6-K 1 gsk201207256k.htm HALF YEARLY REPORT gsk201207256k.htm
FORM 6-K
 
 
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549
 
 
Report of Foreign Issuer
 
 
Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934
 
 
 
For period ending 25 July 2012
GlaxoSmithKline plc
(Name of registrant)


 
 
980 Great West Road, Brentford, Middlesex, TW8 9GS
(Address of principal executive offices)


 
 
Indicate by check mark whether the registrant files or
will file annual reports under cover Form 20-F or Form 40-F


 
 
Form 20-F x     Form 40-F

 
--

 
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.


 
 
Yes      No x
--
 

 
 



Issued: Wednesday, 25 July 2012, London, U.K.
Results Announcement for the second quarter and Interim Management Report for the half-year 2012
 
GSK delivers Q2 core EPS of 26.4p and dividend of 17p
 
 
Core results*
 
Q2 2012
     
H1 2012
 
 
£m
CER%
£%
 
£m
CER%
£%
Turnover
6,462
 
(2)
(4)
 
13,102
 
(2)
Core operating profit
2,002
 
(7)
(8)
 
4,073
 
(2)
(3)
Core earnings per share
26.4p
(5)
(5)
 
53.7p
 
 
Total results
 
Q2 2012
     
H1 2012
 
 
£m
CER%
£%
 
£m
CER%
£%
Turnover
6,462
 
(2)
(4)
 
13,102
 
(2)
Operating profit
1,736
 
(1)
(2)
 
3,773
 
(1)
Earnings per share
25.4p
17 
17 
 
52.1p
 
 
Summary
 
Group sales -2% with growth from key investment areas offset by pressure on mature products in Europe and US:
 
-
Growth in Pharmaceuticals and Vaccines sales in EMAP +9% and Japan +6%; Consumer Healthcare sales +7% (excluding divested brands and alli)
 
-
Sales declines in Europe -8% and US -6% reflect challenging macro-economic environment, genericisation and discontinuation of certain products
 
-
Full year sales now expected to be in line with 2011 on a constant currency basis
   
Significant late-stage pipeline delivery supports potential for multiple product launches and outlook for the Group:
 
-
Data in-house to support potential launch of 8 new drugs and vaccines in next 24 months across broad therapeutic categories including COPD, type 2 diabetes and HIV
 
-
Multiple approvals and filings successfully achieved since Q1 including filing of first new asset in respiratory portfolio Relvar/Breo
 
-
Growing momentum of innovative oncology portfolio with imminent filing of MEK, BRAF inhibitors for melanoma
     
Further actions taken to reduce costs and drive operating leverage:
 
-
2012 core operating margin now expected to be broadly in line with last year (2011: 32.1%)
 
-
Continued strategic commitment to drive operating margin improvements over the next few years
 
-
New manufacturing process improvements expected to generate annual cost savings of approximately £500 million by end of 2015
 
-
Accelerating financial efficiencies with Q2 core tax rate improved to 25.5% (Q2 2011: 26.6%); now targeting 25% core tax rate in 2013
   
Continued strong cash generation supports enhanced returns to shareholders:
 
-
H1 2012 adjusted net cash inflow from operating activities of £3.1 billion (+3%)
 
-
Q2 dividend: 17p +6%
 
-
£3.2 billion of cash distributed to shareholders in H1 2012: +22% versus H1 2011; continue to expect £2-£2.5 billion of share repurchases in 2012
 
-
Acquisition of Human Genome Sciences expected to complete in Q3 2012; Benlysta US net sales $38 million in Q2 2012
     
       
 
 
The full results are presented under 'Income Statement' on page 27 and Core results reconciliations are presented on pages 43 to 46.
*   For explanations of the measures 'Core results' and 'CER', see page 25.
 
 
 
GSK's strategic priorities
 
 
We have focused our business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve our long term financial performance:
   
·
Grow a diversified global business
·
Deliver more products of value
·
Simplify the operating model
 
 
Chief Executive Officer's review
 
Our performance this quarter reflects the challenging macro-economic environment in which we are operating and the continued transition of our product portfolio.  Ultimately, the ability of companies in our sector to succeed in this environment and in the future will be determined by how successful they are in accessing growth markets and delivering valuable new product flow on a sustainable basis.
 
On both these dimensions, GSK is making progress.  In the last four years, we have created a more geographically balanced business with improving operational and financial efficiency.  At the same time, we have developed a substantial late-stage pipeline, which we believe is a material and significant organic growth opportunity for the Group.
 
R&D output this last quarter has been remarkable.  We received very encouraging Phase III data for assets to treat COPD, diabetes and HIV and received regulatory approvals for two new vaccines.  We also initiated regulatory filings for new products to treat respiratory diseases and hepatitis C thrombocytopenia and we expect to complete the first filings for our BRAF and MEK inhibitors for treatment of melanoma very shortly.
 
Of the 15 assets with Phase III data expected by the end of 2012, 12 have now reported some or all of their data, with 10 positive and 2 negative.  Several of these programmes are reporting ahead of schedule and we already have the vast majority of data required to support the potential launch of 8 major new drugs and vaccines in the next 24 months.
 
Whilst there is still much to be done to get these products registered, this marks the beginning of a new phase in pipeline delivery for GSK and it is essential that we mobilise the organisation to optimise this opportunity.  We are investing in a new global 'franchise' model to strengthen our R&D and Commercial interface and build our capability to execute global launches of multiple new products.  In doing this we aim to improve the consistency of product launch performances at a market-by-market level.
 
We are also restructuring our regional commercial organisation and are combining our European and Emerging Markets business units under the leadership of Abbas Hussain.  This will increase our capability to flex resources to support delivery of the pipeline and continued investment in Emerging Markets.  These changes will improve GSK's ability to realise new growth opportunities and remain competitive in the current global pricing environment.
 
As we stated in April, given economic circumstances, we could not rule out further adverse impact to pricing on our more established products.  Since then the outlook for Europe has materially worsened.  Sales for our European business declined 8% in the quarter reflecting a 7% adverse pricing effect and 1% volume decline.
 
Sales in our US Pharmaceutical and Vaccines business also declined in the quarter.  Here, we are also seeing pressure on our mature portfolio exacerbated by genericisation and discontinuation of certain products.  However, we remain confident that our US business can return to sales growth in the future given the potential contribution of the pipeline and recent performance of newly launched products such as Votrient and Arzerra.
 
These pressures in Europe and the US are responsible for the sales decline we have seen in the second quarter.  Overall Group sales declined 2% in the quarter and were flat for the first 6 months.  In this context and with the known adverse prior year comparisons to come in Q3, we now expect that sales this year will be in line with 2011 on a constant currency basis.
 
Clearly, we will continue to look for opportunities to drive sales growth and our businesses in Emerging Markets, Japan and Consumer Healthcare are all delivering positive sales contributions.  In the quarter, Pharmaceutical and Vaccine sales in Japan grew 6% and in Emerging Markets, as anticipated, we saw an improved performance versus Q1 with sales up 9%.  Our ongoing Consumer Healthcare business (excluding divested brands and alli) also continued to perform strongly with sales up 7%.
 
In addition, we remain focused on generating operating leverage and increasing financial efficiencies to support improved earnings performance.  Through the implementation of our operational excellence programme over the last four years, we have now realised annual cost savings of approximately £2.5 billion.
 
With future sales generated from pipeline delivery and continued discipline on cost management, we remain confident in our ability to drive improvements in the Group's core operating margin over the next few years.  However, for 2012 the tougher environment we are facing means that we now expect the core operating margin this year to be broadly in line with last year (32.1%).
 
Our actions to reduce costs and accelerate the financial strategy we set out last year is already evident in the second quarter.  Core SG&A expenditure was down 4% compared to Q2 2011 and our tax rate improved to 25.5%.  We are now targeting a core tax rate of around 25.5% for the full year and of 25% in 2013, a year earlier than previously expected.  In addition, we expect to see improvements in net financing costs as cash balances reduce and debt is refinanced at more favourable rates.
 
One driver of future margin improvement will be process improvements in our manufacturing organisation. Over the last several years, we have rationalised our site network and improved the efficiency of our operations.  In doing so, we have identified further opportunities to simplify our supply chain processes and increase our global cost competitiveness.  We believe these improvements could deliver annual cost savings totalling £500 million by the end of 2015 phased over the next three years and delivered for additional costs of approximately £200 million.
 
We will also continue to look at ways to streamline and drive efficiency in our current product portfolios and effect change in our business mix to drive margin improvement.  Our recent agreement to acquire Human Genome Sciences and the divestment of non-core OTC brands from our consumer healthcare business are examples of this.
 
GSK continues to be highly cash generative with second quarter cash inflows of £1.7 billion.  Before legal settlements, adjusted net cash inflow from operating activities was £2.1 billion.  Our commitment remains to use free cash flow to support increasing dividends, share repurchases or, where returns are more attractive, bolt-on acquisitions.  In the first half of 2012, £3.2 billion in cash has been distributed to shareholders, an increase of 22% versus 2011.  Today, we have confirmed another 6% increase in the Q2 dividend to 17p and we continue to expect total share repurchases this year to be £2-£2.5 billion.
 
In July, we paid £1.9 billion to the US Government in settlement of a broad range of long-standing legal cases.  This settlement has reduced uncertainty for the Group and we believe was in the best interests of shareholders.  However, the mistakes that were made were clearly unacceptable.  Over the last four years, we have taken action at all levels of the company to change our procedures for compliance, marketing and selling
and, through our values based culture, we will continue to do all we can to live up to the standards rightly expected of us by regulators, patients, shareholders and wider society.
 
