth of Lucozade up 11% to £107 million, aided by the introduction of
Lucozade Alert, and Horlicks up 14% to £48 million. |
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
13 |
Cash flow statement
Three months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
Q2 2008 |
|
|
Q2 2007 |
|
|
|
£m |
|
|
£m |
|
Profit after tax |
|
|
1,307 |
|
|
|
1,355 |
|
Tax on profits |
|
|
529 |
|
|
|
541 |
|
Share of after tax profits of associates and joint ventures |
|
|
(15 |
) |
|
|
(11 |
) |
Net finance expense |
|
|
118 |
|
|
|
44 |
|
Depreciation and other non-cash items |
|
|
288 |
|
|
|
250 |
|
Increase in working capital |
|
|
(52 |
) |
|
|
(164 |
) |
(Decrease)/increase in other net liabilities |
|
|
(70 |
) |
|
|
93 |
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
2,105 |
|
|
|
2,108 |
|
|
|
|
|
|
|
|
|
|
Taxation paid |
|
|
(732 |
) |
|
|
(723 |
) |
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
|
1,373 |
|
|
|
1,385 |
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(345 |
) |
|
|
(372 |
) |
Proceeds from sale of property, plant and equipment |
|
|
6 |
|
|
|
|
|
Purchase of intangible assets |
|
|
(121 |
) |
|
|
(29 |
) |
Proceeds from sale of intangible assets |
|
|
|
|
|
|
5 |
|
Purchase of equity investments |
|
|
(5 |
) |
|
|
(9 |
) |
Proceeds from sale of equity investments |
|
|
14 |
|
|
|
30 |
|
Purchase of businesses, net of cash acquired |
|
|
(324 |
) |
|
|
|
|
Investment in associates and joint ventures |
|
|
(5 |
) |
|
|
|
|
Interest received |
|
|
92 |
|
|
|
78 |
|
Dividends from associates and joint ventures |
|
|
2 |
|
|
|
2 |
|
|
|
|
|
|
|
|
Net cash outflow from investing activities |
|
|
(686 |
) |
|
|
(295 |
) |
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|
|
Decrease/(increase) in liquid investments |
|
|
793 |
|
|
|
(20 |
) |
Proceeds from own shares for employee share options |
|
|
|
|
|
|
43 |
|
Shares acquired by ESOP Trusts |
|
|
(2 |
) |
|
|
|
|
Issue of share capital |
|
|
7 |
|
|
|
118 |
|
Purchase of own shares for cancellation |
|
|
(1,390 |
) |
|
|
|
|
Purchase of Treasury shares |
|
|
|
|
|
|
(642 |
) |
Increase in long-term loans |
|
|
4,522 |
|
|
|
983 |
|
Net increase in/(repayment of) short-term loans |
|
|
(571 |
) |
|
|
(715 |
) |
Net repayment of obligations under finance leases |
|
|
(10 |
) |
|
|
(13 |
) |
Interest paid |
|
|
(241 |
) |
|
|
(150 |
) |
Dividends paid to shareholders |
|
|
(859 |
) |
|
|
(785 |
) |
Dividends paid to minority interests |
|
|
(31 |
) |
|
|
(11 |
) |
Other financing cash flows |
|
|
(39 |
) |
|
|
14 |
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from financing activities |
|
|
2,179 |
|
|
|
(1,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(decrease) in cash and bank overdrafts in the period |
|
|
2,866 |
|
|
|
(88 |
) |
Exchange adjustments |
|
|
17 |
|
|
|
(24 |
) |
Cash and bank overdrafts at beginning of period |
|
|
1,956 |
|
|
|
1,689 |
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of period |
|
|
4,839 |
|
|
|
1,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of period comprise: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
4,988 |
|
|
|
1,894 |
|
Overdrafts |
|
|
(149 |
) |
|
|
(317 |
) |
|
|
|
|
|
|
|
|
|
|
4,839 |
|
|
|
1,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
14 |
Cash flow
Cash generated from operations was £2,105 million in Q2 2008. This represents
a decrease of £3 million compared with Q2 2007. The operating cash flow is in
excess of the funds needed for the routine cash flows of tax, capital
expenditure on property, plant and equipment and dividend payments to
shareholders, together amounting to £1,936 million. The purchase of businesses
relates to the acquisition of Sirtris Pharmaceuticals Inc. at a cost of £324
million, net of cash acquired. Receipts of £7 million arose from the issue of
new shares. In addition, £1,390 million was spent in the period on purchasing
the companys shares for cancellation. The increase in the cash position arose
primarily from issuing $9 billion of bonds under the US debt programme.
Legal matters
The Group is involved in various legal and administrative proceedings
principally product liability, intellectual property, tax, anti-trust and
governmental investigations and related private litigation concerning sales,
marketing and pricing which are more fully described in the Legal proceedings
note in the Annual Report.
At 30th June 2008, the Groups aggregate provision for legal and other disputes
(not including tax matters described under Taxation on page 25) was £1.1
billion. 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.
Significant developments since the date of the 2007 Annual Report are as follows:
With respect to the Groups settlement agreement with Mylan related to Paxil CR,
Mylan was permitted to and entered the market for all strengths of Paxil CR in
May 2008.
In July 2008, two actions were filed against the Group, one by a purported class
of direct purchasers and another by a purported class of indirect purchasers, in
the US District Court for the Eastern District of Pennsylvania. These actions
allege anti-trust violations related to the Groups petitioning activity before
the FDA regarding Flonase. These actions are in their early stages.
With respect to the remaining civil lawsuits brought by ten states and several
New York counties against the Group and other drug companies regarding the
process for reporting the average wholesale price (AWP) for drugs reimbursed
by Medicaid, a joint trial was held in the State of Alabamas case against the
Group and Novartis. On 1st July 2008, the Alabama jury awarded a verdict
against the Group for $81 million for compensatory damages and interest but
declined to award any punitive damages. The Group intends to appeal the
verdict.
With respect to the complaint filed by Biota Holdings Limited in the Victorian
Supreme Court in Australia alleging that the Group had failed to fulfil its
obligations for Relenza (zanamivir), the parties held a mediation meeting on the
17th and 18th July and reached agreement on a settlement. Under the terms of
the settlement, GSK admits no liability but will make a payment of AUD 20
million (£10 million) to Biota.
With respect to the Paxil Securities Litigation, the US Court of Appeals for the
Second Circuit affirmed on May 9, 2008 the District Court for the Southern
District of New Yorks dismissal of the plaintiffs complaint. As the
plaintiffs did not seek review from the US Supreme Court of the Second Circuits
decision, the matter is now closed.
As previously reported in the Q1 2008 Results Announcement, in April 2008 an
action was filed against Biovail and GSK by a purported class of direct
purchasers in the US District Court for the District of Massachusetts alleging
anti-trust violations related to the enforcement of Biovails Wellbutrin XL
patents. The action is in its early stages.
