Issued:
Wednesday, 27 October 2021, London U.K.
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GSK delivers strong Q3 sales of £9.1 billion +5% AER, +10%
CER
Total EPS 23.3p -7% AER, +3% CER; Adjusted EPS 36.6p +3% AER, +10%
CER
2021 full year EPS guidance improved
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Highlights
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Sales growth across Pharmaceuticals, Vaccines and Consumer
Healthcare driven by strong commercial execution and underlying
demand
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●
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Pharmaceuticals
£4.4 billion +5% AER, +10% CER with growth in New and
Specialty medicines +24% CER; Respiratory +33% CER;
Immuno-inflammation +32% CER ex-COVID-19 solutions; Oncology +34%
CER; total HIV +8% CER
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●
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Vaccines
£2.2 billion +7% AER, +13% CER with Shingrix £502 million +41%
CER
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●
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COVID-19
solutions sales £209 million; Xevudy £114 million and pandemic
adjuvant £94 million
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●
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Consumer
Healthcare £2.5 billion +3% AER, +8% CER (+10% excluding
divestments/brands under review)
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Cost discipline supports delivery of EPS growth
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●
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Total
Group operating margin 21.4%. Total EPS 23.3p -7% AER, +3%
CER
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●
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Adjusted
Group operating margin 31.7%. Adjusted EPS 36.6p +3% AER, +10% CER.
This included a contribution to growth from COVID-19 solutions of
approximately +5% AER, +5% CER in Q3 (+6% AER, +6% CER in the nine
months)
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●
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Q3 net
cash flow from operations £2.6 billion. Free cash flow
£1.2 billion
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Continued momentum in R&D delivery and strengthening of
pipeline
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Additional
regulatory indications approved for Nucala in respiratory and Jemperli in cancer
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HIV
progress with FDA priority review of cabotegravir for prevention of
HIV (PDUFA action date 23 Jan 2022) and new collaboration on ultra
long-acting integrase inhibitor
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●
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Positive
Phase III data on daprodustat in anaemia due to chronic kidney
disease to be presented at the American Society of Nephrology
meeting in Nov 2021
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●
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COVID-19
solutions: approval in Japan for Xevudy and ongoing discussions with
several governments Phase III start with SK Bioscience for
adjuvanted COVID-19 vaccine
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●
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World
Health Organization recommendation for broad roll-out of RTS,S
malaria vaccine for children living in sub-Saharan
Africa
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Progress on demerger to create new world-leading Consumer
Healthcare company in 2022
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●
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New UK
Corporate Headquarters announced
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●
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Announcement
expected of Chair Designate in Q4 2021
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2021 EPS guidance improved and reconfirm 2022 outlook
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●
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Now
expect 2021 Adjusted EPS to decline between -2% to -4% at CER
excluding COVID-19 solutions, previously mid-to-high single digit
decline
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Now
expect 2021 Adjusted EPS contribution from COVID-19 solutions of 7%
to 9% at CER
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●
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Expectation
for meaningful improvement in revenues and margins in 2022
reconfirmed
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●
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2022
outlook excludes any contribution from COVID-19
solutions
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Dividend of 19p declared for Q3 2021. Continue to expect 80p/share
for 2021
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Emma Walmsley, Chief Executive Officer, GSK said: “GSK
has delivered another quarter of strong business performance, with
double-digit sales growth in Pharmaceuticals and Vaccines,
increased momentum in Consumer Healthcare, and continued discipline
on costs. This has allowed us to improve our full-year guidance
and, alongside the progress in strengthening our R&D pipeline,
reinforces our confidence in the outlook for a step-change in
growth and performance in 2022 and beyond. We also continue to make
excellent progress towards unlocking the value of Consumer
Healthcare through a successful demerger in
mid-2022.”
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The
Total results are presented in summary on page 2 and under
‘Financial performance’ on pages 11 and 25 and Adjusted
results reconciliations are presented on pages 21, 22, 35 and 36.
Adjusted results are a non-IFRS measure that may be considered in
addition to, but not as a substitute for, or superior to,
information presented in accordance with IFRS. Adjusted results are
defined on page 9 and £% or AER% growth, CER% growth, free
cash flow and other non-IFRS measures are defined on page 59,
COVID-19 solutions are also defined on page 59. GSK provides
guidance on an Adjusted results basis only, for the reasons set out
on page 9. All expectations, guidance and targets regarding future
performance and dividend payments should be read together with
‘Outlook, assumptions and cautionary statements’ on
pages 60 and 61.
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Q3 2021 results
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Q3 2021
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Growth
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9 months 2021
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Growth
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£m
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£%
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CER%
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£m
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£%
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CER%
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Turnover
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9,077
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5
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10
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24,587
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(3)
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3
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Total
operating profit
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1,938
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4
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15
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5,306
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(21)
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(11)
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Total
earnings per share
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23.3p
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(7)
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3
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72.7p
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(29)
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(19)
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Adjusted
operating profit
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2,874
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8
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16
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|
6,913
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(2)
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8
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Adjusted
earnings per share
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36.6p
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3
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10
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87.7p
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(5)
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5
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Net
cash from operating activities
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2,562
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>100
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4,185
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(9)
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Free
cash flow
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1,223
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>100
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1,536
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(33)
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2021 guidance
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GSK now
expects 2021 Adjusted EPS to decline by between -2% to -4% at CER,
excluding any contribution from COVID-19 solutions. This updated
guidance represents an improvement to that previously given in July
2021 of an expected decline of mid to high-single digit percent
Adjusted EPS at CER, excluding any contribution from COVID-19
solutions.
Over
the remainder of 2021, as planned we will continue to increase
investment in our pipeline, build on our top-line momentum for key
growth drivers and largely complete readiness for the demerger of
Consumer Healthcare. Assuming no significant deterioration in
healthcare systems and consumer trends, we expect:
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Pharmaceutical
revenue for 2021 to grow in low-single digits (previously flat to
low-single digits) at CER.
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Consumer
Healthcare revenue for 2021 to grow low to mid-single digits at CER
(excluding brands divested/under review) with above market
growth.
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●
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For our
Vaccines business, as anticipated, we have faced significant
disruption during 2021, given governments’ prioritisation of
COVID-19 vaccination programmes and measures to contain the
pandemic. This has impacted adult and adolescent immunisations,
including Shingrix, notably
in the US. In Q3 2021, the surge in the delta variant delayed the
expected second half recovery in Shingrix prescriptions particularly in
the US retail channel. This was more than offset by beneficial
year-on-year wholesaler inventory comparisons and by growth in the
US non-retail channel as well as encouraging sales outside the US
from existing and new launch markets. Although recent US
prescription trends for Shingrix are encouraging, we now expect
Vaccines revenue for 2021 to decline by mid-single digits
(previously broadly flat) at CER with Shingrix sales for the full year
anticipated to broadly match the-year-to date sales performance
(-11% at CER) given the record quarterly sales comparison in Q4
2020. We remain confident in the underlying demand and medium term
prospects for Shingrix and
our vaccines portfolio.