In conclusion, whilst we are under no illusions that we must respond to the challenging economic environment we face, the very significant progress made in our late-stage pipeline provides us with increasing confidence that we have the ability to deliver long-term sustainable sales growth and improving returns to shareholders.  For the remainder of this year we will continue to look to maximise growth opportunities from key investment areas and take further action to reduce our cost base and implement financial efficiencies.  At the same time, and going into 2013, we will focus on preparation for the roll out of multiple new products, which we would expect to see materially contribute to the Group sales and earnings over the next few years.
 
 
Sir Andrew Witty
Chief Executive Officer
 
Video interviews with Sir Andrew and CFO, Simon Dingemans discussing today's results are available on
www.gsk.com
 
 
 
Contents
Page
   
Q2/H1 2012 results summary
1
Chief Executive Officer's review
2
Group performance
5
Divisional performance
14
Research and development
22
Definitions
25
Contacts
26
   
Income statements
27
Statement of comprehensive income
28
Pharmaceuticals and Vaccines turnover - three months ended 30 June 2012
29
Pharmaceuticals and Vaccines turnover - six months ended 30 June 2012
30
ViiV Healthcare turnover - three months and six months ended 30 June 2012
31
Balance sheet
32
Statement of changes in equity
33
Cash flow statement - six months ended 30 June 2012
34
Segment information
35
Legal matters
38
Taxation
39
Additional information
40
Reconciliation of cash flow to movements in net debt
42
Core results reconciliations
43
Principal risks and uncertainties
47
Directors' responsibility statement
47
Auditor's review report
48
 
 
 
Group performance
 
 
Group turnover by division, geographic region and segment
 
 
Group turnover by division
Q2 2012
H1 2012
 
 

  
 
£m
Growth
CER%
£m
Growth
CER%
 




Pharmaceuticals
4,442
(3)
8,988
(1)
Vaccines
763
1,521
 




Pharmaceuticals and Vaccines
5,205
(3)
10,509
(1)
Consumer Healthcare
1,257
2,593
 




 
6,462
(2)
13,102
 




         
 
 
 
Group turnover by geographic region
Q2 2012
H1 2012
 

 

 
 
£m
Growth
CER%
£m
Growth
CER%
 

 

 

 

 
USA
2,003
(8)
4,154
(1)
Europe
1,824
(7)
3,723
(6)
EMAP
1,680
11 
3,261
Japan
543
1,158
Other
412
(6)
806
(5)
 

 

 

 

 
 
6,462
(2)
13,102
 

 

 

 

 
         
 
 
 
Group turnover by segment
Q2 2012
H1 2012
 
 
 
 
£m
Growth
CER%
£m
Growth
CER%
 
 
 
 
 
Pharmaceuticals and Vaccines
       
-
USA
1,662
(6)
3,446
-
Europe
1,236
(8)
2,531
(7)
-
EMAP
1,169
2,221
-
Japan
484
1,033
-
ViiV Healthcare
346
(7)
680
(6)
-
Other trading and unallocated pharmaceuticals
308
(7)
598
(6)
 
 
 
 
 
Pharmaceuticals and Vaccines
5,205
(3)
10,509
(1)
Consumer Healthcare
1,257
2,593
 
 
 
 
 
 
6,462
(2)
13,102
 
 
 
 
 
 
 
Turnover - Q2 2012
 
Total Group turnover for Q2 2012 decreased 2%, to £6,462 million.  Pharmaceuticals and Vaccines turnover was down 3% primarily reflecting continued pressures in mature markets and growth in EMAP and Japan.  Pharmaceuticals turnover declined 3% and Vaccines turnover was flat.  Reported Consumer Healthcare turnover was flat at £1,257 million.  Consumer Healthcare turnover, excluding the non-core OTC brands that were divested in H1 2012 and alli
increased 7%.
 
In the quarter, Group turnover outside the US and Europe accounted for 41% of turnover and increased 7%.
 
In the US, Pharmaceuticals and Vaccines turnover declined 6%. Pharmaceuticals turnover declined 7%, reflecting the loss of sales of Vesicare following the conclusion of the co-promotion agreement in Q1 2012, together with sales declines of a number of older products, particularly Arixtra, Avandia and Valtrex.  These declines were partly offset by an encouraging performance from new products, particularly in oncology, which was up 39%.  Respiratory sales were flat in the quarter.  Sales of Vaccines in the US were down 1%, reflecting adverse comparisons for Rotarix and Hepatitis vaccines with Q2 2011 which benefited from significant CDC stockpile purchases.
 
Europe Pharmaceuticals and Vaccines markets remained particularly challenging and turnover declined 8% driven by adverse pricing effects including the impact of greater parallel trade of 7%.  In Q1 2012 the adverse price effect was 6% on the same basis. Volumes declined by 1% reflecting the increasing impact of generic competition to tail products.  Pharmaceuticals turnover declined 9% while vaccines sales, down 5% to £240 million, also continued to be affected by austerity measures, including delays to some tender orders, as well as weak travel vaccines sales.
 
EMAP Pharmaceuticals and Vaccines sales rose 9%, with growth generated across a broad number of markets, primarily Latin America (up 11% to £334 million) and China (up 13% to £177 million), and also a return to growth in Middle East/Africa (up 5% to £294 million). This was partly offset by price reductions in Turkey, Korea and the CIS. Pharmaceuticals grew 7% primarily reflecting strong growth in respiratory, anti-bacterial and cardiovascular/urogenital sales together with a growing contribution from newer oncology products, partly offset by weaker sales of anti-virals.  Vaccines grew 15%, primarily as a result of strong tender shipments for Rotarix, Synflorix and Infanrix/Pediarix.
 
Japan Pharmaceuticals and Vaccines turnover grew 6%, with an encouraging performance from the Pharmaceuticals business, which grew 10% despite the impact of the mandatory biennial price cuts.  The Respiratory portfolio grew 12% to £151 million and there were strong contributions from a number of the newer products, including Lamictal, Avodart and Volibris.Vaccines sales declined significantly, reflecting an adverse comparison with Q2 2011 which benefited from the HPV vaccination catch-up programme, which is now largely complete.
 
ViiV Healthcare turnover declined by 7% as the continued effect of generic competition in the US to Combivir and Epivir offset the growth of newer products.
 
Consumer Healthcare turnover excluding the sales of the non-core OTC brands that were divested in H1 2012 and alli increased by 7%.  This reflected continued strong contributions from Oral care, Nutrition and Wellness, partly offset by a decline in Skin health.  On a regional basis, ongoing growth was broadly based with contributions from each of the US (up 4%), Europe (up 2%), both in the face of continued economic pressures, and Rest of World (up 12%), particularly India and China.  As a result of a supply issue in H1 2012, the disposal of alli on acceptable terms has not proved possible and so GSK has decided to retain and re-build the brand.  Market re-supply commenced in late June 2012.  Excluding only the non-core OTC brands divested in H1 2012 (but including alli), Consumer Healthcare turnover increased 5% in the quarter.  Reported Consumer Healthcare turnover was flat at £1,257 million.
 
Turnover - H1 2012
 
Total Group turnover for H1 2012 was flat as a 1% decline in Pharmaceuticals and Vaccines turnover was offset by a 1% increase in reported Consumer Healthcare turnover.  Pharmaceuticals turnover was down 1%, largely as a result of continued pressures in mature markets.  Vaccines turnover was flat as growth in EMAP and Japan was offset by declines in the US and Europe.  Excluding the non-core OTC brands divested in H1 2012 and alli Consumer Healthcare turnover grew 7%.
 
In the half-year, Group turnover outside the US and Europe accounted for 40% of turnover and increased 5%.
 
US Pharmaceuticals and Vaccines turnover increased 1%.  Pharmaceuticals turnover increased 2%, with growth in Respiratory, Oncology and CNS products.  Growth also benefited from the net effect of the incremental revenue from the conclusion of the Vesicare co-promotion agreement in Q1 2012, but no sales thereafter.  There were sales declines for a number of older products including Arixtra, Avandia and Valtrex but an encouraging performance from new products, particularly in oncology, which grew 29%.Vaccines sales fell 3% as adverse comparisons for Hepatitis vaccines and Rotarix with H1 2012, which benefited from significant CDC stockpile purchases, more than offset the growth in sales of Infanrix/Pediarix and Boostrix.
 
Europe Pharmaceuticals and Vaccines turnover declined 7% in the half-year primarily driven by the effects of various government austerity measures on prices.  This represented adverse pricing effects of 7% and flat volume.  Pharmaceuticals sales declined 7% in the half-year and Vaccines sales declined 4%.
 
EMAP Pharmaceuticals and Vaccines turnover increased 6% as strong growth in Latin America and China was tempered by the effect of price reductions, including in Turkey and Korea, and instability in the Middle East/Africa region.  Pharmaceuticals turnover increased 6%, while the Vaccines business, where volatility is often driven by tender sales, grew 3% with strong growth in many developing countries being partly offset by lower tender orders in Latin America.
 
Japan Pharmaceuticals and Vaccines turnover grew 5% despite the impact of the mandatory biennial price cuts.  Pharmaceuticals turnover grew 3%, with strong growth from the recently launched products, Lamictal, Avodart, Volibris
and Rotarix. The Respiratory portfolio grew 1%, driven by a strong performance from Xyzal, offsetting declines in Flixonase and Zyrtec as a result of a weaker allergy season than in H1 2011.  Vaccines sales increased 21%, primarily as a result of the strength of Rotarix following its recent launch.
 
ViiV Healthcare turnover declined by 6% as generic competition in the US to Combivir and Epivir offset the growth generated by Epzicom and Selzentry.
 
Consumer Healthcare turnover excluding the sales of the non-core OTC brands that were divested in H1 2012 and alli, increased 7%.  This reflected continued strong contributions from Oral care, Nutrition and Wellness, partly offset by a decline in Skin health.  On a regional basis, the US grew 6%, Europe 3% and Rest of World 11%.  Excluding only the non-core OTC brands divested in H1 2012 (but including alli) Consumer Healthcare turnover increased 5% in the half-year.  Reported turnover for Consumer Healthcare grew 1%.
 