Developments with respect to tax matters are described in Taxation on page 25.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
15 |
Income statement
Six months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
performance |
|
|
|
|
|
|
Restructuring |
|
|
Statutory |
|
|
H1 2007 |
|
|
|
H1 2008 |
|
|
Growth |
|
|
H1 2008 |
|
|
H1 2008 |
|
|
(restated) |
|
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
£m |
|
|
£m |
|
Turnover: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals |
|
|
9,690 |
|
|
|
(3 |
) |
|
|
|
|
|
|
9,690 |
|
|
|
9,545 |
|
Consumer Healthcare |
|
|
1,870 |
|
|
|
3 |
|
|
|
|
|
|
|
1,870 |
|
|
|
1,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TURNOVER |
|
|
11,560 |
|
|
|
(2 |
) |
|
|
|
|
|
|
11,560 |
|
|
|
11,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(2,674 |
) |
|
|
5 |
|
|
|
(198 |
) |
|
|
(2,872 |
) |
|
|
(2,446 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
8,886 |
|
|
|
(4 |
) |
|
|
(198 |
) |
|
|
8,688 |
|
|
|
8,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration |
|
|
(3,485 |
) |
|
|
(5 |
) |
|
|
(56 |
) |
|
|
(3,541 |
) |
|
|
(3,514 |
) |
Research and development |
|
|
(1,582 |
) |
|
|
2 |
|
|
|
(18 |
) |
|
|
(1,600 |
) |
|
|
(1,515 |
) |
Other operating income |
|
|
355 |
|
|
|
|
|
|
|
|
|
|
|
355 |
|
|
|
304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals |
|
|
3,854 |
|
|
|
(4 |
) |
|
|
(270 |
) |
|
|
3,584 |
|
|
|
3,785 |
|
Consumer Healthcare |
|
|
320 |
|
|
|
(8 |
) |
|
|
(2 |
) |
|
|
318 |
|
|
|
310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
|
4,174 |
|
|
|
(4 |
) |
|
|
(272 |
) |
|
|
3,902 |
|
|
|
4,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
|
178 |
|
|
|
|
|
|
|
|
|
|
|
178 |
|
|
|
135 |
|
Finance expense |
|
|
(382 |
) |
|
|
|
|
|
|
(2 |
) |
|
|
(384 |
) |
|
|
(217 |
) |
Share of after tax profits of associates
and joint ventures |
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION |
|
|
3,984 |
|
|
|
(7 |
) |
|
|
(274 |
) |
|
|
3,710 |
|
|
|
4,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
|
(1,140 |
) |
|
|
|
|
|
|
69 |
|
|
|
(1,071 |
) |
|
|
(1,151 |
) |
Tax rate % |
|
|
28.6 |
% |
|
|
|
|
|
|
|
|
|
|
28.9 |
% |
|
|
28.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION FOR THE PERIOD |
|
|
2,844 |
|
|
|
(8 |
) |
|
|
(205 |
) |
|
|
2,639 |
|
|
|
2,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to minority interests |
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
46 |
|
|
|
41 |
|
Profit attributable to shareholders |
|
|
2,798 |
|
|
|
|
|
|
|
(205 |
) |
|
|
2,593 |
|
|
|
2,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,844 |
|
|
|
|
|
|
|
(205 |
) |
|
|
2,639 |
|
|
|
2,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE |
|
|
52.9p |
|
|
|
(3 |
) |
|
|
|
|
|
|
49.0p |
|
|
|
51.0p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
52.5p |
|
|
|
|
|
|
|
|
|
|
|
48.7p |
|
|
|
50.4p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
16 |
Operating profit business performance H1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 2008 |
|
|
H1 2007 |
|
|
Growth |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
|
|
|
|
|
|
£m |
|
|
turnover |
|
|
£m |
|
|
turnover |
|
|
CER% |
|
|
£% |
|
Turnover |
|
|
11,560 |
|
|
|
100.0 |
|
|
|
11,266 |
|
|
|
100.0 |
|
|
|
(2 |
) |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(2,674 |
) |
|
|
(23.1 |
) |
|
|
(2,446 |
) |
|
|
(21.7 |
) |
|
|
5 |
|
|
|
9 |
|
Selling, general and administration |
|
|
(3,485 |
) |
|
|
(30.1 |
) |
|
|
(3,514 |
) |
|
|
(31.3 |
) |
|
|
(5 |
) |
|
|
(1 |
) |
Research and development |
|
|
(1,582 |
) |
|
|
(13.8 |
) |
|
|
(1,515 |
) |
|
|
(13.4 |
) |
|
|
2 |
|
|
|
4 |
|
Other operating income |
|
|
355 |
|
|
|
3.1 |
|
|
|
304 |
|
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
4,174 |
|
|
|
36.1 |
|
|
|
4,095 |
|
|
|
36.3 |
|
|
|
(4 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business performance operating margin decreased 0.2 percentage points, as
sterling operating profit increased 2% while sterling turnover increased 3%.
Cost of sales as a percentage of turnover increased by 1.4 percentage points,
reflecting generic competition to higher margin products and lower Avandia
sales.
SG&A costs as a percentage of turnover decreased 1.2 percentage points compared
with H1 2007. SG&A fell by 5% because of lower legal charges and the benefits
arising from the new operational excellence programme. Legal charges were £36
million in H1 2008 compared with £129 million in H1 2007. SG&A costs excluding
legal fell by 2% compared with H1 2007.
R&D expenditure increased 2%, as an increased investment in vaccines R&D was
partially offset by savings from the operational excellence programme
elsewhere. Pharmaceuticals R&D expenditure in the period represented 15.8% (H1
2007: 15.3%) of pharmaceutical turnover.
Other operating income includes royalty income, equity investment disposals and
impairments, product disposals and fair value adjustments to financial
instruments. Other operating income was £355 million in H1 2008 (H1 2007: £304
million). Other operating income in H1 2008 included royalty income of £130
million (H1 2007: £94 million), product disposals, including the disposal of
non patent protected products to Aspen, of £216 million (H1 2007: £34 million),
favourable fair value movements on derivative financial instruments of £32
million (H1 2007: £21 million favourable) and equity investment disposals of £7
million (H1 2007: £32 million). Other operating income in H1 2007 also
included the Roche litigation settlement relating to carvedilol.