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2021 COVID-19 solutions expectations
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In the
year to date, we had COVID-19 solution sales of £485 million
including £352 million of pandemic adjuvant sales and
£130 million of the treatment Xevudy. The contribution to
year-to-date Adjusted EPS was approximately 6%. For the full year,
we anticipate that COVID-19 solutions will contribute approximately
7% to 9% to Adjusted EPS (previously 4% to 6%) at CER. This
reflects the success of contracting for Xevudy with binding agreements signed
to date for the sale of more than 420,000 doses and more than an
additional 220,000 doses reserved through other agreements. The
precise Adjusted EPS contribution of COVID-19 solution sales within
the 7% to 9% range depends on pandemic adjuvant contracting for
2022 and the resulting potential charges within COGS as we continue
to manufacture for this potential.
All
expectations, guidance and targets regarding future performance and
dividend payments should be read together with ‘Outlook,
assumptions and cautionary statements’ on pages 60 and 61. If
exchange rates were to hold at the closing rates on 30 September
2021 ($1.34/£1, €1.16/£1 and Yen 151/£1) for
the rest of 2021, the estimated negative impact on 2021 Sterling
turnover growth would be 5% and if exchange gains or losses were
recognised at the same level as in 2020, the estimated negative
impact on 2021 Sterling Adjusted EPS growth would be around
9%.
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Results presentation
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A
webcast of the quarterly results presentation hosted by Emma
Walmsley, GSK CEO, will be held at 2pm BST on 27 October 2021.
Presentation materials will be published on www.gsk.com prior to
the webcast and a transcript of the webcast will be published
subsequently.
Information
available on GSK’s website does not form part of, and is not
incorporated by reference into, this Results
Announcement.
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Operating performance – Q3 2021
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Turnover
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Q3 2021
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£m
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Growth
£%
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Growth
CER%
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Pharmaceuticals
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4,397
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5
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10
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Vaccines
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2,174
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7
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13
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Consumer
Healthcare
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2,506
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3
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8
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Group
turnover
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9,077
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5
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10
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Group turnover was £9,077 million in the quarter, up 5% AER,
10% CER. Sales of COVID-19 solutions contributed approximately 2
percentage points to total growth in the quarter.
Pharmaceutical turnover in the quarter was £4,397 million, up
5% AER, 10% CER. The increase was driven by strong growth in New
Specialty products, partly offset by a decline in the Established
Pharmaceuticals portfolio. Sales of Xevudy, the monoclonal antibody treatment for COVID-19,
of £114 million contributed approximately 3 percentage points
to total Pharmaceuticals growth in the quarter.
Vaccines turnover grew 7% AER, 13% CER to £2,174 million,
primarily driven by higher Shingrix sales in the US and Europe and pandemic adjuvant
sales. Unfavourable US prior period returns and rebates adjustments
reduced overall Vaccines growth by approximately 3 percentage
points. Vaccines turnover excluding pandemic vaccines grew 2% AER,
8% CER to £2,079 million.
Consumer Healthcare sales grew 3% AER, 8% CER to £2,506
million in the third quarter with minimal dilution from divestment
given the completion of the portfolio rationalisation at the end of
Q1 2021. Sales excluding brands divested/under review grew 6% AER,
10% CER. In the third quarter last year growth was adversely
impacted by approximately 2 percentage points from the reversal of
increased retailer stocking ahead of a systems cutover in North
America. Additionally increased sales ahead of the anticipated
price increases in the US in October favourably impacted growth by
approximately 1%.
Operating profit
Total operating profit was £1,938 million in Q3 2021 compared
with £1,858 million in Q3 2020. The increase reflected lower
restructuring and re-measurement charges on the contingent
consideration liabilities offset by higher impairments. Total
operating margin was 21.4%.
Adjusted operating profit was £2,874 million, 8% higher than
Q3 2021 at AER, 16% higher at CER on a turnover increase of 10%
CER. The adjusted operating margin was 31.7%, which is 0.8
percentage points higher at AER, and 1.5 percentage points higher
on CER basis compared to Q3 2020. The increase in Adjusted
operating profit primarily reflected leverage of pandemic sales,
strong growth in New and Specialty Products and favourable prior
period RAR adjustments in Pharmaceuticals, continued tight control
of ongoing costs and benefits from continued restructuring. This
was partially offset by increased investment in R&D, investment
behind launches and an adverse comparator following a
post-retirement restructuring benefit in Q3 2020.
Earnings per share
Total EPS was 23.3p, compared with 25.0p in Q3 2020. This primarily
reflected increased impairments and lower milestones and disposal
income partly offset by lower restructuring and re-measurement
charges.
Adjusted EPS was 36.6p, compared with 35.6p in Q3 2020, reflecting
strong sales growth across all three businesses, partly offset by a
higher effective tax rate and a higher non-controlling interest
allocation of Consumer Healthcare profits. The contribution to
growth from COVID-19 solutions was approximately 5% AER, 5%
CER.
Cash flow
The net cash inflow from operating activities for the quarter was
£2,562 million (Q3 2020: £861 million) and free cash
inflow was £1,223 million (Q3 2020: £180 million
outflow). The increase primarily reflected increased operating
profit, decrease in inventory and trade receivables and favourable
timing of taxes, returns and rebates compared to Q3
2020.
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Operating performance – 9 months 2021
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Turnover
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9 months 2021
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£m
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Growth
£%
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Growth
CER%
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Pharmaceuticals
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12,508
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(1)
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5
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Vaccines
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4,969
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-
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5
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Consumer
Healthcare
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7,110
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(7)
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(3)
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Group
turnover
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24,587
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(3)
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3
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Group turnover was £24,587 million in the nine months, down 3%
AER, but up 3% CER. Sales of COVID-19 solutions contributed
approximately 3 percentage points to total growth in the nine
months.
Pharmaceutical turnover in the nine months was £12,508
million, down 1% AER but up 5% CER. Sales of Xevudy, the monoclonal antibody treatment for COVID-19,
of £130 million contributed approximately 1 percentage point
to total Pharmaceuticals growth in the nine
months.