 
 
Core operating profit and margin
 
 
Core operating profit
Q2 2012
H1 2012
 


 
£m
% of
turnover
Growth
CER %
£m
% of
turnover
Growth
CER %
 






Turnover
6,462 
100 
(2)
13,102 
100 
             
Cost of sales
(1,690)
(26.2)
(3,401)
(26.0)
Selling, general and administration
(1,956)
(30.3)
(4)
(3,994)
(30.5)
(1)
Research and development
(880)
(13.6)
(3)
(1,772)
(13.5)
Royalty income
66 
1.1 
138 
1.1 
 






Core operating profit
2,002 
31.0 
(7)
4,073 
31.1 
(2)
 






Core earnings per share
26.4p
 
(5)
53.7p
 
 

 


 

             
 
 
Core operating profit by division
Q2 2012
H1 2012
 


 
 
£m
% of
turnover
Growth
CER %
£m
Margin %
Growth
CER %
 






Pharmaceuticals
1,617 
36.4 
(13)
3,399 
37.8 
(4)
Vaccines
262 
34.4 
(9)
533 
35.0 
(3)
 






Pharmaceuticals and Vaccines
1,879 
36.1 
(12)
3,932 
37.4 
(4)
Consumer Healthcare
222 
17.7 
(3)
458 
17.7 
(2)
 






 
2,101 
32.5 
(11)
4,390 
33.5 
(4)
Corporate & other unallocated costs
(99)
 
(52)
(317)
 
(21)
 






Core operating profit
2,002 
31.0 
(7)
4,073 
31.1 
(2)
 






             
 
 
Core operating profit by segment
Q2 2012
H1 2012
 


 
£m
Margin %
Growth
CER %
£m
Margin %
Growth
CER %
 






Pharmaceuticals and Vaccines
           
-
USA
1,121 
67.4 
(3)
2,380 
69.1 
-
Europe
653 
52.8 
(11)
1,325 
52.4 
(11)
-
EMAP
376 
32.2 
687 
30.9 
-
Japan
279 
57.6 
621 
60.1 
-
ViiV Healthcare
206 
59.5 
445 
65.4 
-
Pharmaceutical R&D
(699)
 
(1,388)
 
-
Other trading and unallocated
   pharmaceuticals
(57)
(18.5)
>(100)
(138)
(23.1)
>(100)
 






Pharmaceuticals and Vaccines
1,879 
36.1 
(12)
3,932 
37.4 
(4)
Consumer Healthcare
222 
17.7 
(3)
458 
17.7 
(2)
 






 
2,101 
32.5 
(11)
4,390 
33.5 
(4)
Corporate & other unallocated costs
(99)
 
(52)
(317)
 
(21)
 






Core operating profit
2,002 
31.0 
(7)
4,073 
31.1 
(2)
 








Core operating profit - Q2 2012
Core operating profit was £2,002 million, a 7% decrease in CER terms on a turnover decline of 2%.  The operating margin declined by 1.2 percentage points to 31.0% compared with Q2 2011.  This primarily reflected the decline in turnover together with an adverse comparison with an unusually low cost of sales in Q2 2011, an adverse regional and product mix and continued investments in R&D, new product launches and growth businesses partially mitigated by ongoing cost management.  Operating profit also benefited from a number of one-off adjustments which were recognised predominantly in cost of sales and SG&A including an adjustment of around £100 million due to a change in the basis of future discretionary pension increases from RPI to CPI in certain legacy plans.
 
Cost of sales as a percent of turnover increased to 26.2% of turnover reflecting comparison to an unusually low 24.2% in Q2 2011 (which benefited from one-off favourable movements and the phasing of expenditure in 2011) relative to the 26.5% for the full year 2011.  The increase in cost of sales as a percentage of turnover reflected adverse regional and product mix partially offset by ongoing cost management, and included a number of one-off items that were broadly similar in amount to the one-off benefits recorded in Q2 2011.
 
SG&A costs as a percentage of sales were 30.3% compared with 31.0% in Q2 2011 as SG&A costs declined 4% on a turnover decline of 2%.  The reduction in SG&A percentage reflected ongoing cost management, including savings from the Operational Excellence programme, as well as a number of one-off benefits which together more than covered the cost of continued investment in growth businesses and new product launches.
 
R&D expenditure declined 3% to £880 million (13.6% of turnover) compared with £906 million in Q2 2011 (13.5% of turnover), reflecting ongoing cost management partially offset by increased investment in the late-stage pipeline.
 
Core operating profit - H1 2012
Core operating profit was £4,073 million, a 2% decrease in CER terms on flat turnover. The operating margin declined by 0.5 percentage points to 31.1% compared with H1 2011, primarily reflecting an adverse regional and product mix, the continued investments in R&D, new product launches and ongoing growth businesses partially mitigated by continued cost management.  Operating profit also benefited from a number of one-off adjustments which were recognised predominantly in cost of sales and SG&A including an adjustment of around £100 million due to a change in the basis of future discretionary pension increases from RPI to CPI in certain legacy plans.
 
Cost of sales increased to 26.0% of turnover (H2 2011: 25.6%).  This primarily reflected the impact of adverse regional and product mix as well as comparison with a relatively low H1 2011, partially offset by lower inventory write-offs, a one-off royalty adjustment and ongoing cost management as well as a number of one-off items.
 
SG&A costs as a percentage of sales were 30.5% compared with 30.5% in 2011 as SG&A costs declined slightly on a flat turnover at CER.  The margin was flat as the continued investment in growth businesses and new product launches was largely offset by ongoing cost management, including savings from the Operational Excellence programme.
 
R&D expenditure was broadly flat at £1,772 million (13.5% of turnover) compared with £1,762 million in H1 2011 (13.2% of turnover), reflecting increased investment in the late-stage pipeline offset by ongoing cost management.
 
 
Core net income and core earnings per share - Q2 2012
Net finance expense was broadly flat at £184 million.  This reflected relatively stable levels of net debt as the Group's strong cash generation enabled the funding of share repurchases of £849 million and increased dividend payments.
 
In line with the Group's funding strategy, GSK issued $5 billion (£3.1 billion) of new debt in May 2012 with 3, 5, and 10 year maturities and an average coupon of 1.89%.  A portion of the proceeds will be used to pre-fund the repayment of bonds totalling approximately £2.5 billion during the course of this year, and the remainder will be used to fund other general corporate purposes.  The two bonds maturing this year have an average coupon of 4.6% and a further bond for £1.7 billion with a coupon of 4.85% matures in 2013.
 
Tax on core profit amounted to £464 million and represented an effective tax rate of 25.5% (2011: 26.6%).  This reflected continued progress towards the target rate of 25%.
 
Core EPS of 26.4p declined 5% in CER and actual rate terms reflecting the strengthening of Sterling against the Euro and a number of international currencies, offset by the weakness of Sterling against the US Dollar and Japanese Yen, and lower exchange losses on settled inter-company transactions.
 
Core net income and core earnings per share - H1 2012
Net finance expense was broadly flat at £352 million.  This reflected relatively stable levels of net debt as the Group's strong cash generation enabled the funding of share repurchases of £1,067 million and increased dividend payments.
 
Tax on core profit amounted to £959 million and represented an effective tax rate of 25.7% (H1 2011: 26.9%), reflecting continued progress towards the target rate of 25%.  GSK is now targeting a core tax rate of around 25.5% for the full year 2012 and 25% for 2013, a year earlier than originally planned.
 
Core EPS of 53.7p increased 1% in CER terms (flat at actual rates) reflecting the strengthening of Sterling against the Euro and a number of international currencies, offset by the weakness of Sterling against the US Dollar and Japanese Yen, and lower exchange losses on the settlement of inter-company transactions.
 
 
Currency impact
The Q2 2012 results are based on average exchange rates, principally £1/$1.58, £1/€1.24 and £1/Yen 125.  Comparative exchange rates are given on page 40.  The period end exchange rates were £1/$1.57, £1/€1.24 and £1/Yen 125.  If exchange rates were to hold at these period end rates for the rest of 2012, the estimated adverse impact on 2012 sterling turnover would be around 1.5%, and if there were no further exchange gains or losses the estimated adverse impact on 2012 sterling core EPS would be around 2%.
 
 
Restructuring programme
The Operational Excellence restructuring programme has delivered approximately £2.5 billion of annual savings and remains on track to deliver £2.8 billion of annual savings by 2014.  Costs of £54 million were charged in the quarter (Q2 2011: £191 million) and £135 million in the half-year (H1 2011: £326 million).
 
Total operating profit and total earnings per share - Q2 2012
Total operating profit was £1,736 million compared with £1,778 million in Q2 2011.  This included £54 million of restructuring charges (Q2 2011: £191 million), intangible amortisation of £116 million (Q2 2011: £112 million), intangible impairments of £208 million (Q2 2011: £26 million), legal costs of £197 million (Q2 2011: £61 million) and other operating income of £309 million (Q2 2011: £1 million).
 
The intangible asset impairments included £133 million related to the impairment of alli.
 
The finalisation of the terms of the settlement of various Federal government investigations means that this matter has been resolved within the existing pre-tax provision.  The after tax cost was approximately $150 million lower than provided.  As a result a credit was recorded as a non-core tax charge in Q2 2012.  However, due to the evolving state litigation environment, GSK has utilised the tax benefit arising in recording an offsetting additional pre-tax provision of approximately $180 million (equating to an after tax cost of $150 million) related to these matters.  This has been recorded as a non-core legal charge in SG&A in Q2 2012.  The net effect of these movements on total earnings was neutral.
 
Other operating income included the profit on disposal of the European and International non-core OTC brands.
 