Operating profit statutory results
Statutory operating profit for H1 2008 was £3,902 million, down 10% CER and 5%
in sterling terms compared with H1 2007. This included £272 million of
restructuring charges related to the new operational excellence programme and
Reliant Pharmaceuticals; £198 million was charged to cost of sales, £56 million
to SG&A and £18 million to R&D. There were no such charges in H1 2007.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
17 |
Turnover
Pharmaceuticals including vaccines
Six months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
USA |
|
|
Europe |
|
|
Rest of World |
|
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
Respiratory |
|
|
2,738 |
|
|
|
5 |
|
|
|
1,232 |
|
|
|
6 |
|
|
|
983 |
|
|
|
2 |
|
|
|
523 |
|
|
|
9 |
|
Seretide/Advair |
|
|
1,918 |
|
|
|
8 |
|
|
|
972 |
|
|
|
6 |
|
|
|
700 |
|
|
|
6 |
|
|
|
246 |
|
|
|
25 |
|
Flixotide/Flovent |
|
|
320 |
|
|
|
(2 |
) |
|
|
143 |
|
|
|
6 |
|
|
|
87 |
|
|
|
(7 |
) |
|
|
90 |
|
|
|
(8 |
) |
Serevent |
|
|
133 |
|
|
|
(8 |
) |
|
|
33 |
|
|
|
(11 |
) |
|
|
71 |
|
|
|
(3 |
) |
|
|
29 |
|
|
|
(16 |
) |
Veramyst |
|
|
30 |
|
|
|
>100 |
|
|
|
26 |
|
|
|
>100 |
|
|
|
2 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
Flixonase/Flonase |
|
|
111 |
|
|
|
(12 |
) |
|
|
37 |
|
|
|
(26 |
) |
|
|
29 |
|
|
|
(7 |
) |
|
|
45 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-virals |
|
|
1,490 |
|
|
|
(6 |
) |
|
|
702 |
|
|
|
(6 |
) |
|
|
427 |
|
|
|
(14 |
) |
|
|
361 |
|
|
|
2 |
|
HIV |
|
|
719 |
|
|
|
(6 |
) |
|
|
294 |
|
|
|
(8 |
) |
|
|
321 |
|
|
|
(4 |
) |
|
|
104 |
|
|
|
(2 |
) |
Epzicom/Kivexa |
|
|
203 |
|
|
|
25 |
|
|
|
79 |
|
|
|
11 |
|
|
|
102 |
|
|
|
33 |
|
|
|
22 |
|
|
|
50 |
|
Combivir |
|
|
209 |
|
|
|
(14 |
) |
|
|
86 |
|
|
|
(13 |
) |
|
|
86 |
|
|
|
(20 |
) |
|
|
37 |
|
|
|
(3 |
) |
Trizivir |
|
|
104 |
|
|
|
(20 |
) |
|
|
50 |
|
|
|
(20 |
) |
|
|
48 |
|
|
|
(16 |
) |
|
|
6 |
|
|
|
(38 |
) |
Agenerase, Lexiva |
|
|
73 |
|
|
|
3 |
|
|
|
36 |
|
|
|
(5 |
) |
|
|
31 |
|
|
|
8 |
|
|
|
6 |
|
|
|
67 |
|
Epivir |
|
|
68 |
|
|
|
(21 |
) |
|
|
22 |
|
|
|
(15 |
) |
|
|
30 |
|
|
|
(21 |
) |
|
|
16 |
|
|
|
(29 |
) |
Ziagen |
|
|
51 |
|
|
|
(8 |
) |
|
|
21 |
|
|
|
(5 |
) |
|
|
19 |
|
|
|
(6 |
) |
|
|
11 |
|
|
|
(15 |
) |
Valtrex |
|
|
526 |
|
|
|
14 |
|
|
|
368 |
|
|
|
14 |
|
|
|
71 |
|
|
|
13 |
|
|
|
87 |
|
|
|
13 |
|
Zeffix |
|
|
93 |
|
|
|
4 |
|
|
|
7 |
|
|
|
17 |
|
|
|
13 |
|
|
|
9 |
|
|
|
73 |
|
|
|
1 |
|
Relenza |
|
|
32 |
|
|
|
(82 |
) |
|
|
10 |
|
|
|
(87 |
) |
|
|
1 |
|
|
|
(98 |
) |
|
|
21 |
|
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central nervous system |
|
|
1,647 |
|
|
|
(1 |
) |
|
|
1,141 |
|
|
|
|
|
|
|
272 |
|
|
|
(4 |
) |
|
|
234 |
|
|
|
(3 |
) |
Lamictal |
|
|
613 |
|
|
|
17 |
|
|
|
508 |
|
|
|
22 |
|
|
|
71 |
|
|
|
(9 |
) |
|
|
34 |
|
|
|
3 |
|
Imigran/Imitrex |
|
|
338 |
|
|
|
|
|
|
|
273 |
|
|
|
1 |
|
|
|
47 |
|
|
|
(2 |
) |
|
|
18 |
|
|
|
(6 |
) |
Seroxat/Paxil |
|
|
248 |
|
|
|
(16 |
) |
|
|
47 |
|
|
|
(31 |
) |
|
|
59 |
|
|
|
(18 |
) |
|
|
142 |
|
|
|
(8 |
) |
Wellbutrin |
|
|
223 |
|
|
|
(15 |
) |
|
|
210 |
|
|
|
(17 |
) |
|
|
6 |
|
|
|
>100 |
|
|
|
7 |
|
|
|
(14 |
) |
Requip |
|
|
152 |
|
|
|
(12 |
) |
|
|
78 |
|
|
|
(31 |
) |
|
|
60 |
|
|
|
26 |
|
|
|
14 |
|
|
|
100 |
|
Treximet |
|
|
8 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular and urogenital |
|
|
833 |
|
|
|
(9 |
) |
|
|
483 |
|
|
|
(18 |
) |
|
|
245 |
|
|
|
9 |
|
|
|
105 |
|
|
|
16 |
|
Avodart |
|
|
177 |
|
|
|
32 |
|
|
|
104 |
|
|
|
30 |
|
|
|
56 |
|
|
|
28 |
|
|
|
17 |
|
|
|
60 |
|
Lovaza |
|
|
117 |
|
|
|
|
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
Coreg |
|
|
92 |
|
|
|
(78 |
) |
|
|
91 |
|
|
|
(78 |
) |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
(80 |
) |
Coreg CR |
|
|
74 |
|
|
|
>100 |
|
|
|
73 |
|
|
|
>100 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
Coreg IR |
|
|
18 |
|
|
|
(95 |
) |
|
|
18 |
|
|
|
(95 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fraxiparine |
|
|
109 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
(3 |
) |
|
|
22 |
|
|
|
40 |
|
Arixtra |
|
|
71 |
|
|
|
48 |
|
|
|
35 |
|
|
|
44 |
|
|
|
31 |
|
|
|
42 |
|
|
|
5 |
|
|
|
>100 |
|
Vesicare |
|
|
30 |
|
|
|
30 |
|
|
|
30 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Levitra |
|
|
27 |
|
|
|
8 |
|
|
|
26 |
|
|
|
8 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metabolic |
|
|
557 |
|
|
|
(40 |
) |
|
|
272 |
|
|
|
(52 |
) |
|
|
146 |
|
|
|
(13 |
) |
|
|
139 |
|
|
|
(26 |
) |
Avandia products |
|
|
385 |
|
|
|
(51 |
) |
|
|
203 |
|
|
|
(61 |
) |
|
|
103 |
|
|
|
(23 |
) |
|
|
79 |
|
|
|
(39 |
) |
Avandia |
|
|
247 |
|
|
|
(57 |
) |
|
|
143 |
|
|
|
(64 |
) |
|
|
42 |
|
|
|
(38 |
) |
|
|
62 |
|
|
|
(42 |
) |
Avandamet |
|
|
123 |
|
|
|
(31 |
) |
|
|
49 |
|
|
|
(47 |
) |
|
|
59 |
|
|
|
(9 |
) |
|
|
15 |
|
|
|
(21 |
) |
Bonviva/Boniva |
|
|
105 |
|
|
|
49 |
|
|
|
69 |
|
|
|
43 |
|
|
|
33 |
|
|
|
53 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-bacterials |
|
|
692 |
|
|
|
(2 |
) |
|
|
84 |
|
|
|
(17 |
) |
|
|
315 |
|
|
|
(6 |
) |
|
|
293 |
|
|
|
9 |
|
Augmentin |
|
|
285 |
|
|
|
(1 |
) |
|
|
25 |
|
|
|
(37 |
) |
|
|
136 |
|
|
|
|
|
|
|
124 |
|
|
|
11 |
|
Altabax |
|
|
6 |
|
|
|
20 |
|
|
|
6 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology and emesis |
|
|
230 |
|
|
|
(19 |
) |
|
|
115 |
|
|
|
(34 |
) |
|
|
78 |
|
|
|
6 |
|
|
|
37 |
|
|
|
6 |
|
Hycamtin |
|
|
65 |
|
|
|
7 |
|
|
|
36 |
|
|
|
6 |
|
|
|
23 |
|
|
|
5 |
|
|
|
6 |
|
|
|
25 |
|
Zofran |
|
|
60 |
|
|
|
(61 |
) |
|
|
7 |
|
|
|
(91 |
) |
|
|
32 |
|
|
|
(22 |
) |
|
|
21 |
|
|
|
(20 |
) |
Tykerb |
|
|
41 |
|
|
|
>100 |
|
|
|
21 |
|
|
|
69 |
|
|
|
15 |
|
|
|
>100 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines |
|
|
1,013 |
|
|
|
23 |
|
|
|
233 |
|
|
|
26 |
|
|
|
476 |
|
|
|
23 |
|
|
|
304 |
|
|
|
19 |
|
Hepatitis |
|
|
306 |
|
|
|
20 |
|
|
|
119 |
|
|
|
52 |
|
|
|
128 |
|
|
|
|
|
|
|
59 |
|
|
|
14 |
|
Infanrix/Pediarix |
|
|
320 |
|
|
|
10 |
|
|
|
100 |
|
|
|
7 |
|
|
|
175 |
|
|
|
12 |
|
|
|
45 |
|
|
|
8 |
|
Fluarix, FluLaval |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
6 |
|
|
|
(14 |
) |
Flu-prepandemic |
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cervarix |
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21 |
|
|
|
|
|
|
|
6 |
|
|
|
|
|
Rotarix |
|
|
62 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
60 |
|
|
|
43 |
|
|
|
>100 |
|
Boostrix |
|
|
31 |
|
|
|
7 |
|
|
|
14 |
|
|
|
|
|
|
|
12 |
|
|
|
11 |
|
|
|
5 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
490 |
|
|
|
3 |
|
|
|
5 |
|
|
|
(85 |
) |
|
|
152 |
|
|
|
20 |
|
|
|
333 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
9,690 |
|
|
|
(3 |
) |
|
|
4,267 |
|
|
|
(9 |
) |
|
|
3,094 |
|
|
|
1 |
|
|
|
2,329 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
Pharmaceutical turnover includes co-promotion income.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
18 |
Regional pharmaceuticals including vaccines
|
|
|
|
|
|
|
|
|
|
|
H1 2008 |
|
|
|
£m |
|
|
CER% |
|
USA |
|
|
4,267 |
|
|
|
(9 |
) |
Europe |
|
|
3,094 |
|
|
|
1 |
|
Rest of World |
|
|
2,329 |
|
|
|
5 |
|
Asia Pacific/Japan |
|
|
884 |
|
|
|
|
|
Emerging Markets |
|
|
1,032 |
|
|
|
10 |
|
|
|
|
|
|
|
9,690 |
|
|
|
(3 |
) |
|
|
|
As a result of the review of the strategic direction of the Group, the regional
reporting structure within the Pharmaceuticals business has been realigned.