Vaccines turnover was flat on AER basis but was up 5% CER to
£4,969 million. This was primarily driven by pandemic adjuvant
sales, partially offset by the adverse impact of COVID-19 on
Shingrix. An unfavourable US prior period returns and
rebates adjustment reduced Vaccines growth by approximately 3
percentage points. Vaccines turnover excluding pandemic vaccines
declined by 7% AER, 2% CER to £4,614
million.
Consumer Healthcare turnover declined 7% AER, 3% CER to £7,110
million. Sales excluding brands divested/under review declined 3%
AER but increased 2% CER. The same period last year’s growth
included the benefit from the inclusion of the Pfizer portfolio and
a particularly strong first quarter given the accelerated
purchases.
Operating profit
Total operating profit was £5,306 million compared with
£6,722 million in Q3 2020. The decrease primarily reflected an
unfavourable comparison to the net profit on disposal in Q2 2020 of
the Horlicks and other Consumer brands and resultant sale of shares
in Hindustan Unilever. This was partly offset by lower major
restructuring costs, lower re-measurement charges on the contingent
consideration liabilities and the unwind in 2020 of the fair market
value uplift on inventory arising on completion of the Consumer
Healthcare Joint Venture with Pfizer. The total operating margin
was 21.6%.
The
Adjusted operating profit was £6,913 million, 2% lower at AER,
up 8% CER primarily reflecting the benefit from incremental
pandemic sales, sales growth in Pharmaceuticals, tight cost
control, favourable legal settlements and benefits from continued
restructuring across the business. This was partly offset by lower
non-pandemic Vaccines sales, primarily Shingrix, an adverse mix in Vaccines,
higher supply chain costs, divestments in Consumer Healthcare and
increased investment in R&D. The adjusted operating profit
margin of 28.1% was 0.2 percentage points higher at AER and 1.4
percentage points higher at CER.
Earnings per share
Total
EPS was 72.7p, compared with 102.0p in 2020. This primarily
reflected an unfavourable comparison to the net profit on disposal
in Q2 2020 of the Horlicks and other Consumer Healthcare brands
partly offset by the related loss on sale of the shares in
Hindustan Unilever, a tax credit in Q2 2021 in connection with
enactment of an increase in the headline UK corporation tax rate,
lower major restructuring costs and lower re-measurement charges on
the contingent consideration liabilities.
Adjusted EPS was 87.7p compared with 92.6p in 2020, down 5% AER but
up 5% CER, reflecting incremental pandemic adjuvant sales,
sales increases in Pharmaceuticals, tight cost control and
favourable legal settlements, lower interest costs and lower
non-controlling interest allocation, partly offset by lower
non-pandemic sales in Vaccines, primarily Shingrix, increased R&D investment
and a higher effective tax rate. The contribution to growth from
COVID-19 solutions was approximately 6% AER, 6% CER.
Cash flow
Net cash inflow from operating activities was £4,185
million (2020: £4,586 million). The decrease primarily reflected adverse exchange
impacts, increased inventory, increased trade receivables, adverse
timing of returns and rebates, partly offset by improved operating
profit at CER reduced tax payments including tax on
disposals. Free cash inflow was £1,536 million for the
nine months (2020: £2,300 million).
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R&D pipeline
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We
focus on the science of the immune system, human genetics and
advanced technologies to develop Vaccines and Specialty Medicines
in four core therapeutic areas - Infectious Diseases, HIV, Oncology
and Immunology/ Respiratory. We also remain open to opportunities
outside these core therapy areas where there are scale
opportunities consistent with the science of the immune system and
human genetic validation.
As
disclosed at the Investor Update on 23 June 2021, the Company has a
robust late-stage R&D pipeline with many assets having the
potential to be first-in-class or best-in-class, as well as
offering significant strategic lifecycle opportunities. The
late-stage pipeline will help deliver the sales ambition set by the
Company for 2021-2026 and beyond.
Our
R&D pipeline currently comprises 63 Vaccines and Specialty
Medicines.
Pipeline
news flow highlights since Q2 2021 are listed below in
chronological order.
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Infectious diseases
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Shingrix
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●
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The US Centers for Disease Control and Prevention’s (CDC)
Advisory Committee on Immunisation Practices (ACIP) voted
unanimously to recommend two doses of Shingrix
for the
prevention of shingles and its complications in adults 19 years of
age and older who are or will be immunodeficient or
immunosuppressed due to disease or therapy.
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RTS, S malaria vaccine
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●
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The
World Health Organization recommended a broader roll-out of the
RTS,S/AS01e malaria vaccine to reduce childhood illness and deaths
from malaria in children living in sub-Saharan Africa and other
regions with moderate to high malaria transmission.
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GMMA Shigella candidate vaccine
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●
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Started
a Phase I study of the quadrivalent Shigella candidate vaccine
(GVGH), using the GMMA technology.
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Cytomegalovirus (CMV) candidate vaccine
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●
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Started a Phase I/II study of the adjuvanted recombinant
protein-based candidate vaccine against CMV.
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Meningitis ABCWY next generation candidate vaccine
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●
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Started
a Phase II study based on positive safety data in house from Phase
I.
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Menveo
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●
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Filed a regulatory submission with the FDA for a fully liquid
version of Menveo
which would eliminate the
need for reconstitution and simplify vaccine preparation steps for
healthcare practitioners.
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Triumeq (abacavir/dolutegravir/lamivudine)
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|
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●
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ViiV
Healthcare submitted a FDA regulatory application for the first
dispersible single-tablet regimen containing dolutegravir for
children living with HIV.
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Dovato (dolutegravir/lamivudine)
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●
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ViiV
Healthcare presented three-year switch data for Dovato confirming long-term,
non-inferior efficacy with no virologic failure versus continuation
of TAF-based regimens of at least three drugs.
|
●
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ViiV
Healthcare presented data from a second Dovato switch study confirming
non-inferior efficacy and no virologic failure versus a broad range
of regimens of at least three drugs.
|
Cabotegravir (long-acting integrase inhibitor)
|
|
●
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The FDA
granted Priority Review to ViiV Healthcare’s New Drug
Application for cabotegravir long-acting for prevention of HIV. A
Prescription Drug User Fee Act action date has been set for 23
January 2022.
|
Cabenuva (cabotegravir/rilpivirine)
|
|
●
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ViiV
Healthcare shared data from the CUSTOMIZE study that showed that
new long-acting HIV regimen Cabenuva has been successfully
implemented in a broad range of US healthcare
practices.
|
Collaborations
|
|
●
|
ViiV
Healthcare announced an exclusive license agreement with Shionogi
to develop a third-generation HIV integrase inhibitor with
potential for ultra long-acting dosing intervals.