The charge for taxation on total profits amounted to £233 million and represented a total effective tax rate of 15.0% (Q2 2011: 28.0%), reflecting the items discussed above.  Total EPS was 25.4p compared with 21.8p in Q2 2011.
 
Total operating profit and total earnings per share - H1 2012
Total operating profit was £3,773 million compared with £3,813 million in H1 2011.  This included £135 million of restructuring charges (H1 2011: £326 million), intangible amortisation of £220 million (H1 2011: £223 million), intangible impairments of £260 million (H1 2011: £34 million), legal costs of £230 million (H1 2011: £61 million) and other operating income of £545 million (H1 2011: £246 million).
 
The intangible asset impairments included the impairment of alli and the legal costs included a charge related to the evolving US state litigation environment, both as described above.  Other operating income included the profit on disposal of the non-core OTC brands.
 
The charge for taxation on total profits amounted to £722 million and represented a total effective tax rate of 21.0% (H1 2011: 32.7%), reflecting the items discussed above.  Total EPS was 52.1p compared with 51.8p in H1 2011.
 
 
 
Core adjustments
The adjustments that reconcile core operating profit, profit after tax and earnings per share to total results are as follows:
 
 
 
Q2 2012
Q2 2011
 


 
 
Operating
profit
£m
Profit
after tax
£m
 
EPS
p
Operating
profit
£m
Profit
after tax
£m
 
EPS
p
 






Core results
2,002
 
1,354
 
26.4
 
2,167 
1,454 
27.9 
             
   Intangible asset amortisation
(116)
(83)
(1.7)
(112)
(77)
(1.5)
   Intangible asset impairment
(208)
(136)
(2.7)
(26)
(18)
(0.4)
   Major restructuring costs
(54)
(42)
(0.8)
(191)
(161)
(3.2)
   Legal costs
(197)
(69)
(1.4)
(61)
(52)
(1.0)
   Other operating income/asset disposals
309
 
295
 
5.6
 
 






 
(266)
(35)
(1.0)
(389)
(307)
(6.1)
 






Total results
1,736
 
1,319
 
25.4
 
1,778
1,147 
21.8
 






             
 
 
 
 
H1 2012
H1 2011
 


 
Operating
profit
£m
Profit
after tax
£m
 
EPS
p
Operating
profit
£m
Profit
after tax
£m
 
EPS
p
 






Core results
4,073
 
2,772
 
53.7
 
4,211 
2,829 
53.8 
             
   Intangible asset amortisation
(220)
(157)
(3.2)
(223)
(153)
(3.0)
   Intangible asset impairment
(260)
(172)
(3.5)
(34)
(24)
(0.5)
   Major restructuring costs
(135)
(105)
(2.1)
(326)
(275)
(5.5)
   Legal costs
(230)
(97)
(1.9)
(61)
(52)
(1.0)
   Other operating income/asset disposals
545
 
468
 
9.1
 
246 
406 
8.0 
 






 
(300)
(63)
(1.6)
(398)
(98)
(2.0)
 






Total results
3,773
 
2,709
 
52.1
 
3,813 
2,731 
51.8 
 






             
Full reconciliations between core results and total results are set out on pages 43 to 46 and the definition of core results is set out on page 25.
 
 
 
Cash generation and conversion
 
 
Cash flow and net debt
 
 
 
Q2 2012
H1 2012
H1 2011
 



Net cash inflow from operating activities (£m)
1,737
2,749
2,276
Adjusted net cash inflow from operating activities* (£m)
2,066
3,138
3,040
Free cash flow* (£m)
986
1,673
1,227
Adjusted free cash flow* (£m)
1,315
2,062
1,991
Free cash flow growth (%)
57%
36%
(62)%
Free cash flow conversion*(%)
99%
77%
74%
Net debt (£m)
9,638
9,638
9,256
 



*  Adjusted net cash inflow from operating activities, free cash flow, adjusted free cash flow and free cash flow conversion are defined on page 25.
 
 
In the quarter, net cash inflow from operating activities was £1,737 million (Q2 2011: £1,289 million).  Excluding legal settlements of £329 million (Q2 2011: £313 million), the adjusted net cash inflow from operating activities was £2,066 million, £464 million higher than in Q2 2011.  This primarily reflected a stronger working capital performance and lower tax payments.
 
The net cash inflow from operating activities for the six months was £2,749 million (H1 2011: £2,276 million).  Excluding legal settlements of £389 million (H1 2011: £764 million), the adjusted net cash inflow from operating activities was £3,138 million, £98 million higher than in H1 2011.  This primarily reflected a stronger working capital performance and lower tax payments.
 
Free cash flow was £1,673 million for the six months.  Excluding legal settlements, adjusted free cash flow was £2,062 million (H1 2011: £1,991 million), the growth reflecting a better working capital performance together with lower tax payments.
 
The free cash flow, together with asset disposal proceeds of £859 million, enabled the Group to pay dividends (including distributions to non-controlling interests) of £2,292 million and spend £1,067 million on repurchasing shares.  At 30 June 2012, net debt was £9.6 billion, compared with £9.0 billion at 31 December 2011, comprising gross debt of £17.2 billion and cash and liquid investments of £7.6 billion.  The gross positions reflect the recent debt issue ahead of bond repayments due this year.  At 30 June 2012, GSK had short-term borrowings (including overdrafts) repayable within 12 months of £3,657 million with loans of £1,021 million repayable in the subsequent year.
 
Since the quarter-end, the Group has made payments to the US Government of £1.9 billion ($3 billion) in settlement of certain investigations (see 'Legal matters' on page 38) and agreed to acquire Human Genome Sciences for approximately £1.9 billion ($3 billion), net of cash and debt.
 
 
 
Working capital
 
 
 
30 June
2012
31 March
2012
31 December
2011
30 September
2011
30 June
2011
 





Working capital conversion cycle* (days)
212
215
210
227
236
Working capital percentage of turnover (%)
22
22
21
24
25
 





*  Working capital conversion cycle is defined on page 25.
 
 
Working capital decreased by £241 million in the quarter compared with an increase of £17 million in Q2 2011.  In the quarter, the working capital conversion cycle reduced to 212 days.  For the six months, the working capital conversion cycle increased by 2 days from 31 December 2011 as a result of Vaccines stock building, including for the flu season, partly offset by an improvement in receivables collection.  Working capital increased by £197 million in the half-year.
 
 
 
Returns to shareholders
 
 
GSK's commitment is to use free cash flow to support increasing dividends, undertake share repurchases or, where returns are more attractive, reinvest in the business, including bolt-on acquisitions.
 
Quarterly dividends
The Board has declared a second interim dividend of 17 pence per share (Q2 2011: 16 pence per share) making 34 pence for the half year.
 
Payment of dividends
The equivalent interim dividend receivable by ADR holders is 52.7918 cents per ADS based on an exchange rate of £1/$1.5527.  The ex-dividend date will be 8 August 2012, with a record date of 10 August and a payment date of 4 October 2012.
 
 
       
 
Paid/
payable
Pence per
share
£m
 



2012
     
First interim
5 July 2012
17
847
Second interim
4 October 2012
17
835
   


       
2011
     
First interim
7 July 2011
16
814
Second interim
6 October 2011
16
809
Third interim
5 January 2012
17
847
Fourth interim
12 April 2012
21
1,043
   


   
70
3,513
Supplemental
12 April 2012
5
248
   


   
75
3,761
   


 
 
Share repurchases
During the quarter, GSK repurchased 61.3 million shares (£882 million), bringing the total for the year to date to 77.2 million shares (£1,108 million) including a quarter-end accrual.  GSK intends to make total repurchases of £2.0-£2.5 billion during 2012 where this use of funds delivers an attractive return.  The company issued 8 million shares under employee share schemes amounting to £97 million (Q2 2011: £70 million).
 
The weighted average number of shares for Q2 2012 was 4,945 million, compared with 5,064 million in Q2 2011.
 
The weighted average number of shares for H1 2012 was 4,954 million, compared with 5,075 million in H1 2011.
 
 
 
Divisional performance
 
 
Pharmaceutical sales summary
 
 
 
Q2 2012
H1 2012
 


 
 
£m
CER%
£m
CER%
 



------
Respiratory
1,814
3,655
Anti-virals
197
(10)
381
(14)
Central nervous system
447
848
Cardiovascular and urogenital
572
(10)
1,300
10 
Metabolic
45
(42)
78
(51)
Anti-bacterials
303
(5)
621
(10)
Oncology and emesis
196
23 
375
22 
Dermatology
210
(2)
423
(1)
Rare diseases
110
216
(3)
ViiV Healthcare (HIV)
346
(7)
680
(6)
Other
202
(20)
411
(12)
 




 
4,442
(3)
8,988
(1)
 




 
 
Respiratory
 
Q2 2012 (£1,814 million; flat)
In the quarter, Respiratory sales were flat, as growth in EMAP and Japan offset a decline in Europe, while sales in the US were flat.  Total sales of Seretide/Advair were also flat. Flixotide/Flovent sales fell 4% to £189 million, but
Xyzal sales, almost exclusively in Japan, doubled to £32 million. Ventolin sales declined 1%.
 
In the US, reported sales of Advair were flat at £641 million.  On an underlying basis, sales for the quarter grew approximately 3% (5% volume decline offset by 8% positive impact of price and mix).  The three percentage point difference between underlying and reported growth is primarily due to variations in wholesaler and retailer stocking patterns. Flovent, the leading single agent inhaled corticosteroid in the US market, fell 3% to £107 million as estimated underlying growth of 4% was more than offset by the impact of variations in wholesaler and retailer stocking patterns and an increase in accruals for returns and rebates. Ventolin reported sales in the US of £57 million, down 5%, as estimated underlying growth of approximately 8% was also offset by the impact of variations in wholesaler and retailer stocking patterns and an increase in accruals for returns and rebates.
 