The Group has also taken the opportunity to review the allocation of entities
and expenses between the Pharmaceuticals and Consumer Healthcare businesses.
Comparative information has been restated onto a consistent basis and the
effect of the restatement is available on the companys website.
H1 Pharmaceutical turnover including vaccines update
Total pharmaceutical turnover for the first half declined 3% to £9.7 billion.
In the United States, turnover fell 9% to £4.3 billion, impacted by increased
generic competition and a reduction in Avandia sales. In Europe, turnover was
up 1% to £3.1 billion, with improving sales growth from vaccines and newer
products.
Key product variances during the first half were:
|
|
Seretide/Advair sales grew 8% to £1.9 billion, with US sales up 6% to £972 million. |
|
|
|
Vaccines grew 23% to £1 billion, with growth contributions from established vaccines such as the
hepatitis vaccines (up 20% to £306 million), Infanrix/Pediarix (up 10% to £320 million) and new
vaccines Rotarix (£62 million) and Cervarix (£27 million). Sales of GSKs recently introduced
pre-pandemic flu vaccine were £39 million. |
|
|
|
Sales of Lamictal grew 17% to £613 million and sales of Valtrex grew 14% to £526 million in H1 2008.
Sales of Lovaza, which was acquired by GSK in 2007, were £117 million for the first half of 2008. |
|
|
|
Total sales of Avandia products were £385 million, a decline of 51% over the same period last year. |
|
|
|
Generic competition affected sales of Seroxat/Paxil (down 16% to £248 million), Zofran (down 61% to
£60 million) and Wellbutrin (down 15% to £223 million). A generic version of Wellbutrin 150mg dose
was introduced in the second quarter. |
|
|
|
Sales of Requip for Parkinsons disease/Restless Legs Syndrome declined 12% to £152 million,
following the introduction of generic competition in the USA in May. GSK received FDA approval for
Requip XL, a once a day treatment for Parkinsons disease, in June and launched the product in
July. |
|
|
|
Coreg IR sales declined 95% to £18 million, due to generic competition in the USA. Sales of Coreg
CR, which was launched last year, were £74 million. |
|
|
|
Sales of Relenza, an anti-viral treatment for influenza, were lower than the comparative half year
of 2007 at £32 million, reflecting the variable timings of tender orders from governments. |
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
19 |
Turnover
Consumer Healthcare
Six months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
USA |
|
|
Europe |
|
|
Rest of World |
|
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
£m |
|
|
CER% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OVER-THE-COUNTER MEDICINES |
|
|
880 |
|
|
|
(2 |
) |
|
|
268 |
|
|
|
(21 |
) |
|
|
278 |
|
|
|
5 |
|
|
|
334 |
|
|
|
14 |
|
Panadol franchise |
|
|
158 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
36 |
|
|
|
14 |
|
|
|
122 |
|
|
|
15 |
|
Smoking cessation products |
|
|
123 |
|
|
|
(21 |
) |
|
|
85 |
|
|
|
(17 |
) |
|
|
29 |
|
|
|
(34 |
) |
|
|
9 |
|
|
|
(10 |
) |
Tums |
|
|
43 |
|
|
|
|
|
|
|
37 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
25 |
|
Cold sore franchise |
|
|
39 |
|
|
|
12 |
|
|
|
16 |
|
|
|
14 |
|
|
|
19 |
|
|
|
13 |
|
|
|
4 |
|
|
|
|
|
Breathe Right |
|
|
35 |
|
|
|
27 |
|
|
|
19 |
|
|
|
(14 |
) |
|
|
10 |
|
|
|
>100 |
|
|
|
6 |
|
|
|
>100 |
|
alli |
|
|
27 |
|
|
|
(64 |
) |
|
|
25 |
|
|
|
(66 |
) |
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORAL HEALTHCARE |
|
|
587 |
|
|
|
6 |
|
|
|
100 |
|
|
|
(2 |
) |
|
|
328 |
|
|
|
6 |
|
|
|
159 |
|
|
|
11 |
|
Aquafresh franchise |
|
|
214 |
|
|
|
2 |
|
|
|
38 |
|
|
|
(7 |
) |
|
|
130 |
|
|
|
3 |
|
|
|
46 |
|
|
|
8 |
|
Sensodyne franchise |
|
|
173 |
|
|
|
14 |
|
|
|
30 |
|
|
|
11 |
|
|
|
84 |
|
|
|
15 |
|
|
|
59 |
|
|
|
15 |
|
Dental healthcare |
|
|
126 |
|
|
|
6 |
|
|
|
29 |
|
|
|
(3 |
) |
|
|
51 |
|
|
|
10 |
|
|
|
46 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUTRITIONAL HEALTHCARE |
|
|
403 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
244 |
|
|
|
7 |
|
|
|
159 |
|
|
|
22 |
|
Lucozade |
|
|
193 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
171 |
|
|
|
12 |
|
|
|
22 |
|
|
|
31 |
|
Horlicks |
|
|
104 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
(8 |
) |
|
|
93 |
|
|
|
20 |
|
Ribena |
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61 |
|
|
|
(2 |
) |
|
|
19 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,870 |
|
|
|
3 |
|
|
|
368 |
|
|
|
(16 |
) |
|
|
850 |
|
|
|
6 |
|
|
|
652 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
H1 Consumer Healthcare turnover update
Consumer Healthcare sales during the first half-year grew by 3% to £1.9
billion. In the Rest of World markets, sales grew 15% and in Europe, sales
grew 6%. Sales in the USA were £368 million, a decline of 16% during the half
year, reflecting the impact of lower sales of alli and increased competition to
smoking cessation products. Excluding sales of alli and smoking cessation
products, H1 Consumer Healthcare sales grew 9%.