|
Oncology
|
Jemperli (dostarlimab-gxly)
|
|
●
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Presented
data from the Phase I GARNET study at the European Society for
Medical Oncology Medical Conference held between 16-21 September
2021. The presentation addressed the anti-tumour activity by tumour
mutational burden in patients with recurrent or advanced
endometrial cancer in addition to treatment-related adverse events
that occurred during the study.
|
●
|
The FDA
granted accelerated approval for Jemperli in adult patients with
mismatch repair-deficient (dMMR) recurrent or advanced solid
tumours.
|
Bintrafusp alfa (TGF beta trap/PD-1 agonist)
|
|
●
|
As
noted previously, Merck KGaA, Darmstadt, Germany announced the
termination of our agreement on bintrafusp alfa.
|
Blenrep (belantamab
mafodotin). |
|
●
|
Announced
the decision to initiate an expansion cohort based on encouraging
preliminary data observed in the dose finding phase of the
nirogacestat DREAMM-5 sub-study.
|
Immunology/Respiratory
|
AL001 and AL101 (progranulin-elevating monoclonal
antibodies)
|
|
●
|
Alector
announced first patient dosed in a Phase II study evaluating AL001
in amyotrophic lateral sclerosis.
|
●
|
Alector
presented 12-month results from the INFRONT-2 Phase II open-label
clinical study of AL001 for the treatment of symptomatic
frontotemporal dementia patients with a progranulin mutation at the
Alzheimer's Association International Conference, 26-30 July
2021.
|
Nucala (mepolizumab)
|
|
●
|
The
European Medicines Agency’s Committee for Human Medicinal
Products issued positive opinions recommending the approval of
Nucala in three additional
eosinophillic-driven diseases; hypereosinophilic syndrome;
eosinophilic granulomatosis with polyangiitis; and chronic
rhinosinusitis with nasal polyps.
|
●
|
The FDA
approved Nucala for use in
chronic rhinosinusitis with nasal polyps.
|
GSK1070806 (IL18 neutralising antibody)
|
|
●
|
Started a Phase Ib study investigating our IL-18 neutralising
antibody in atopic dermatitis.
|
Benlysta (belimumab)
|
|
●
|
The
BLISS-BELIEVE study, assessing the incremental contribution of
rituximab to Benlysta in
patients with systemic lupus erythematosus (SLE), showed that the
addition of a single cycle of rituximab did not enhance
Benlysta’s efficacy,
but did provide further evidence of the efficacy of Benlysta alone or in combination with
standard of care in SLE patients.
|
Opportunity driven
|
Linerixibat (IBAT inhibitor)
|
|
●
|
Progressed
linerixibat into a Phase III study for cholestatic pruritus in
primary biliary cholangitis.
|
COVID-19
|
Xevudy (sotrovimab, VIR-7831/GSK4182136)
|
|
●
|
Received
binding agreements for the sale of more than 420,000 doses
worldwide, including a portion of those procured by the US
Government. In addition, in excess of 220,000 doses have been
reserved through other agreements.
|
●
|
Granted conditional or provisional marketing authorisation in
Australia, Japan and Saudi Arabia, and been granted emergency or
temporary authorisation in Brazil, Canada, Italy, Singapore,
Switzerland, the United States and several other
countries.
|
Otilimab (anti-GM-CSF monoclonal antibody)
|
|
●
|
The increasing evidence that Xevudy plays an important role as a treatment for
mild-to-moderate COVID-19 in high-risk adult and paediatric
patients and the decision to generate more data on this medicine
given the continued evolution of the pandemic, has led to the
decision not to further explore otilimab as a potential treatment
for severe pulmonary COVID-19 related disease in patients 70 years
and older. The Phase III contRAst programme investigating otilimab
for rheumatoid arthritis continues as planned with pivotal data
anticipated in H2 2022.
|
Vaccine collaborations
|
|
●
|
Announced positive Phase I results
from the SK Biosciences COVID-19 collaboration and start of the
Phase II and Phase III studies.
|
●
|
CureVac
and GSK published pre-clinical data on the second-generation mRNA
technology, which demonstrated an improved immune response compared
to CureVac’s first-generation mRNA COVID-19 therapy. Data
demonstrated high protective efficacy of the second-generation mRNA
lead candidate, CV2CoV, in animal models in a SARS-CoV-2 challenge
study. In parallel to the
work on the second-generation mRNA vaccine technology, GSK and
CureVac will accelerate efforts to progress the development of
modified mRNA vaccine constructs.
|
Contents
|
Page
|
|
|
Total
and Adjusted results
|
9
|
Financial
performance – Q3 2021
|
11
|
Financial
performance – nine months ended 30 September
2021
|
25
|
Cash
generation
|
40
|
Returns
to shareholders
|
41
|
|
|
Income
statements
|
43
|
Statement
of comprehensive income – three months ended 30 September
2021
|
44
|
Statement
of comprehensive income – nine months ended 30 September
2021
|
45
|
Pharmaceuticals
turnover – three months ended 30 September 2021
|
46
|
Pharmaceuticals
turnover – nine months ended 30 September 2021
|
47
|
Vaccines
turnover – three months ended 30 September 2021
|
48
|
Vaccines
turnover – nine months ended 30 September 2021
|
49
|
Balance
sheet
|
50
|
Statement
of changes in equity
|
51
|
Cash
flow statement – nine months ended 30 September
2021
|
52
|
Segment
information
|
53
|
Legal
matters
|
55
|
Additional
information
|
56
|
Reconciliation
of cash flow to movements in net debt
|
58
|
Net
debt analysis
|
58
|
Free
cash flow reconciliation
|
58
|
Reporting
definitions
|
59
|
Outlook,
assumptions and cautionary statements
|
60
|
Independent
review report
|
62
|
Contacts
|
GSK –
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. For further information please visit www.gsk.com.
|
GSK enquiries:
|
|
|
|
Media
enquiries:
|
Tim
Foley
|
+44 (0)
20 8047 5502
|
(London)
|
|
Simon
Moore
|
+44 (0)
20 8047 5502
|
(London)
|
|
Madeleine
Breckon
|
+44 (0)
20 8047 5502
|
(London)
|
|
Kristen
Neese
|
+1 215
751 3335
|
(Philadelphia)
|
|
Kathleen
Quinn
|
+1 202
603 5003
|
(Washington)
|
|
|
|
|
Analyst/Investor
enquiries:
|
Nick
Stone
|
+44 (0)
7717 618834
|
(London)
|
|
Sonya
Ghobrial
|
+44 (0)
7392 784784
|
(Consumer)
|
|
James
Dodwell
|
+44 (0)
7881 269066
|
(London)
|
|
Mick
Readey
|
+44 (0)
7990 339653
|
(London)
|
|
Jeff
McLaughlin
|
+1 215
751 7002
|
(Philadelphia)
|
|
Frannie
DeFranco
|
+1 215
751 4855
|
(Philadelphia)
|
Registered in England & Wales:
No. 3888792
|
|
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
|
Total and Adjusted results
|
Total
reported results represent the Group’s overall
performance.