The ICS/LABA combination market in the US (which includes Advair) grew approximately 1% in Q2 2012 compared with Q2 2011.  Despite some loss of market share, the company has maintained its clear leadership position in the overall 'controller' class (LABA, ICS and anti-cholinergic products) with combined market share of Advair and Flovent being 48% in Q2 2012 compared with 51% in Q2 2011.  Overall prescription volume in the controller class grew 2% in the quarter.  (All market growth and share data based on weekly IMS Health data).
 
European Respiratory sales were down 6% in the quarter reflecting the impact of price cuts. Seretidesales were down 4% to £364 million, as price cuts more than offset volume growth of approximately 2%.
 
In EMAP, Respiratory sales grew 10% in the quarter, with growth across most products in the portfolio. Seretide grew 4% to £100 million with strong growth in China and Latin America offsetting weakness in Turkey and the Middle East. Ventolin sales increased 13% to £44 million.
 
H1 2012 (£3,655 million; +1%)
Respiratory sales in the half-year grew 1% to £3,655 million, as growth in the US, EMAP and Japan offset a decline in Europe. Seretide/Advair sales grew 1%, led by a 3% increase in the US to £1,271 million. Flixotide/Flovent
sales fell 3% to £388 million, but Xyzal sales more than doubled to £68 million. Ventolin sales grew 3% to £302 million.
 
US respiratory sales increased 3% as growth in Advair (up 3%) and Ventolin (up 9%) offset small declines in Serevent and Veramyst.
 
European Respiratory sales declined 5% reflecting the impact of price cuts. Seretide sales were down 4% to £739 million.
 
Respiratory sales in EMAP grew 10%. Seretide grew 6% to £198 million with strong growth in China and Latin America and Ventolin sales increased 10% to £85 million.
 
Anti-virals
 
Q2 2012 (£197 million; -10%)
Valtrex sales continued to decline (down 24% to £66 million), principally as a result of generic competition in the US and Europe.
 
H1 2012 (£381 million; -14%)
The 14% decline in Anti-virals sales largely resulted from generic competition to Valtrex (down 28% to £129 million).
 
Central nervous system
 
Q2 2012 (£447 million; +6%)
In Central nervous system, strong growth of Lamictal (up 14% to £147 million), principally in the US and Japan, was partly offset by declines in a number of older products impacted by both generic competition and price cuts.
 
In the US, the Lamictal franchise grew 11% to £76 million with Lamictal XR, a once a day extended release product for epilepsy, continuing to deliver strong volume growth and more than offsetting the decline in the immediate release (twice a day) formulation, which has encountered generic competition.  In Japan, sales of Lamictal IR more than doubled to £20 million, in part due to sales for the recently launched bi-polar indication.
 
H1 2012 (£848 million; +3%)
The Central nervous system sales growth was driven by the 21% growth of Lamictal to £295 million.Requip sales fell 18% to £89 million, primarily as a result of generic competition in both the US and Europe.
 
Cardiovascular and urogenital
 
Q2 2012 (£572 million; -10%)
The 10% sales decline primarily reflected the 36% fall in Arixtra sales to £47 million following generic competition in the US which began in Q3 2011 and the loss of sales of Vesicare following the conclusion of the co-promotion agreement in Q1 2012.
 
The Avodart franchise grew 6% to £197 million in the quarter with growth driven by strong contributions from the recent launches of the combination product Duodart/Jalyn in Europe and of Avodart in Japan. Avodart/Jalyn sales in the US declined 10% as growth in Jalyn was more than offset by lower Avodart sales (down 13%), reflecting the impact of labelling changes implemented in 2011 and the availability of a generic product in the same class.
 
Lovaza grew 4% to £157 million with a broadly flat market share in a market that has declined approximately 8% compared with Q2 2011 as economic pressures have resulted in fewer doctor visits and reduced testing for asymptomatic conditions such as very high triglycerides.
 
Levitra sales fell 29% to £30 million primarily due to the loss of a large government contract that would have required discounts resulting in returns below acceptable levels.
 
H1 2012 (£1,300 million; +10%)
The net benefit of the conclusion of the Vesicare co-promotion agreement combined with growth in sales of Avodart and Lovaza led to the 10% growth in the category.  These gains were partly offset by the impact of generic competition to Arixtra.
 
Metabolic
 
Q2 2012 (£45 million; -42%)
The decline in Metabolic product sales continued to reflect the loss of sales of Avandia.
 
H1 2012 (£78 million; -51%)
The decline in Metabolic product sales continued to reflect the loss of sales of Avandia.
 
Anti-bacterials
 
Q2 2012 (£303 million; -5%)
While Anti-bacterials sales showed a return to growth in EMAP, particularly from Augmentin, this was more than offset by the impact of generic competition to brands in both Europe and the US.
 
H1 2012 (£621 million; -10%)
Anti-bacterial sales declined in all regions except EMAP as a result of the mild flu season, price cuts in Europe and the impact of generic competition to brands in both Europe and the US.
 
Oncology and emesis
 
Q2 2012 (£196 million; +23%)
Three new products, Votrient (up 77% to £39 million), Promacta (up 76% to £30 million) and Arzerra (up 36% to £15 million) all continued to grow in the US, Europe and EMAP. Tykerb/Tyverb grew 5% to £60 million, with growth in both the US and EMAP. Hycamtin continued to be adversely affected by generic competition in Europe.
 
In the US,Votrient (up 67% to £20 million) benefited from the launch of a new indication for use in advanced soft-tissue sarcoma. Promacta increased 50% to £13 million, reflecting the continued effect of longer-term use data that was added to the label in 2011.
 
H1 2012 (£375 million; +22%)
Growth in the category in the half year was driven by new products Votrient (up 87% to £72 million), Promacta (up 97% to £57 million) and Arzerra (up 35% to £27 million). Hycamtin sales fell 26% to £20 million as a result of generic competition in Europe.
 
Dermatology
 
Q2 2012 (£210 million; -2%)
In EMAP sales grew 4% to £96 million, with growth in many markets including India, Brazil and Korea partly offset by the impact of temporary supply interruptions.  Japan grew 13% to £9 million.  Growth in these markets was offset by declines in the US (down 7% to £59 million), mainly as a result of the impact of generic competition (Evoclin, Extina plus Duac from Q2 2012), and Europe (down 5% to £35 million), mainly as a result of price cuts.
 
H1 2012 (£423 million; -1%)
Sales were down 1% in the half-year as growth in EMAP (up 7% to £191 million) was offset by a decline in the US (down 7% to £118 million).
 
Rare diseases
 
Q2 2012 (£110 million; flat)
The decline in Flolan sales (down 27% to £35 million), largely as a result of the biennial price reduction in Japan, continued and more than offset the growth of Volibris (up 45% to £31 million).
 
H1 2012 (£216 million; -3%)
Volibris sales grew 36% to £59 million but this growth was more than offset by a 26% decline in Flolan sales to £70 million.
 
ViiV Healthcare (HIV)
 
Q2 2012 (£346 million; -7%)
ViiV Healthcare sales declined by 7%, with the US down 25%, Europe down 4%, and EMAP up 42%.  Sales growth in Epzicom/Kivexa (up 16% to £166 million) and Selzentry (up 23% to £31 million) were more than offset by a 26% decline in the mature portfolio, primarily as a result of generic competition in the US to Combivir and Epivir.
 
In the US, the growth in Epzicom reflected an increasing acceptance of the fixed dose combination within the HIV community.  In July 2012, the US International Antiviral Society updated their 2012 treatment guidelines and are now recommending the use of Epzicom as a preferred initial NRTI backbone regimen (previously it was recommended as an alternative option in the guidelines).
 
H1 2012 (£680 million; -6%)
Sales in the half-year fell 6%, with the US down 18%, Europe down 3% and EMAP up 30%, Epzicom grew 15% to £325 million and Selzentry grew 24% to £60 million, but the mature portfolio declined 24%.
 
 
 
Vaccines sales
 
 
 
Q2 2012
H1 2012
 


 
£m
CER%
£m
CER%
 




Total Vaccines sales
763
-
1,521
-
 




 
 
Q2 2012 (£763 million; flat)
Total Vaccines sales were flat in the quarter as strong growth in EMAP was offset by the effects of continued government austerity measures in Europe, and comparisons with a strong Q2 2011, which was driven by stockpile sales in the US and the HPV vaccination catch-up programme in Japan.
 
Infanrix/Pediarix
was the largest growth driver (up 19% to £179 million), primarily reflecting strong growth in the US (up 68%), helped by a competitor supply issue.
 
Sales of hepatitis vaccines in the US were down 21% compared with Q2 2011, which benefited from significant CDC stockpile purchases, and in Europe were down 14% to £52 million as a result of reduced public funding of vaccination programmes and other austerity measures.  Sales in EMAP grew 19% to £36 million.
 
Synflorix
sales increased 10% to £101 million, largely reflecting a strong performance in EMAP.
 
Rotarix
sales grew 25% to £93 million, with strong sales growth throughout EMAP as well as initial launch sales in Japan, which more than offset a 33% decline in the US, where Q2 2011 benefited from a significant CDC stockpile purchase.
 
Cervarix
sales fell 22% to £50 million largely as a result of the adverse comparison with Q2 2011 which benefited from sales related to the HPV vaccination catch-up programme in Japan.
 
H1 2012 (£1,521 million; flat)
Vaccines sales were flat as growth in EMAP and Japan was offset by declines in the US and Europe.
 