Key product movements impacting turnover growth for the period:
|
|
Panadol sales grew 15% to £158 million aided by new consumer and physician communication campaigns. |
|
|
|
GSKs smoking cessation franchise continued to be impacted by strong competition from prescription
treatments and retailers own-label brands in the USA, with overall sales declining 21% to £123
million. GSK has a series of initiatives underway to improve growth of these brands. |
|
|
|
Sales of Breathe Right strips grew 27% to £35 million following further launches of the brand in
the Rest of World markets. |
|
|
|
H1 sales of alli were £27 million, impacted by lower demand from retailers for stock following a
year-end promotion and an adverse comparison with H1 2007 when alli was launched. Based on retail
market data, underlying demand for alli was estimated to be £55 million in H1. |
|
|
|
Sales of Sensodyne grew 14% to £173 million benefiting from the successful launch of Sensodyne
Pronamel. |
|
|
|
Sales of Lucozade grew strongly up 14% to £193 million, aided by the introduction of Lucozade
Alert; and sales of Horlicks were up 16% to £104 million, which benefited from a new product
promotion campaign in India. |
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
20 |
Balance sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30th June |
|
|
30th June |
|
|
31st December |
|
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
£m |
|
|
£m |
|
|
£m |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
8,092 |
|
|
|
7,215 |
|
|
|
7,821 |
|
Goodwill |
|
|
1,618 |
|
|
|
956 |
|
|
|
1,370 |
|
Other intangible assets |
|
|
4,658 |
|
|
|
3,688 |
|
|
|
4,456 |
|
Investments in associates and joint ventures |
|
|
346 |
|
|
|
309 |
|
|
|
329 |
|
Other investments |
|
|
382 |
|
|
|
576 |
|
|
|
517 |
|
Deferred tax assets |
|
|
2,210 |
|
|
|
2,173 |
|
|
|
2,196 |
|
Derivative financial instruments |
|
|
42 |
|
|
|
119 |
|
|
|
1 |
|
Other non-current assets |
|
|
495 |
|
|
|
820 |
|
|
|
687 |
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
17,843 |
|
|
|
15,856 |
|
|
|
17,377 |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
3,525 |
|
|
|
2,758 |
|
|
|
3,062 |
|
Current tax recoverable |
|
|
49 |
|
|
|
68 |
|
|
|
58 |
|
Trade and other receivables |
|
|
5,392 |
|
|
|
5,062 |
|
|
|
5,495 |
|
Derivative financial instruments |
|
|
329 |
|
|
|
167 |
|
|
|
475 |
|
Liquid investments |
|
|
393 |
|
|
|
1,022 |
|
|
|
1,153 |
|
Cash and cash equivalents |
|
|
4,988 |
|
|
|
1,894 |
|
|
|
3,379 |
|
Assets held for sale |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
14,679 |
|
|
|
10,974 |
|
|
|
13,626 |
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
32,522 |
|
|
|
26,830 |
|
|
|
31,003 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
(1,157 |
) |
|
|
(1,175 |
) |
|
|
(3,504 |
) |
Trade and other payables |
|
|
(5,312 |
) |
|
|
(4,374 |
) |
|
|
(4,861 |
) |
Derivative financial instruments |
|
|
(137 |
) |
|
|
(142 |
) |
|
|
(262 |
) |
Current tax payable |
|
|
(841 |
) |
|
|
(783 |
) |
|
|
(826 |
) |
Short-term provisions |
|
|
(819 |
) |
|
|
(733 |
) |
|
|
(892 |
) |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
(8,266 |
) |
|
|
(7,207 |
) |
|
|
(10,345 |
) |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings |
|
|
(12,566 |
) |
|
|
(5,023 |
) |
|
|
(7,067 |
) |
Deferred tax liabilities |
|
|
(762 |
) |
|
|
(917 |
) |
|
|
(887 |
) |
Pensions and other post-employment benefits |
|
|
(1,756 |
) |
|
|
(1,422 |
) |
|
|
(1,383 |
) |
Other provisions |
|
|
(1,100 |
) |
|
|
(813 |
) |
|
|
(1,035 |
) |
Derivative financial instruments |
|
|
(2 |
) |
|
|
(68 |
) |
|
|
(8 |
) |
Other non-current liabilities |
|
|
(363 |
) |
|
|
(339 |
) |
|
|
(368 |
) |
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
(16,549 |
) |
|
|
(8,582 |
) |
|
|
(10,748 |
) |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
(24,815 |
) |
|
|
(15,789 |
) |
|
|
(21,093 |
) |
|
|
|
|
|
|
|
|
|
|
NET ASSETS |
|
|
7,707 |
|
|
|
11,041 |
|
|
|
9,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
1,440 |
|
|
|
1,505 |
|
|
|
1,503 |
|
Share premium account |
|
|
1,302 |
|
|
|
1,183 |
|
|
|
1,266 |
|
Retained earnings |
|
|
4,255 |
|
|
|
7,820 |
|
|
|
6,475 |
|
Other reserves |
|
|
441 |
|
|
|
288 |
|
|
|
359 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
7,438 |
|
|
|
10,796 |
|
|
|
9,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests |
|
|
269 |
|
|
|
245 |
|
|
|
307 |
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
7,707 |
|
|
|
11,041 |
|
|
|
9,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
21 |
Net assets
The book value of net assets decreased by £2,203 million from £9,910 million at
31st December 2007 to £7,707 million at 30th June 2008. This reflects an
increase in net debt arising from the funding of the share buy-back programme
and dividend payments, together with an increase in the pension deficit. The
increase in the pension deficit arose predominantly from a reduction in asset
values and an increase in the estimated long-term UK inflation rate,partially
offset by an increase in the rate used to discount UK pension liabilities from
5.75% to 6.50%. At 30th June 2008, the net deficit on the Groups pension
plans was £716 million compared with a net deficit at 31st December 2007 of
£156 million.
The carrying value of investments in associates and joint ventures at 30th June
2008 was £346 million, with a market value of £928 million.
Equity
At 30th June 2008, total equity had decreased from £9,910 million at 31st
December 2007 to £7,707 million. The decrease arose principally from further
purchases of shares for cancellation, dividend payments and actuarial losses on
defined benefit pension and post-employment plans, partially offset by retained
earnings in the period.
At 30th June 2008, the ESOP Trusts held 131.1 million GSK shares against the
future exercise of share options and share awards. The carrying value of
£1,496 million has been deducted from other reserves. The market value of
these shares was £1,459 million.