GSK
also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS
measures may be considered in addition to, but not as a substitute
for or superior to, information presented in accordance with IFRS.
Adjusted results are defined below and other non-IFRS measures are
defined on page 59.
GSK
believes that Adjusted results, when considered together with Total
results, provide investors, analysts and other stakeholders with
helpful complementary information to understand better the
financial performance and position of the Group from period to
period, and allow the Group’s performance to be more easily
compared against the majority of its peer companies. These measures
are also used by management for planning and reporting purposes.
They may not be directly comparable with similarly described
measures used by other companies.
GSK
encourages investors and analysts not to rely on any single
financial measure but to review GSK’s quarterly results
announcements, including the financial statements and notes, in
their entirety.
GSK is
committed to continuously improving its financial reporting, in
line with evolving regulatory requirements and best practice. In
line with this practice, GSK expects to continue to review and
refine its reporting framework.
Adjusted
results exclude the following items from Total results, together
with the tax effects of all of these items:
|
●
|
amortisation
of intangible assets (excluding computer software)
|
●
|
impairment
of intangible assets (excluding computer software) and
goodwill
|
●
|
Major
restructuring costs, which include impairments of tangible assets
and computer software, (under specific Board approved programmes
that are structural, of a significant scale and where the costs of
individual or related projects exceed £25 million), including
integration costs following material acquisitions
|
●
|
transaction-related
accounting or other adjustments related to significant
acquisitions
|
●
|
proceeds
and costs of disposal of associates, products and businesses;
significant legal charges (net of insurance recoveries) and
expenses on the settlement of litigation and government
investigations; other operating income other than royalty income,
and other items including the one-off impact of the revaluation of
deferred tax assets and liabilities following enactment of the
increase in the headline rate of UK corporation tax from 19% to 25%
(effective 2023)
|
●
|
separation
costs
|
Costs
for all other ordinary course smaller scale restructuring and legal
charges and expenses are retained within both Total and Adjusted
results.
As
Adjusted results include the benefits of Major restructuring
programmes but exclude significant costs (such as significant
legal, major restructuring and transaction items) they should not
be regarded as a complete picture of the Group’s financial
performance, which is presented in Total results. The exclusion of
other Adjusting items may result in Adjusted earnings being
materially higher or lower than Total earnings. In particular, when
significant impairments, restructuring charges and legal costs are
excluded, Adjusted earnings will be higher than Total
earnings.
GSK has
undertaken a number of Major restructuring programmes in response
to significant changes in the Group’s trading environment or
overall strategy, or following material acquisitions. Costs, both
cash and non-cash, of these programmes are provided for as
individual elements are approved and meet the accounting
recognition criteria. As a result, charges may be incurred over a
number of years following the initiation of a Major restructuring
programme.
Significant
legal charges and expenses are those arising from the settlement of
litigation or government investigations that are not in the normal
course and materially larger than more regularly occurring
individual matters. They also include certain major legacy
matters.
The
enactment of the increase in the headline rate of UK corporation
tax from 19% to 25% (effective 2023) resulted in a credit to the
income statement of £325 million in Q2 2021. Due to the
magnitude, GSK has reported this credit as an Adjusting item in the
nine months ending 30 September 2021 so that it does not obscure
the key trends in the Group’s performance for the
period.
Reconciliations
between Total and Adjusted results, providing further information
on the key Adjusting items, are set out on pages 21, 22, 35 and
36.
GSK
provides earnings guidance to the investor community on the basis
of Adjusted results. This is in line with peer companies and
expectations of the investor community, supporting easier
comparison of the Group’s performance with its peers. GSK is
not able to give guidance for Total results as it cannot reliably
forecast certain material elements of the Total results,
particularly the future fair value movements on contingent
consideration and put options that can and have given rise to
significant adjustments driven by external factors such as currency
and other movements in capital markets.
|
ViiV Healthcare
ViiV
Healthcare is a subsidiary of the Group and 100% of its operating
results (turnover, operating profit, profit after tax) are included
within the Group income statement.
Earnings
are allocated to the three shareholders of ViiV Healthcare on the
basis of their respective equity shareholdings (GSK 78.3%, Pfizer
11.7% and Shionogi 10%) and their entitlement to preferential
dividends, which are determined by the performance of certain
products that each shareholder contributed. As the relative
performance of these products changes over time, the proportion of
the overall earnings allocated to each shareholder also changes. In
particular, the increasing proportion of sales of
dolutegravir-containing products has a favourable impact on the
proportion of the preferential dividends that is allocated to GSK.
Adjusting items are allocated to shareholders based on their equity
interests. GSK was entitled to approximately 86% of the Total
earnings and 83% of the Adjusted earnings of ViiV Healthcare for
2020.
As
consideration for the acquisition of Shionogi’s interest in
the former Shionogi-ViiV Healthcare joint venture in 2012, Shionogi
received the 10% equity stake in ViiV Healthcare and ViiV
Healthcare also agreed to pay additional future cash consideration
to Shionogi, contingent on the future sales performance of the
products being developed by that joint venture, principally
dolutegravir. Under IFRS 3 ‘Business combinations’, GSK
was required to provide for the estimated fair value of this
contingent consideration at the time of acquisition and is required
to update the liability to the latest estimate of fair value at
each subsequent period end. The liability for the contingent
consideration recognised in the balance sheet at the date of
acquisition was £659 million. Subsequent re-measurements are
reflected within other operating income/(expense) and within
Adjusting items in the income statement in each period. At 30
September 2021, the liability, which is discounted at 8.0%, stood
at £5,242 million, on a post-tax basis.
Cash
payments to settle the contingent consideration are made to
Shionogi by ViiV Healthcare each quarter, based on the actual sales
performance of the relevant products in the previous quarter. These
payments reduce the balance sheet liability and hence are not
recorded in the income statement. The cash payments made to
Shionogi by ViiV Healthcare in the nine months to September 2021
were £615 million.
Because
the liability is required to be recorded at the fair value of
estimated future payments, there is a significant timing difference
between the charges that are recorded in the Total income statement
to reflect movements in the fair value of the liability and the
actual cash payments made to settle the liability.