Infanrix/Pediarix sales increased 10% to £340 million, driven by a 25% increase in US sales, which was helped by a competitor supply issue.  Hepatitis vaccines fell 8% to £318 million, primarily as a result of the adverse comparison with H1 2011 in the US and austerity measures in Europe. Cervarix sales grew 2% to £181 million. Rotarix grew 12%, led by EMAP and Japan, and Boostrix grew 25%, largely driven by a strong US performance, which benefited from the expanded indication for use in adults of 65 and older.
 
 
 
Sales from new pharmaceutical and vaccine launches
 
 
 
Q2 2012
H1 2012
 


 
£m
CER%
£m
CER%
 




Arzerra
15
36 
27
35 
Benlysta
12
>100 
21
>100 
Duodart/Jalyn
37
56 
71
74 
Lamictal XR
37
40 
71
44 
Potiga/Trobalt
1
2
Prolia
6
>100 
11
>100 
Promacta
30
76 
57
97 
Requip XL
24
(32)
52
(24)
Synflorix
101
10 
174
Treximet
13
(14)
25
(14)
Volibris
31
45 
59
36 
Votrient
39
77 
72
87 
Others
4
 
8
 
 




 
350
27 
650
29 
 




 
 
New products are those launched in the last five years (2008 to 2012 inclusive).  Total sales of new products were £350 million, grew 27% in Q2 2012 and represented 7% of Pharmaceuticals and Vaccines turnover.
 
Benlysta for lupus has now been launched in the US and most European markets.  GSK turnover of £12 million in the quarter and £21 million in the half-year reflect GSK's share of gross profit in the US and total sales in all other markets.  US net sales were $38 million in the quarter and $69 million in the half-year.
 
Trobalt as an adjunctive (add-on) treatment of partial onset seizures continues to be launched throughout Europe and, under the brand name of Potiga, the launch in the US began during Q2 2012.
 
Nimenrix was approved by the European Medicines Agency in April 2012 for active immunisation against invasive meningococcal disease caused by Neisseria meningitidis serogroups A, C, W-135 and Y.  Launches are now underway in the UK, Germany and the Netherlands and further European markets will follow.
 
Menhibrix, the first combination vaccine to help prevent meningococcal serogroups C and Y and Hib disease, was approved by the FDA in June 2012. Menhibrixis for use in children aged from six weeks to 18 months and was developed to align with the Centers for Disease Control and Prevention's recommended infant immunisation schedule for Hib vaccination and to allow for vaccination against meningococcal groups C & Y without adding additional shots.  Launch of Menhibrix is expected in 2013, following a review by the CDC Advisory Committee on Immunization Practices in Q4 2012.
 
 
 
Consumer Healthcare

 
 
Q2 2012
H1 2012
 


     
Growth excluding non-core OTC products and alli
   
Growth excluding non-core OTC products and alli
 
£m
CER%
CER%
£m
CER%
CER%
 
––––––
––––––
––––––
––––––
––––––
––––––
Turnover
           
Total wellness
486
(8)
1,025
(8)
Oral care
440
902
Nutrition
271
540
Skin health
60
(2)
(2)
126
(4)
(4)
 
––––––
––––––
––––––
––––––
––––––
––––––
Total
1,257
2,593
 
––––––
––––––
––––––
––––––
––––––
––––––

 
 
Q2 2012
H1 2012
 


     
Growth excluding non-core OTC products and alli
   
Growth excluding non-core OTC products and alli
 
£m
CER%
CER%
£m
CER%
CER%
 
––––––
––––––
––––––
––––––
––––––
––––––
Turnover
           
USA
220
(11)
449
(9)
Europe
457
(5)
924
(4)
ROW
580
10 
12 
1,220
11 
 
––––––
––––––
––––––
––––––
––––––
––––––
Total
1,257
2,593
 
––––––
––––––
––––––
––––––
––––––
––––––


Q2 2012 (£1,257 million; flat)
Consumer Healthcare turnover was flat in the quarter.Excluding the non-core OTC brands that were divested in H1 2012 and alli, turnover grew 7% compared with market growth of approximately 4%.
 
The Group has now completed the sale of non-core brands that had total 2011 sales of approximately £370 million. As a result of a supply issue in H1 2012, the disposal of allion acceptable terms has not proved possible and so GSK has decided to retain and re-build the brand.  Market re-supply commenced in late June 2012.  Excluding only the non-core OTC brands divested in H1 2012 (but including alli), Consumer Healthcare turnover increased 5% in the quarter.
 
Wellness sales were down 8%, but excluding the non-core brands divested in H1 2012 and alli, the category delivered broadly based growth of 9%.  Including alli, sales growth was 3%.  The Pain Management business grew 6%, led by Panadol(up 7%), which reported strong growth in Emerging markets and Southern Europe.  The Gastro-intestinal business grew 13%, led by Eno.  The Smoking Reduction and Cessation franchise grew 11% with good growth in the US resulting primarily from enhanced consumer and retail marketing.  Europe also recorded strong growth, with some benefit from comparison with Q2 2011, which was negatively impacted by supply issues.
 
Oral care sales were up 8%.  The Sensodyne Sensitivity and Acid Erosion business, up 8% to £165 million, continued its strong growth across all markets, driven by Sensodyne Repair and Protect and Sensodyne Pronamel. Good results on Denture care products also helped to offset a small decline in Aquafresh sales.
 
Nutrition sales grew 6% in the quarter.  The category performance was driven by strong growth of 15% in Rest of World markets.  The Horlicks family nutrition business grew 14% in India. Lucozade grew 1% as strong growth in Rest of World markets, particularly Africa, offset a decline in Europe, which was affected by weakness in the economy.
 
Skin health sales fell 2% as growth in the US and some developing markets, particularly Bactroban OTC in China, was more than offset by declines in Europe, partly as a result of a supply issue, and Latin America, where the business was impacted by aggressive competitor pricing.
 
Excluding the non-core OTC brands divested in H1 2012 and alli, the US Consumer Healthcare business reported growth of 4% in the quarter, primarily driven by the Smoking Reduction and Cessation franchise and Biotene. In Europe, sales excluding the non-core OTC brands and alli grew 2%, led by strong performances in Southern Europe and Central and Eastern Europe.  The Rest of World markets grew 12% excluding the non-core OTC brands, with strong results from India, China, the Middle East and Africa and Japan.
 
H1 2012 (£2,593 million; +1%)
In the half-year, Consumer Healthcare turnover grew 1%.  Excluding the non-core brands that were divested in the half-year and alli, turnover grew 7%, and excluding just the non-core OTC brands, turnover grew 5%.Wellness sales declined 8%, but excluding the non-core OTC brands divested in H1 2012 and alli, growth was 7%.  The Pain Management business grew 5%, Gastrointestinal products grew 9% and the Smoking Reduction and Cessation franchise grew 7%.
 
Strong growth in Oral care brand sales continued, led by the 15% growth of Sensodyne.
 
Nutrition sales grew 8% as strong growth in Rest of World markets, led by Horlicks in India and Lucozade in Africa, offset a flat performance in Europe.
 
Skin health sales fell 4% as declines in Europe and Latin America more than offset growth in the US and China.
 
Excluding the non-core OTC brands and alli, US sales growth was 6%, reflecting the strength of Sensodyne and the Smoking Reduction and Cessation franchise.  European sales grew 3% excluding the non-core OTC brands, reflecting strong growth in Central and Eastern Europe, which offset a decline in the UK.  The Rest of World markets grew 11%, excluding the non-core OTC brands, with strong performances in India, China, the Middle East and Africa.
 
 
 
Research and development
 
 
GSK remains focused on delivering an improved return on its investment in R&D.  Sales contribution, reduced attrition and cost reduction are all important drivers of an improving internal rate of return.  R&D expenditure is not determined as a percentage of sales but instead capital is allocated using strict returns based criteria depending on the pipeline opportunities available.
 
The operations of Pharmaceuticals R&D are broadly split into Discovery activities (up to the completion of Phase IIa trials) and Development work (from Phase IIb onwards) each supported by specific and common infrastructure and other shared services where appropriate.  R&D expenditure for H1 2012 is analysed below.
 
 
 
H1 2012
£m
H1 2011
£m
 


Discovery
380
393
Development
830
775
Facilities and central support functions
229
264
 


 
1,439
1,432
Vaccines
254
258
Consumer Healthcare
79
72
 


Core R&D
1,772
1,762
 


Amortisation and impairment of intangible assets
116
80
Major restructuring costs
5
88
 


Total R&D
1,893
1,930
 


 
 
 
GSK's Phase III/Registration Pharmaceuticals and Vaccines pipeline
 
The table below is provided as part of our quarterly update to show events and changes to the late-stage pipeline during the quarter and up to the date of this announcement.  There were several news events for late-stage pipeline assets in this quarter and these are listed in the table below.
 
In February 2011, the following 15 assets were listed as expected to deliver Phase III data by the end of 2012: 2402968, UMEC/VI (LABA/LAMA), albiglutide, dabrafenib (BRAF, 2118436), dolutegravir, IPX066, MAGE-A3 (event driven), migalastat HCl, RTS,S, otelixizumab, Promacta, FF/VI (previously known as Relovair), trametinib (MEK, 1120212), Tykerb, Votrient.
 
Phase III data were announced during 2011 and Q1 2012 from studies on IPX066, otelixizumab, Votrient, Promacta,FF/VI, Mosquirix, Tykerb, albiglutide, trametinib, dabrafenib and dolutegravir.
 
Since Q1 2012, GSK has announced the following pipeline news:
   
·
FDA approval and CHMP positive opinion of Votrient for sarcoma;
·
EMA approval of Nimenrix (MenACWY) vaccine;
·
filing of Promacta/Revolade for Hepatitis C thrombocytopenia in US and EU;
·
trametinib and dabrafenib data presented at ASCO and start of Phase III combination study;
·
FDA approval of Horizant for post-herpetic neuralgia;
·
HARMONY 6 and 7 data presented at ADA; final elements of the albiglutide clinical registration package (HARMONY 8 and CV meta-analysis) in-house and support filing in early 2013;
·
FDA approval of MenHibrix (HibMenCY) vaccine;
·
data from four pivotal efficacy studies for UMEC/VI (LAMA/LABA), limited additional data required to support filing by end of 2012;
·
data from the SINGLE study of dolutegravir-based regimen demonstrate superiority vs Atripla;
·
filing of FF/VI for COPD and asthma in EU and COPD in US (with the proposed brand names of Relvar and Breo).
 