During the period, GSK purchased £2,474 million of shares for cancellation, and
in addition an accrual of £605 million was recorded to reflect the maximum
potential commitment under an irrevocable purchase agreement to acquire shares
for cancellation during the period from 1st July to 23rd July 2008. At 30th
June 2008, the company held 474.2 million Treasury shares at a cost of £6,286
million, which has been deducted from retained earnings.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
22 |
Cash flow statement
Six months ended 30th June 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 2008 |
|
|
H1 2007 |
|
|
2007 |
|
|
|
£m |
|
|
£m |
|
|
£m |
|
Profit after tax |
|
|
2,639 |
|
|
|
2,888 |
|
|
|
5,310 |
|
Tax on profits |
|
|
1,071 |
|
|
|
1,151 |
|
|
|
2,142 |
|
Share of after tax profits of associates and joint ventures |
|
|
(14 |
) |
|
|
(26 |
) |
|
|
(50 |
) |
Net finance expense |
|
|
206 |
|
|
|
82 |
|
|
|
191 |
|
Depreciation and other non-cash items |
|
|
598 |
|
|
|
524 |
|
|
|
1,333 |
|
Increase in working capital |
|
|
(13 |
) |
|
|
(195 |
) |
|
|
(538 |
) |
Decrease in other net liabilities |
|
|
(274 |
) |
|
|
(510 |
) |
|
|
(308 |
) |
|
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
4,213 |
|
|
|
3,914 |
|
|
|
8,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation paid |
|
|
(1,039 |
) |
|
|
(979 |
) |
|
|
(1,919 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
|
3,174 |
|
|
|
2,935 |
|
|
|
6,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(599 |
) |
|
|
(684 |
) |
|
|
(1,516 |
) |
Proceeds from sale of property, plant and equipment |
|
|
8 |
|
|
|
19 |
|
|
|
35 |
|
Purchase of intangible assets |
|
|
(182 |
) |
|
|
(425 |
) |
|
|
(627 |
) |
Proceeds from sale of intangible assets |
|
|
|
|
|
|
5 |
|
|
|
9 |
|
Purchase of equity investments |
|
|
(17 |
) |
|
|
(150 |
) |
|
|
(186 |
) |
Proceeds from sale of equity investments |
|
|
16 |
|
|
|
44 |
|
|
|
45 |
|
Purchase of businesses, net of cash acquired |
|
|
(324 |
) |
|
|
(233 |
) |
|
|
(1,027 |
) |
Investment in associates and joint ventures |
|
|
(7 |
) |
|
|
|
|
|
|
(1 |
) |
Interest received |
|
|
179 |
|
|
|
137 |
|
|
|
247 |
|
Dividends from associates and joint ventures |
|
|
4 |
|
|
|
6 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from investing activities |
|
|
(922 |
) |
|
|
(1,281 |
) |
|
|
(3,009 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Decrease/(increase) in liquid investments |
|
|
779 |
|
|
|
14 |
|
|
|
(39 |
) |
Proceeds from own shares for employee share options |
|
|
6 |
|
|
|
84 |
|
|
|
116 |
|
Shares acquired by ESOP Trusts |
|
|
(3 |
) |
|
|
|
|
|
|
(26 |
) |
Issue of share capital |
|
|
37 |
|
|
|
332 |
|
|
|
417 |
|
Purchase of own shares for cancellation |
|
|
(2,376 |
) |
|
|
|
|
|
|
(213 |
) |
Purchase of Treasury shares |
|
|
|
|
|
|
(1,217 |
) |
|
|
(3,538 |
) |
Increase in long-term loans |
|
|
5,215 |
|
|
|
983 |
|
|
|
3,483 |
|
Repayment of long-term loans |
|
|
|
|
|
|
|
|
|
|
(207 |
) |
Net (repayment of)/increase in short-term loans |
|
|
(2,382 |
) |
|
|
(275 |
) |
|
|
1,632 |
|
Net repayment of obligations under finance leases |
|
|
(22 |
) |
|
|
(22 |
) |
|
|
(39 |
) |
Interest paid |
|
|
(283 |
) |
|
|
(174 |
) |
|
|
(378 |
) |
Dividends paid to shareholders |
|
|
(1,567 |
) |
|
|
(1,456 |
) |
|
|
(2,793 |
) |
Dividends paid to minority interests |
|
|
(65 |
) |
|
|
(67 |
) |
|
|
(77 |
) |
Other financing cash flows |
|
|
15 |
|
|
|
(24 |
) |
|
|
(79 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash outflow from financing activities |
|
|
(646 |
) |
|
|
(1,822 |
) |
|
|
(1,741 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(decrease) in cash and bank overdrafts in the period |
|
|
1,606 |
|
|
|
(168 |
) |
|
|
1,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange adjustments |
|
|
12 |
|
|
|
(17 |
) |
|
|
48 |
|
Cash and bank overdrafts at beginning of period |
|
|
3,221 |
|
|
|
1,762 |
|
|
|
1,762 |
|
|
|
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of period |
|
|
4,839 |
|
|
|
1,577 |
|
|
|
3,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and bank overdrafts at end of period comprise: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
4,988 |
|
|
|
1,894 |
|
|
|
3,379 |
|
Overdrafts |
|
|
(149 |
) |
|
|
(317 |
) |
|
|
(158 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,839 |
|
|
|
1,577 |
|
|
|
3,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
23 |
Cash flow
Cash generated from operations was £4,213 million in H1 2008. This represents
an increase of £299 million compared with H1 2007. The operating cash flow is
in excess of the funds needed for the routine cash flows of tax, capital
expenditure on property, plant and equipment and dividend payments to
shareholders, together amounting to £3,205 million. Receipts of £43 million
arose from the exercise of share options: £6 million from shares held by the
ESOP Trusts and £37 million from the issue of new shares. In addition, £2,376
million was spent in the period on purchasing the companys shares for
cancellation. The increased cash position at 30th June 2008 arose from issuing
a £700 million bond under the EMTN programme during Q1 2008 and $9 billion of
bonds under the US debt programme during Q2 2008.
Statement of recognised income and expense
|
|
|
|
|
|
|
|
|
|
|
H1 2008 |
|
|
H1 2007 |
|
|
|
£m |
|
|
£m |
|
Exchange movements on overseas net assets |
|
|
204 |
|
|
|
(38 |
) |
Tax on exchange movements |
|
|
(7 |
) |
|
|
(4 |
) |
Fair value movements on available-for-sale investments |
|
|
(119 |
) |
|
|
(19 |
) |
Deferred tax on fair value movements on available-for-sale investments |
|
|
13 |
|
|
|
(5 |
) |
Exchange movements on goodwill in reserves |
|
|
(15 |
) |
|
|
13 |
|
Actuarial (losses)/gains on defined benefit plans |
|
|
(507 |
) |
|
|
1,141 |
|
Deferred tax on actuarial movements in defined benefit plans |
|
|
151 |
|
|
|
(337 |
) |
Fair value movements on cash flow hedges |
|
|
(4 |
) |
|
|
(8 |
) |
Deferred tax on fair value movements on cash flow hedges |
|
|
2 |
|
|
|
3 |
|
|
|
|
|
|
|
|
Net (losses)/gains recognised directly in equity |
|
|
(282 |
) |
|
|
746 |
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
|
2,639 |
|
|
|
2,888 |
|
|
|
|
|
|
|
|
Total recognised income and expense for the period |
|
|
2,357 |
|
|
|
3,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised income and expense for the period attributable to: |
|
|
|
|
|
|
|
|
Shareholders |
|
|
2,330 |
|
|
|
3,584 |
|
Minority interests |
|
|
27 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
2,357 |
|
|
|
3,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
24 |
Additional information
Exchange rates
The Group 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 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31st December |
|
|
|
Q2 2008 |
|
|
Q2 2007 |
|
|
H1 2008 |
|
|
H1 2007 |
|
|
2007 |
|
Average rates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£/US$ |
|
|
1.99 |
|
|
|
1.98 |
|
|
|
1.99 |
|
|
|
1.97 |
|
|
|
2.00 |
|
£/Euro |
|
|
1.28 |
|
|
|
1.47 |
|
|
|
1.30 |
|
|
|
1.48 |
|
|
|
1.46 |
|
£/Yen |
|
|
208 |
|
|
|
240 |
|
|
|
209 |
|
|
|
237 |
|
|
|
235 |
|
Period-end rates: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£/US$ |
|
|
1.99 |
|
|
|
2.01 |
|
|
|
1.99 |
|
|
|
2.01 |
|
|
|
1.99 |
|
£/Euro |
|
|
1.26 |
|
|
|
1.49 |
|
|
|
1.26 |
|
|
|
1.49 |
|
|
|
1.36 |
|
£/Yen |
|
|
211 |
|
|
|
248 |
|
|
|
211 |
|
|
|
248 |
|
|
|
222 |
|
During both Q2 and H1 2008, average Sterling exchange rates were stronger
against the US Dollar but weaker against the Euro and the Yen compared with
similar periods in 2007. Comparing Q2/H1 2008 period-end rates with Q2/H1 2007
period-end rates, Sterling was weaker against the US Dollar, the Euro and the
Yen.