Further
explanation of the acquisition-related arrangements with ViiV
Healthcare are set out on pages 52 and 53 of the Annual Report
2020.
|
Financial performance – Q3 2021
|
Total
results
|
The
Total results for the Group are set out below.
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
9,077
|
|
8,646
|
|
5
|
|
10
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,889)
|
|
(2,885)
|
|
-
|
|
3
|
|
|
|
|
|
|
|
|
Gross
profit
|
6,188
|
|
5,761
|
|
7
|
|
14
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,646)
|
|
(2,669)
|
|
(1)
|
|
4
|
Research
and development
|
(1,490)
|
|
(1,140)
|
|
31
|
|
34
|
Royalty income
|
116
|
|
85
|
|
36
|
|
40
|
Other
operating income/(expense)
|
(230)
|
|
(179)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
1,938
|
|
1,858
|
|
4
|
|
15
|
|
|
|
|
|
|
|
|
Finance
income
|
7
|
|
(3)
|
|
|
|
|
Finance
expense
|
(200)
|
|
(195)
|
|
|
|
|
Share
of after tax profits of
associates
and joint ventures
|
3
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
1,748
|
|
1,671
|
|
5
|
|
16
|
|
|
|
|
|
|
|
|
Taxation
|
(380)
|
|
(241)
|
|
|
|
|
Tax rate %
|
21.7%
|
|
14.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
1,368
|
|
1,430
|
|
(4)
|
|
6
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
200
|
|
186
|
|
|
|
|
Profit
attributable to shareholders
|
1,168
|
|
1,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,368
|
|
1,430
|
|
(4)
|
|
6
|
|
|
|
|
|
|
|
|
Earnings per share
|
23.3p
|
|
25.0p
|
|
(7)
|
|
3
|
|
|
|
|
|
|
|
|
Adjusted results
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for Q3 2021 and Q3 2020
are set out on pages 21 and 22.
|
|
Q3 2021
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
9,077
|
|
100
|
|
5
|
|
10
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,646)
|
|
(29.2)
|
|
4
|
|
7
|
Selling,
general and administration
|
(2,504)
|
|
(27.6)
|
|
1
|
|
7
|
Research
and development
|
(1,169)
|
|
(12.9)
|
|
11
|
|
15
|
Royalty
income
|
116
|
|
1.4
|
|
36
|
|
40
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,874
|
|
31.7
|
|
8
|
|
16
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
2,685
|
|
|
|
8
|
|
16
|
Adjusted
profit after tax
|
2,131
|
|
|
|
3
|
|
11
|
Adjusted
profit attributable to shareholders
|
1,835
|
|
|
|
3
|
|
11
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
36.6p
|
|
|
|
3
|
|
10
|
|
|
|
|
|
|
|
|
Operating profit by business
|
Q3 2021
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
2,131
|
|
48.5
|
|
10
|
|
17
|
Pharmaceuticals
R&D*
|
(838)
|
|
|
|
9
|
|
12
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
1,293
|
|
29.4
|
|
10
|
|
21
|
Vaccines
|
1,033
|
|
47.5
|
|
15
|
|
22
|
Consumer
Healthcare
|
648
|
|
25.9
|
|
20
|
|
28
|
|
|
|
|
|
|
|
|
|
2,974
|
|
32.8
|
|
14
|
|
23
|
Corporate
and other unallocated costs
|
(100)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,874
|
|
31.7
|
|
8
|
|
16
|
|
|
|
|
|
|
|
|
*
|
Operating
profit of Pharmaceuticals R&D segment, which is the
responsibility of the Chief Scientific Officer and President,
R&D. It excludes ViiV Healthcare R&D expenditure, which is
reported within the Pharmaceuticals segment.
|
Turnover
|
Pharmaceuticals turnover
|
|
Q3 2021
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
741
|
|
27
|
|
33
|
HIV
|
1,251
|
|
3
|
|
8
|
Immuno-inflammation
|
241
|
|
25
|
|
32
|
Pandemic
|
114
|
|
-
|
|
-
|
Oncology
|
128
|
|
29
|
|
34
|
|
|
|
|
|
|
New and
Specialty
|
2,475
|
|
18
|
|
24
|
Established
Pharmaceuticals
|
1,922
|
|
(8)
|
|
(4)
|
|
|
|
|
|
|
|
4,397
|
|
5
|
|
10
|
|
|
|
|
|
|
US
|
2,068
|
|
8
|
|
14
|
Europe
|
953
|
|
(2)
|
|
2
|
International
|
1,376
|
|
6
|
|
12
|
|
|
|
|
|
|
|
4,397
|
|
5
|
|
10
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the quarter was £4,397 million, up 5% AER, 10%
CER, driven by strong growth in New and Specialty products, partly
offset by decline in the Established Pharmaceuticals portfolio.
Sales of Xevudy, the
monoclonal antibody treatment for COVID-19, of £114 million
contributed approximately 3 percentage points to total
Pharmaceuticals growth in the quarter.
New and
Specialty sales of £2,475 million grew 18% AER, 24% CER, with
ongoing growth from Respiratory, Oncology, Immuno-Inflammation and
HIV. Favourable prior period RAR adjustments, including the impact
of lower than expected Medicaid usage on a number of products,
contributed approximately 2 percentage points to New and Specialty
products growth and also to total Pharmaceuticals
growth.
Respiratory
sales were up 27% AER, 33% CER, to £741 million, on growth of
Trelegy and Nucala, and the Oncology and
Immuno-inflammation portfolios continued to show double digit
growth. HIV sales grew 3% AER, 8% CER, to £1,251 million, with
growth of Dovato exceeding
the decrease in Tivicay and
Triumeq. Sales of
Established Pharmaceuticals declined 8% AER, 4% CER to £1,922
million.
In the
US, sales grew 8% AER, 14% CER on continued growth of Nucala, Trelegy, Benlysta and Dovato. Established Products declined
10% AER, 5% CER, with the impact of generic competition partly
offset by strong demand for Established Respiratory products in the
COVID-19 environment, and a favourable prior period RAR
adjustment.
In
Europe, sales declined 2% AER and grew 2% CER, with double digit
growth of Trelegy, Nucala, Anoro,
Benlysta and Zejula.
HIV Dovato growth exceeded
decreases in Tivicay and
Triumeq. The Established
Pharmaceuticals portfolio declined 12% AER, 9% CER, impacted by
generic competition including Seretide, Duodart and
Volibris.