Of the 15 assets with Phase III data expected by the end of 2012, 12 have now reported data.  Six of the 15 assets have either filed or have sufficient data to file:
   
·
Votrient sarcoma (filed and approved by FDA);
·
FF/VI (asthma and COPD) (filed);
·
Promacta/Revolade Hepatitis C thrombocytopenia (filed);
·
trametinib (MEK) (US filing expected w/c 30 July);
·
dabrafenib (BRAF) (US and EU filings expected w/c 30 July);
·
albiglutide (clinical registration programme now complete; filing expected in Q1 2013).
 
GSK has the vast majority of data required to support the potential launch of 8 major new drugs and vaccines in next 24 months.  Two of them have been approved (Nimenrix and Menhibrix), four have complete data (albiglutide, dabrafenib, trametinib and Relvar/Breo) and 2 of them require further data (UMEC/VI and dolutegravir).
 
Overall, by the end of 2012, GSK expects further read-outs on six of the ongoing Phase III assets UMEC/VI (LABA/LAMA), migalastat, dolutegravir,Mosquirix, '968 and Votrient) and expects Phase III registration programmes to complete for three further products and indications: UMEC/VI (LABA/LAMA), dolutegravir and Mosquirix.  The MAGE-A3 studies are event driven and data are expected in 2013.
 
Following investor events to describe Phase III data presented at ASCO (MEK, BRAF) and ADA (albiglutide), GSK is planning further events at IAC (dolutegravir), ESMO (Oncology portfolio) and ERS (Relvar) and a meeting to discuss progress across the pipeline in Q4 2012.
 


Biopharmaceuticals
US
EU
News update in the quarter
Arzerra
(ofatumumab)
CLL (first line & relapsed)
Ph III
Ph III
 
NHL (FL)
Ph III
Ph III
 
NHL (DLBCL)
Ph III
Ph III
 
Benlysta (s.c.)
Systemic lupus erythematosus
Ph III
Ph III
 
albiglutide
Type 2 diabetes
Ph III
Ph III
Results from Phase III studies HARMONY 6 and HARMONY 7 presented at ADA on 7 June 2012.
Positive data from HARMONY 8 and CV meta-analysis received in-house.  Clinical registration package is now complete.
Cardiovascular & Metabolic
US
EU
News update in the quarter
darapladib
Atherosclerosis
Ph III
Ph III
 
Neurosciences
 
US
EU
News update in the quarter
Horizant
Post-herpetic neuralgia
Approved
Jun 2012
n/a
Approved by FDA on 6 June 2012.
IPX066
Parkinson’s disease
n/a
Ph III
EU filing strategy under review.
Oncology
 
US
EU
News update in the quarter
Promacta/Revolade
Hepatitis C
Filed
May 2012
Filed
May 2012
Filed in US & EU on 24/25 May 2012.  FDA have granted priority review.
Votrient
(pazopanib)
Sarcoma
Approved
Apr 2012
Filed
Jul 2011
Approved by FDA on 26 April 2012.
CHMP positive opinion on 25 May 2012.
Ovarian
Ph III
Ph III
 
Tykerb/Tyverb
Metastatic breast cancer – dual blockade
Ph III
Filed
Feb 2012
US filing withdrawn on 12 July 2012.
Adjuvant breast cancer
Ph III
Ph III
 
Head & neck cancer
Ph III
Ph III
 
Gastric cancer
Ph III
Ph III
 
trametinib (1120212,
MEK inhibitor)
Metastatic melanoma
Ph III
Ph III
METRIC study data presented at ASCO on 4 June 2012.  On schedule to complete US filing w/c 30 July.
dabrafenib (2118436, BRAF inhibitor)
Metastatic melanoma
Ph III
Ph III
BREAK-3 study data presented at ASCO on 4 June 2012.  On schedule to complete US and EU filings w/c 30 July.
trametinib + dabrafenib in combination use
Metastatic melanoma
Ph III
Ph III
Commenced Phase III study in May 2012.
Respiratory & Immuno-inflammation
US
EU
News update in the quarter
Relvar/Breo (FF/VI)
COPD
Filed
July 2012
Filed
June 2012
Filed in EU for COPD on 26 June 2012.
Filed in US for COPD on 12 July 2012.
Asthma
Ph III
Filed
June 2012
Filed in EU for asthma on 26 June 2012.
US asthma filing strategy under review.
1605786 (CCX282)
Crohn’s disease
Ph III
Ph III
 
umeclidinium bromide (UMEC) +vilanterol (VI)
(‘444+‘719)
COPD
Ph III
Ph III
Positive headline data from 4 pivotal efficacy studies announced on 2 July 2012.
umeclidinium bromide (UMEC) (‘719)
COPD
Ph III
Ph III
Positive data from UMEC/VI support monotherapy development.
vilanterol (VI)
COPD
Ph III
Ph III
Positive data from UMEC/VI plus FF/VI programme support monotherapy development.
fluticasone furoate (FF)
Asthma
Ph III
   
Rare Diseases
 
US
EU
News update in the quarter
migalastat HCl
Fabry disease
Ph III
Ph III
 
drisapersen (2402968)
Duchenne muscular dystrophy
 
Ph III
 
2696273
(Ex-vivo stem cell gene therapy)
Adenosine deaminase severe combined immune deficiency (ADA-SCID)
 
Ph II/III
 
Vaccines
 
US
EU
News update in the quarter
Menhibrix
(HibMenCY-TT)
MenCY and Hib prophylaxis
Approved
Jun 2012
n/a
Approved by FDA on 14 June 2012.
Nimenrix
(MenACWY)
MenACWY prophylaxis
Ph II
Approved
Apr 2012
Approved by EMA on 27 April 2012.
MAGE-A3
Melanoma
Ph III
Ph III
 
NSCLC
Ph III
Ph III
 
Quadrivalent flu
Influenza prophylaxis
Filed
Feb 2012
Filed
Mar 2012
 
Herpes zoster
Shingles prophylaxis
Ph III
Ph III
Phase III study commenced in immunocompromised patients.
Mosquirix (RTS,S)
Malaria prophylaxis
n/a
n/a
 
HIV (ViiV Healthcare)
US
EU
News update in the quarter
dolutegravir (S/GSK1349572)
HIV integrase inhibitor
Ph III
Ph III
Positive data from SPRING-2 study showing non-inferiority of dolutegravir vs raltegravir to be presented at IAC on 26 July 2012.
dolutegravir-Trii
HIV integrase inhibitor + abacavir + lamivudine fixed dose combination
Ph III
Ph III
Positive data from SINGLE study of dolutegravir + abacavir/lamivudine regimen vs Atripla announced on 11 July 2012.

 
Definitions
 
 
Core results
Core results exclude the following items from total results: amortisation and impairment of intangible assets (excluding computer software) and goodwill; major restructuring costs; legal charges (net of insurance recoveries) on the settlement of litigation and government investigations; other operating income other than royalty income; disposals of associates, products and businesses, and acquisition accounting adjustments for material acquisitions, together with the tax effects of these items. GSK believes this approach provides a clearer view of the underlying performance of the core business and should make the Group's results more comparable with the majority of its peers.
 
CER growth
In order to illustrate underlying performance, it is the Group's practice to discuss its results in terms of constant exchange rate (CER) growth.  This represents growth calculated as if the exchange rates used to determine the results of overseas companies in Sterling had remained unchanged from those used in the comparative period.  All commentaries are presented in terms of CER growth, unless otherwise stated.
 
Free cash flow
Free cash flow is the net cash inflow from operating activities less capital expenditure, interest and dividends paid to non-controlling interests plus proceeds from the sale of property, plant and equipment and dividends received from joint ventures and associated undertakings.  It is used by management for planning and reporting purposes and in discussions with and presentations to investment analysts and rating agencies.  Free cash flow growth is calculated on a reported basis.
 
Adjusted free cash flow
Adjusted free cash flow excludes payments made to settle legal disputes.
 
Free cash flow conversion
Free cash flow conversion is free cash flow as a percentage of earnings excluding after-tax legal charges and legal settlements.
 
Adjusted net cash inflow from operating activities
Adjusted net cash inflow from operating activities excludes payments made to settle legal disputes.
 
Working capital conversion cycle
The working capital conversion cycle is calculated as the number of days sales outstanding plus days inventory outstanding, less days purchases outstanding.
 
Brand names and partner acknowledgements
Brand names appearing in italics throughout this document are trademarks of GSK or associated companies or used under licence by the Group.
 
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 Group's operations are described under 'Risk Factors' in the 'Financial review & risk section' in the company's Annual Report 2011 included as exhibit 15.2 to the company's Annual Report on Form 20-F for 2011.
 