Restructuring
In October 2007, GSK announced a significant new restructuring programme to
improve the effectiveness and productivity of its operations. This programme
is expected to deliver annual pre-tax savings of £700 million by 2010. GSK
expects to realise approximately £350 million of savings in 2008 and £550
million of savings in 2009.
Charges before tax of £187 million in Q2 2008 and £274 million in H1 2008 were
recorded for the programme and the restructuring of Reliant Pharmaceuticals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
Q2 2008 |
|
|
Q2 2007 |
|
|
H1 2008 |
|
|
H1 2007 |
|
|
|
£m |
|
|
£m |
|
|
£m |
|
|
£m |
|
Tax charge on business performance profit |
|
|
577 |
|
|
|
|
|
|
|
1,140 |
|
|
|
|
|
Tax rate % |
|
|
28.5 |
% |
|
|
|
|
|
|
28.6 |
% |
|
|
|
|
Tax charge on statutory profit |
|
|
529 |
|
|
|
541 |
|
|
|
1,071 |
|
|
|
1,151 |
|
Tax rate % |
|
|
28.8 |
% |
|
|
28.5 |
% |
|
|
28.9 |
% |
|
|
28.5 |
% |
Transfer pricing and other issues are as previously described in the Taxation
note to the Financial Statements included in the Annual Report 2007. Following
discussions with HMRC, the Group has now settled substantially all outstanding
UK tax issues for all periods up to 31st December 2006, with no material impact
on the expected tax rate for the year. The Group also has open tax issues with
the revenue authorities in the USA and Japan, where there have been no material
changes since the publication of the Annual Report 2007, and in Canada, where a
court judgement has been delivered and GSK is appealing.
GSK uses the best advice in determining its transfer pricing methodology and in
seeking to manage transfer pricing and other issues to a satisfactory
conclusion and, on the basis of external professional advice, continues to
believe that it has made adequate provision for the liabilities likely to arise
from open assessments. The ultimate liability for such matters may vary from
the amounts provided and is dependent upon the outcome of litigation
proceedings and negotiations with the relevant tax authorities.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
25 |
Weighted average number of shares
|
|
|
|
|
|
|
|
|
|
|
Q2 2008 |
|
|
Q2 2007 |
|
|
|
millions |
|
|
millions |
|
Weighted average number of shares basic |
|
|
5,234 |
|
|
|
5,574 |
|
Dilutive effect of share options and share awards |
|
|
38 |
|
|
|
51 |
|
|
|
|
|
|
|
|
Weighted average number of shares diluted |
|
|
5,272 |
|
|
|
5,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 2008 |
|
|
H1 2007 |
|
|
2007 |
|
|
|
millions |
|
|
millions |
|
|
millions |
|
Weighted average number of shares basic |
|
|
5,294 |
|
|
|
5,587 |
|
|
|
5,524 |
|
Dilutive effect of share options and share awards |
|
|
31 |
|
|
|
59 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares diluted |
|
|
5,325 |
|
|
|
5,646 |
|
|
|
5,567 |
|
|
|
|
|
|
|
|
|
|
|
|
The number of shares in issue, excluding those held by the ESOP Trusts and
those held as Treasury shares at 30th June 2008, was 5,157 million (30th June
2007: 5,550 million). |
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid/ |
|
Pence per |
|
|
|
|
payable |
|
share |
|
£m |
2008 |
|
|
|
|
|
|
|
|
|
|
First interim
|
|
10th July 2008
|
|
|
13 |
|
|
|
683 |
|
Second interim
|
|
9th October 2008
|
|
|
13 |
|
|
|
670 |
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
First interim
|
|
12th July 2007
|
|
|
12 |
|
|
|
670 |
|
Second interim
|
|
11th October 2007
|
|
|
12 |
|
|
|
667 |
|
Third interim
|
|
10th January 2008
|
|
|
13 |
|
|
|
708 |
|
Fourth interim
|
|
10th April 2008
|
|
|
16 |
|
|
|
859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53 |
|
|
|
2,904 |
|
|
|
|
|
|
|
|
|
|
|
|
The Board has declared a second interim dividend of 13 pence per share (Q2
2007: 12p) making 26 pence for the half year (H1 2007: 24p). The equivalent
interim dividend receivable by ADR holders is 51.9116 cents per ADS based on an
exchange rate of £1/$1.9966. The ex-dividend date will be 30th July 2008, with
a record date of 1st August 2008 and a payment date of 9th October 2008.
The third interim dividend for 2008 will be declared on 22nd October 2008 and
will have an ex-dividend date of 29th October 2008 and a record date of 31st
October 2008. It will be paid on 8th January 2009.
The liability for an interim dividend is only recognised when it is paid, which
is usually after the accounting period to which it relates. The first and
second interim dividends for 2008 have not been recognised in these results.
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of movements in equity |
|
H1 2008 |
|
|
H1 2007 |
|
|
2007 |
|
|
|
£m |
|
|
£m |
|
|
£m |
|
Total equity at beginning of period |
|
|
9,910 |
|
|
|
9,648 |
|
|
|
9,648 |
|
Total recognised income and expense for the period |
|
|
2,357 |
|
|
|
3,634 |
|
|
|
6,134 |
|
Dividends to shareholders |
|
|
(1,567 |
) |
|
|
(1,456 |
) |
|
|
(2,793 |
) |
Shares issued |
|
|
37 |
|
|
|
332 |
|
|
|
417 |
|
Shares purchased and held as Treasury shares |
|
|
|
|
|
|
(1,250 |
) |
|
|
(3,537 |
) |
Shares purchased for cancellation |
|
|
(3,079 |
) |
|
|
|
|
|
|
(213 |
) |
Consideration received for shares transferred by ESOP Trusts |
|
|
6 |
|
|
|
84 |
|
|
|
116 |
|
Shares acquired by ESOP Trusts |
|
|
(3 |
) |
|
|
|
|
|
|
(26 |
) |
Share-based incentive plans |
|
|
113 |
|
|
|
116 |
|
|
|
237 |
|
Tax on share-based incentive plans |
|
|
(2 |
) |
|
|
|
|
|
|
4 |
|
Distributions to minority shareholders |
|
|
(65 |
) |
|
|
(67 |
) |
|
|
(77 |
) |
|
|
|
|
|
|
|
|
|
|
Total equity at end of period |
|
|
7,707 |
|
|
|
11,041 |
|
|
|
9,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of cash flow to movements in net debt |
|
H1 2008 |
|
|
H1 2007 |
|
|
|
£m |
|
|
£m |
|
Net debt at beginning of the period |
|
|
(6,039 |
) |
|
|
(2,450 |
) |
Increase/(decrease) in cash and bank overdrafts |
|
|
1,606 |
|
|
|
(168 |
) |
Cash inflow from liquid investments |
|
|
(779 |
) |
|
|
(14 |
) |
Net increase in long-term loans |
|
|
(5,215 |
) |
|
|
(983 |
) |
Net repayment of short-term loans |
|
|
2,382 |
|
|
|
275 |
|
Net repayment of obligations under finance leases |
|
|
22 |
|
|
|
22 |
|
Exchange adjustments |
|
|
(301 |
) |
|
|
56 |
|
Other non-cash movements |
|
|
(18 |
) |
|
|
(20 |
) |
|
|
|
|
|
|
|
Increase in net debt |
|
|
(2,303 |
) |
|
|
(832 |
) |
|
|
|
|
|
|
|
Net debt at end of the period |
|
|
(8,342 |
) |
|
|
(3,282 |
) |
|
|
|
|
|
|
|
Capital expenditure
In the period to 30th June 2008 there were additions to property, plant and
equipment of £567 million (H1 2007: £712 million) and additions to intangible
assets of £182 million (H1 2007: £424 million).