International
sales grew 6% AER, 12% CER, including £97 million sales of
Xevudy, which contributed
approximately 8 percentage points of growth. Underlying growth from
Respiratory, Dovato,
Tivicay tenders and
Benlysta. Established
Pharmaceuticals declined 6% AER, flat at CER with less impact in
the quarter from a suppressed antibiotics market and generic
competition in Japan.
Respiratory
Total
Respiratory sales of £741 million were up 27% AER, 33% CER,
with growth from Trelegy
and Nucala in all regions.
International Respiratory sales grew 31% AER, 39% CER including
Nucala, up 23% AER, 30%
CER, and Trelegy up 73%
AER, 85% CER. In Europe, Respiratory grew 12% AER, 17% CER with
double digit CER growth of Anoro,
Trelegy and Nucala.
In the US, Respiratory grew 31% AER, 38% CER, driven by
Trelegy and Nucala and the impact of a prior period
RAR adjustment.
Sales
of Nucala were £285
million in the quarter and grew 14% AER, 20% CER, with consistent,
strong growth across all three regions. US sales were up 13% AER,
19% CER to £169 million including impact of nasal polyps
indication launch in the quarter. International sales of £53
million grew 23% AER, 30% CER including strong growth of at home
application in the Japanese market. Europe sales of £63
million grew 7% AER, 12% CER.
Trelegy sales were up 68% AER, 77% CER to £326 million
driven by growth in all regions. In the US, sales growth of 82%
AER, 92% CER includes the asthma indication approved and launched
in Q3 2020. In Europe, sales grew 24% AER, 26% CER and in
International, where Trelegy asthma was approved in Japan in
Q4 2020, sales grew 73% AER, 85% CER to £45
million.
HIV
HIV
sales were £1,251 million with growth of 3% AER, 8% CER in the
quarter. Q3 2021 growth was driven by our new HIV products
Dovato, Juluca, Rukobia and Cabenuva, favourable US wholesaler
purchasing patterns and International tenders.
Triumeq sales were £504 million, down 13% AER, 8% CER
and Tivicay sales were
£352 million, down 7% AER, 2% CER. New HIV products
Dovato, Juluca, Rukobia and Cabenuva delivered sales of £363
million representing 29% of the total HIV portfolio. Sales of the
two drug regimens Dovato
and Juluca were £208
million and £130 million respectively with combined growth of
52% AER, 59% CER. Rukobia
sales were £13 million. Cabenuva, the first long-acting
injectable, recorded sales of £12 million.
In the
US, total sales were £782 million with growth of 4% AER, 10%
CER. New HIV products delivered sales of £231 million,
including: Dovato £110
million, with growth of 96% AER and more than double CER,
Juluca £99 million,
with growth of 4% AER, 9% CER, Rukobia £12 million and
Cabenuva £10 million.
Combined Tivicay and
Triumeq sales were
£538 million decreasing 9% AER, 3% CER. In Europe, total sales
were £297 million flat at AER, but grew 5% CER. New HIV
products delivered sales of £113 million, including:
Dovato £82 million,
with growth of more than double AER and more than double CER and
Juluca £28 million,
with growth of 17% AER, 21% CER. Combined Tivicay and Triumeq sales were £177 million
decreasing 20% AER, 17% CER.
Oncology
Sales
of Zejula, the PARP
inhibitor treatment for ovarian cancer, were £101 million in
the quarter, up 10% AER, 15% CER, but impacted by lower diagnosis
rates particularly in the US. Sales included £56 million in
the US and £41 million in Europe.
Blenrep for the treatment of patients with relapsed or
refractory multiple myeloma was approved and launched in the US and
Europe in Q3 2020 and reported sales of £25 million in the
quarter.
Immuno-inflammation
Immuno-inflammation
sales of £241 million grew 25% AER, 32% CER on Benlysta sales up 28% AER, 35% CER to
£238 million in the quarter, including the impact of lupus
nephritis launches in US and Japan in H2 2020.
Pandemic Sales
Sales
of Xevudy, the monoclonal
antibody treatment for COVID-19 patients at risk of hospitalisation
were £114 million in the quarter. This contributed 3
percentage points of growth to total Pharmaceutical sales in the
quarter, and 8 percentage points to International, which reported
£97 million of Xevudy
sales.
Established Pharmaceuticals
Sales
of Established Pharmaceuticals in the quarter were £1,922
million, down 8% AER, 4% CER.
Established
Respiratory products declined 7% AER, 3% CER to £1,036
million. This reflects the ongoing impact of generic competition to
Advair/Seretide in all
regions, partly offset by approximately 2 percentage points benefit
of a prior period RAR adjustment in the quarter.
The
remainder of the Established Pharmaceuticals portfolio declined by
10% AER, 5% CER to £886 million with ongoing generic impacts
on products including Volibris and Avodart/Duodart in Europe, offset by
some recovery in demand for antibiotics previously impacted by the
COVID-19 pandemic.
|
Vaccines turnover
|
|
Q3 2021
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
352
|
|
(3)
|
|
3
|
Influenza
|
384
|
|
(14)
|
|
(8)
|
Shingles
|
502
|
|
34
|
|
41
|
Established
Vaccines
|
841
|
|
(1)
|
|
4
|
|
|
|
|
|
|
|
2,079
|
|
2
|
|
8
|
Pandemic
Vaccines
|
95
|
|
-
|
|
-
|
|
|
|
|
|
|
Total
Vaccines
|
2,174
|
|
7
|
|
13
|
|
|
|
|
|
|
US
|
1,322
|
|
15
|
|
22
|
Europe
|
380
|
|
(1)
|
|
3
|
International
|
472
|
|
(5)
|
|
(2)
|
|
|
|
|
|
|
|
2,174
|
|
7
|
|
13
|
|
|
|
|
|
|
Vaccines turnover grew 7% AER, 13% CER to £2,174 million,
primarily driven by higher Shingrix sales in the US and Europe and pandemic adjuvant
sales. Unfavorable US prior period returns and rebates
adjustments reduced overall Vaccines growth by approximately 3
percentage points.
Vaccines turnover excluding pandemic vaccines grew 2% AER, 8% CER
to £2,079 million.
Higher demand in the US for paediatric and adolescent vaccination
reflects the return to a normal
back-to-school season, partial catch up of prior period
missed vaccinations and favourable CDC
purchasing patterns.
Meningitis
Meningitis sales declined by 3% AER but grew 3% CER to £352
million. Bexsero sales grew 2% AER, 9% CER to £224 million
and Menveo sales
were up 21% AER, 30%
CER to £126 million primarily driven by higher demand and
share in the US, partially offset by unfavorable prior period
return and rebates movements for Bexsero.