 
 
Contacts
 
 
 
UK Media enquiries:
 
 
David Mawdsley
Stephen Rea
Sarah Spencer
David Daley
 
+44 20 8047 5502
+44 20 8047 5502
+44 20 8047 5502
+44 20 8047 5502
 
(London)
(London)
(London)
(London)
       
US Media enquiries:
Kevin Colgan
Melinda Stubbee
Sarah Alspach
Jennifer Armstrong
+1 (919) 483 2839
+1 (919) 483 2839
+1 (919) 483 2839
+1 (919) 483 2839
(North Carolina)
(North Carolina)
(Washington, DC)
(Philadelphia)
       
Analyst/Investor enquiries:
Sally Ferguson
Tom Curry
Gary Davies
James Dodwell
Jeff McLaughlin
Ziba Shamsi
+44 20 8047 5543
+1 (215) 751 5419
+44 20 8047 5503
+44 20 8047 2406
+1 (215) 751 7002
+44 20 8047 3289
(London)
(Philadelphia)
(London)
(London)
(Philadelphia)
(London)
 
 
GlaxoSmithKline (GSK) together with its subsidiary undertakings, the 'Group' - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer. GlaxoSmithKline's website www.gsk.com gives additional information on the Group. Information made available on the website does not constitute part of this document.
 
 
GlaxoSmithKline plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom Registered in England and Wales.  Registered number: 3888792
 
 
 
Financial information
 
 
Income statements
 
 
 
Q2 2012
£m
Q2 2011
(restated)
£m
H1 2012
£m
H1 2011
(restated)
£m
 




TURNOVER
6,462
6,720
13,102
13,305
         
Cost of sales
(1,992)
(1,744)
(3,802)
(3,616)
 




Gross profit
4,470
4,976
9,300
9,689
         
Selling, general and administration
(2,187)
(2,245)
(4,317)
(4,325)
Research and development
(922)
(1,015)
(1,893)
(1,930)
Royalty income
66
61
138
133
Other operating income
309
545
246
 




OPERATING PROFIT
1,736
1,778
3,773
3,813
         
Finance income
7
23
73
42
Finance expense
(191)
(211)
(425)
(404)
Profit on disposal of interest in associates
-
-
-
584
Share of after tax profits of associates and joint ventures
-
2
10
21
 




PROFIT BEFORE TAXATION
1,552
1,592
3,431
4,056
         
Taxation
(233)
(445)
(722)
(1,325)
Tax rate %
15.0%
28.0%
21.0%
32.7%
 




PROFIT AFTER TAXATION FOR THE PERIOD
1,319
1,147
2,709
2,731
 




         
Profit attributable to non-controlling interests
65
41
130
100
Profit attributable to shareholders
1,254
1,106
2,579
2,631
 




 
1,319
 
1,147
 
2,709
 
2,731
 
 




         
EARNINGS PER SHARE
25.4p
21.8p
52.1p
51.8p
 




         
Diluted earnings per share
25.1p
21.6p
51.3p
50.7p
 




 
 
 
Statement of comprehensive income
 
Q2 2012
£m
Q2 2011
£m
 


Profit for the period
1,319
1,147
     
Exchange movements on overseas net assets and net investment hedges
 
(233)
 
127
Reclassification of exchange on disposal of overseas subsidiary
-
(1)
Fair value movements on available-for-sale investments
50
(43)
Deferred tax on fair value movements on available-for-sale investments
(1)
1
Reclassification of fair value movements on available-for-sale investments
(11)
(11)
Deferred tax reversed on reclassification of available-for-sale investments
6
6
Actuarial losses on defined benefit plans
(1,085)
(38)
Deferred tax on actuarial movements in defined benefit plans
294
18
Reclassification of cash flow hedges to income statement
-
1
Deferred tax on fair value movement on cash flow hedges
-
(2)
 


Other comprehensive (expense)/income for the period
(980)
58
 


Total comprehensive income for the period
339
1,205
 


     
Total comprehensive income for the period attributable to:
   
   Shareholders
288
1,165
   Non-controlling interests
51
40
 


 
339
 
1,205
 
 


 
 
 
Statement of comprehensive income
 
H1 2012
£m
H1 2011
£m
 


Profit for the period
2,709
2,731
     
Exchange movements on overseas net assets and net investment hedges
(108)
121
Reclassification of exchange on disposal of overseas subsidiary
-
(1)
Fair value movements on available-for-sale investments
42
(37)
Deferred tax on fair value movements on available-for-sale investments
(6)
3
Reclassification of fair value movements on available-for-sale investments
(11)
(23)
Deferred tax reversed on reclassification of available-for-sale investments
6
7
Actuarial losses on defined benefit plans
(790)
(7)
Deferred tax on actuarial movements in defined benefit plans
215
2
Fair value movements on cash flow hedges
-
(2)
Deferred tax on fair value movements on cash flow hedges
(2)
(2)
Reclassification of cash flow hedges to income statement
-
3
Share of other comprehensive income/(expense) of associates and joint ventures
30
(8)
 


Other comprehensive (expense)/income for the period
(624)
56
 


Total comprehensive income for the period
2,085
2,787
 


     
Total comprehensive income for the period attributable to:
   
   Shareholders
1,971
2,699
   Non-controlling interests
114
88
 


 
2,085
 
2,787
 
 


 
 
 
Pharmaceuticals and Vaccines turnover
Three months ended 30 June 2012
 
 
 
 
Total 
USA 
Europe 
EMAP 
Rest of World 
 
–––––––––––––––––––––––––
–––––––––––––––––––––––––
––––––––––––––––––––––––
–––––––––––––––––––––––––––
–––––––––––––––––––––––––
 
£m
CER%
£m 
CER%
£m 
CER%
£m
CER%
£m 
CER%
 
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
––––––––––
Respiratory
1,814
-
838
-
483
(6)
213
10
280
8
Avamys/Veramyst
64
15 
(18)
20 
16
13 
33 
Flixonase/Flonase
31
(3)
100 
(18)
15
(17)
Flixotide/Flovent
189
(4)
107 
(3)
31 
(18)
14
27 
37 
Seretide/Advair
1,269
641 
364 
(4)
100
164 
Serevent
38
(12)
13 
16 
(23)
-
(20)
Ventolin
147
(1)
57 
(5)
30 
(9)
44
13 
16 
Xyzal
32
100 
4
25 
28 
>100 
Zyrtec
18
(10)
8
33 
10 
(29)
Other*
26
13 
>100 
13 
(6)
12
15 
(2)
                     
Anti-virals
197
(10)
13
(50)
20
(15)
87
(3)
77
(4)
Hepsera
32
24
Zovirax
22
>100 
8
(10)
Valtrex
66
(24)
(64)
10 
(23)
9
(10)
39 
(7)
Zeffix
60
(6)
33 
(17)
46
(6)
(17)
Other*
17
-
17 
                     
Central nervous system
447
6
136
19
99
(13)
81
12
131
9
Imigran/Imitrex
52
22 
10 
18 
(5)
2
100 
10 
(9)
Lamictal
147
14 
76 
11 
29 
(6)
19
19 
23 
77 
Requip
44
(23)
(40)
19 
(28)
4
15 
Seroxat/Paxil
112
15 
(6)
22
16 
75 
(4)
Treximet
13
(14)
13 
(14)
-
Wellbutrin
20
(9)
12 
7
40 
100 
Other*
59
46 
19 
(30)
27
100 
                     
Cardiovascular and urogenital
572
(10)
327
(22)
129
2
72
16
44
26
Arixtra
47
(36)
15 
(66)
24 
(4)
7
40 
(33)
Avodart
197
81 
(10)
58 
13 
20
11 
38 
43 
Coreg
35
(13)
35 
(11)
-
Fraxiparine
59
39 
20
11 
Lovaza
157
157 
-
Vesicare
-
-
Other*
77
(22)
39 
(34)
(27)
25
18 
(100)
                     
Metabolic
45
(42)
(1)
-
7
(50)
17
13
22
(22)
Avandia products
3
(85)
(2)
3
(75)
Other*
42
(21)
(56)
14
18 
20 
(13)
                     
Anti-bacterials
303
(5)
4
(75)
94
(16)
183
11
22
(4)
Augmentin
149
11 
48 
(4)
90
18 
11 
29 
Other*
154
(16)
(76)
46 
(27)
93
11 
(18)
                     
Oncology and emesis
196
23
81
39
61
5
30
41
24
14
Arzerra
15
36 
29 
100 
-
(100)
Promacta
30
76 
13 
50 
60 
3
>100 
>100 
Tyverb/Tykerb
60
17 
22 
(11)
14
27 
33 
Votrient
39
77 
20 
67 
14 
100 
4
>100 
<(100)
Other*
52
22 
50 
11 
(40)
9
11 
10 
                     
Dermatology
210
(2)
59
(7)
35
(5)
96
4
20
(8)
Bactroban
30
13 
18 
10
(50)
Duac
23
(12)
11 
(8)
(17)
3
50 
(50)
Other*
157
(1)
35 
(14)
25 
(4)
83
14 
                     
Rare diseases
110
-
19
(25)
31
(6)
10
67
50
9
Flolan
35
(27)
(11)
(36)
-
20 
(28)
Volibris
31
45 
18 
12 
2
11 
>100 
Other*
44
11 
(33)
8
33 
19 
33 
                     
Other pharmaceuticals
202
(20)
3
(12)
37
(37)
103
(12)
59
(19)
Benlysta
12
>100 
11 
>100 
-
Other*
190
(24)
(8)
<(100)
37 
(38)
103
(12)
58 
(19)
                     
Vaccines
763
-
183
(1)
240
(5)
277
15
63
(22)
Boostrix
58
11 
37 
30 
13 
25 
3
(25)
(40)
Cervarix
50
(22)
(50)
15 
14 
21
24 
13 
(59)
Fluarix, FluLaval
5
(38)
(80)
(2)
4
25 
Hepatitis
165
(12)
68 
(21)
52 
(14)
36
19 
(21)
Infanrix, Pediarix
179
19 
54 
68 
91 
22
77 
12 
(8)
Rotarix
93
25 
22 
(33)
10 
10 
47
60 
14 
>100 
Synflorix
101
10 
11 
90
17 
Other*
112
(16)
50 
(20)
54
(20)
50 
 
––––––––––
––––––––––
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4,859
(2)
1,662
(6)
1,236
(8)
1,169
9
792