In the period to 30th June 2008 there were disposals of property, plant and
equipment with a book value of £20 million (H1 2007: £24 million) and disposals
of intangible assets with a book value of £nil (H1 2007: £nil).
Business acquisitions and disposals
On 5th June 2008, the Group acquired all of the share capital of Sirtris
Pharmaceuticals Inc., a pharmaceutical company based in the USA specialising in
the development of small molecule drugs that target the sirtuins, a family of
enzymes associated with the ageing process. The purchase price of £376 million
included £52 million of cash and cash equivalents, with the remainder
represented by preliminary valuations of intangible assets of £106 million,
other net liabilities of £27 million and goodwill of £245 million. These are
provisional valuations and may be subject to change in the future.
Contingent liabilities
In H1 2008, there were no material changes to the Groups contingent
liabilities relating to guarantees, letters of credit, discounted bills and
other items arising in the normal course of business from those disclosed in
the Annual Report 2007. For discussions of tax and legal issues, refer to
Taxation on page 25 and Legal matters on page 15.
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Issued: Wednesday, 23rd July 2008, London, U.K.
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27 |
Related party transactions
The Groups significant related parties are its joint ventures and associates
as disclosed in the companys Annual Report 2007. During H1 2008 the value of
services purchased from Quest Diagnostics was £19 million (H1 2007: £18
million) and the balance payable by GSK for services at 30th June 2008 was £2
million (30th June 2007: £4 million).
The value of services provided by GSK to the joint venture with Shionogi was
£nil (H1 2007: £nil) and the balance payable to GSK for these services at 30th
June 2008 was £1 million (30th June 2007 £1 million).
There were no material transactions with directors..
Principal risks and uncertainties
The principal risks and uncertainties affecting the Group are those described
under the headings below in the Risk Factors section of the Business Review
of the Annual Report 2007.
Risk of unplanned loss of patents
Risk that R&D will not deliver commercially successful new products
Risk of substantial adverse outcome of litigation and government investigations
Risks of competition, price controls and limitations on sales
Regulatory controls
Risk of interruption of product supply
Risk from concentration of sales to wholesalers
Reliance on information technology
Taxation
Disruption from pandemic influenza
Environmental liabilities
Global political and economic conditions
Accounting standards
Human resources
Accounting presentation and policies
This unaudited Results Announcement containing condensed financial information
for the three and six months ended 30th June 2008 is prepared in accordance
with the Listing Rules of the UK Listing Authority, IAS 34 Interim Financial
Reporting and the accounting policies set out in the Annual Report 2007.
GSK utilises a 3-column approach to the income statement. Business
Performance shows GSKs underlying results excluding restructuring charges
related to the new Operational Excellence programme, announced in October 2007,
and significant acquisitions. The middle column shows restructuring costs and
the Statutory column shows the full results.
Business performance, which is a supplemental measure, is the primary
performance measure used by management, and is presented after excluding
restructuring charges relating to the new Operational Excellence programme,
which commenced in October 2007, and significant acquisitions. Management
believes that exclusion of these items provides a better reflection of the way
in which the business is managed and gives a more useful indication of the
underlying performance of the Group for the periods presented. Statutory
results include these items. The Group reported only statutory results for Q2
and H1 in 2007.
In order to illustrate underlying performance, it is the Groups 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 previous year. All commentaries are presented in terms of CER
growth and compare 2008 business performance results with 2007 statutory
results, unless otherwise stated.
This Results Announcement does not constitute statutory accounts of the Group
within the meaning of section 240 of the Companies Act 1985. The balance sheet
at 31st December 2007 has been derived from the full Group accounts published
in the Annual Report 2007, which has been delivered to the Registrar of
Companies and on which the report of the independent auditors was unqualified
and did not contain a statement under either section 237(2) or section 237(3)
of the Companies Act 1985.
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Issued: Wednesday, 23rd July 2008, London, U.K.
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28 |
Data for market share and market growth rates are GSK estimates based on the
most recent data from independent external sources and, where appropriate, are
valued in Sterling at relevant exchange rates. Figures quoted for product
market share reflect sales by GSK and licensees.
Comparative information restatement
As a result of the review of the strategic direction of the Group, the regional
reporting structure within the Pharmaceuticals business has been realigned.
Russia and a number of developing Eastern European markets, previously reported
within Europe are now included within the Emerging Markets sector in the Rest
of the World. No change has been made to the reporting structure in the
Consumer Healthcare business where these markets are still reported within
Europe.
The Group has also taken the opportunity to review the allocation of entities
and expenses between the Pharmaceuticals and Consumer Healthcare businesses.
As a result, one entity in China has been reclassified from Pharmaceuticals to
Consumer Healthcare. Comparative information has been restated onto a
consistent basis and the effect of the restatements on each quarter in 2007 and
on Q1 2008 is available on the companys website.
These reallocations have no impact on Group turnover or Group operating profit.
Directors responsibility statement
The Board of Directors approved this document on 23rd July 2008.
The directors confirm that to the best of their knowledge this
unaudited condensed financial information has been prepared in
accordance with IAS 34 as adopted by the European Union and that the
interim management report herein includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8.
The directors of GlaxoSmithKline plc are as listed in the companys
Annual Report 2007, with the exception that Dr Jean-Pierre Garnier
retired on 22nd May 2008.
By order of the Board
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Andrew Witty
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Julian Heslop |
Chief Executive Officer
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Chief Financial Officer |
23rd July 2008
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23rd July 2008 |
Investor information
Financial calendar
The company will announce third quarter 2008 results on 22nd October 2008.
Internet
This Announcement and other information about GSK are available on the
companys website at: http://www.gsk.com.
Contact information
Copies of this interim management report may be obtained from companys
registrars on 0871 384 2991 or by writing to, Equiniti Limited, at Aspect
House, Spencer Road, Lancing, West Sussex, BN99 6DA.
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Issued: Wednesday, 23rd July 2008, London, U.K.
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29 |
Independent review report to GlaxoSmithKline plc
Introduction
We have been engaged by the Company to review the condensed financial
information in the half-yearly financial report for the three and six months
ended 30 June 2008, which comprises the income statement, balance sheet,
statement of recognised income and expense, cash flow statement and related
notes. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Directors responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdoms Financial Services Authority.
The annual financial statements of the Group are prepared in accordance with
IFRSs as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, Interim Financial
Reporting, as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
financial information in the half-yearly financial report based on our review.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
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 enquiries, 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 Ireland) 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 statements in the half-yearly financial
report for the three and six months ended 30 June 2008 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdoms Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
23rd July 2008
Notes:
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(a) |
|
The maintenance and integrity of the GlaxoSmithKline plc website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim report since it was initially
presented on the website. |
|
|
|
(b) |
|
Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in
other jurisdictions. |
|
|
|
|
|
|
Issued: Wednesday, 23rd July 2008, London, U.K.
|
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30 |