Influenza
Fluarix/FluLaval sales declined
by 14% AER, 8% CER, to £384 million as a result of an
unfavorable prior period return and rebates movements in the US
which had an impact of 7 percentage points on growth and phasing in
Europe.
Shingles
Shingrix grew 34% AER, 41% CER to £502 million driven
by sales in the US, launches in the UK, Spain and Italy and higher
demand in Germany. In the US, retail
prescription growth in the quarter was negatively impacted by
outbreaks of the delta variant of COVID-19. However, overall US
sales increased as a result of growth in non-retail prescriptions
together with favourable wholesaler channel inventory movements,
reflecting both a reduction in wholesaler inventory in Q3 2020 and
a rebuild in wholesaler inventory in Q3 2021.
Established Vaccines
Hepatitis vaccines sales were up 3% AER, 8% CER to £142
million, largely driven by favourable US demand.
Sales of DTPa-containing vaccines (Infanrix, Pediarix and Boostrix) grew 1% AER, 6% CER. Infanrix/Pediarix
sales declined 1% AER but were up 4%
CER to £156 million, reflecting US demand partly offset
by a change for the dosing schedule in Germany and tender volume in
Europe. Boostrix sales grew 2% AER, 9% CER to £167 million
driven by higher demand and share in the US.
Rotarix sales were up
16% AER, 22% CER to £153 million, reflecting demand recovery in International and
in the US.
Synflorix sales declined by 20%
AER, 17% CER to £66 million, primarily due to lower tender
demand in International.
MMRV vaccines sales grew 24% AER, 28% CER to £89 million,
driven by improved supply in
International.
Pandemic Vaccines
Pandemic vaccines sales of £95 million included £94
million of pandemic adjuvant sales for contracted volumes to the US
and Canadian governments.
|
Consumer Healthcare turnover
|
|
|
|
Q3 2021
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
702
|
|
-
|
|
5
|
Pain
relief
|
|
|
587
|
|
9
|
|
13
|
Vitamins,
minerals and supplements
|
|
|
406
|
|
15
|
|
19
|
Respiratory
health
|
|
|
328
|
|
12
|
|
16
|
Digestive
health and other
|
|
|
448
|
|
(2)
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
2,471
|
|
6
|
|
10
|
|
|
|
|
|
|
|
|
Brands
divested/under review
|
|
|
35
|
|
(56)
|
|
(55)
|
|
|
|
|
|
|
|
|
|
|
|
2,506
|
|
3
|
|
8
|
|
|
|
|
|
|
|
|
US
|
|
|
830
|
|
6
|
|
12
|
Europe
|
|
|
637
|
|
(3)
|
|
2
|
International
|
|
|
1,039
|
|
6
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
2,506
|
|
3
|
|
8
|
|
|
|
|
|
|
|
|
Consumer Healthcare sales grew 3% AER, 8% CER to £2,506
million in the third quarter with minimal dilution from divestments
given the completion of the portfolio rationalisation at the end of
Q1 2021.
Sales excluding brands divested/under review grew 6% AER, 10%
CER. This includes a favourable
comparison to the third quarter last year which was adversely
impacted by approximately 2 percentage points from the reversal of
increased retailer stocking ahead of a systems cutover in North
America. Additionally increased
sales ahead of the anticipated price increases in the US in October
favourably impacted growth by approximately 1%. Improved capacity
in Vitamins, minerals and supplements allowed retailers to increase
stock levels to more normal levels to meet consumer demand, this
category has been particularly volatile through the
pandemic.
International sales excluding brands divested/under review grew
double digit on a CER basis with strong performance in emerging
markets such as China, Middle East and Africa. European sales
excluding brands divested/under review grew by mid-single digit on
a CER basis. US sales grew by double digits on a CER
basis.
Oral health
Oral health sales were £702 million, flat at AER, up 5%
CER. Sensodyne delivered high single digit growth reflecting
underlying brand strength, with some advance purchasing ahead of
the US price increase and double-digit growth in China and high
single digit growth in India. Gum health delivered mid-single digit
growth, Denture care was flat due to competitive pressure and
market conditions.
Pain relief
Pain relief sales increased 9% AER, 13% CER to £587 million.
The growth was helped by favourable comparatives last year due to
weakness in Advil in the US last year and the destocking as a result
of the US systems cutover. Panadol, Advil and Excedrin in particular grew strong double digits in the
current quarter reflecting improved performance, advance purchasing
ahead of the anticipated price increase in the US and supported by
favourable comparatives. Voltaren decreased low single digit following the expected
short term decline in the US after the introduction of private
label earlier this year. This followed the successful Rx to OTC
switch in May last year and more than offset strong growth in
Germany and the UK.
Vitamins, minerals and supplements
Vitamins,
minerals and supplements sales increased 15% AER, 19% CER to
£406 million, continuing the double digit growth on a
pro-forma basis in Q3 2020. Centrum and Emergen C both grew strong
double digits driven by successful innovation, improved capacity in
the US that allowed restocking for retailers and continued consumer
focus on health and wellness. Caltrate grew by low-single digit
against the comparative in Q3 2020 of double digit
growth.
Respiratory health
Respiratory health sales increased 12% AER, 16% CER to £328
million helped by a favourable comparator in Q3 2020 when sales
declined. Otrivin, Flonase
and Theraflu all grew double digits helped by favourable
comparatives in Q3 2020. Robitussin grew low single digits. Retail sell-in for seasonal cold, flu and nasal
products in Q3 2021 improved on last year although still below 2019
levels.
Digestive health and other
Digestive health and other brands sales declined 2% AER but grew 3%
CER to £448 million. Digestive health brands were up
mid-single digit continuing the strong growth seen in Q3 2020 with
particularly strong growth in Tums. Skin health brands were also up mid-single digit
and ChapStick grew double digits, helped by favourable
comparatives and advance purchasing ahead of the price increases in
the US. Smokers’ health brands grew by low-single
digits.
|
Operating
performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 31.8%, 1.5 percentage
points lower at AER and 2.2 percentage points lower in CER terms
compared with Q3 2020. This included a reduction in write-downs in
manufacturing sites.
Excluding
these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 29.2%, 0.2 percentage points lower at
AER and 0.8 percentage points lower at CER compared with Q3 2020.
This reflected a favourable mix in Vaccines, primarily due to the
growth in Shingrix in the
US and pandemic adjuvants, as well as reduced supply chain costs in
Pharmaceuticals arising from restructuring savings, partly offset
by adverse mix in Pharmaceuticals.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 29.2%, 1.7
percentage points lower at both AER and CER compared with Q3
2020.
Excluding
Adjusting items, Adjusted SG&A costs as a percentage of
turnover were 27.6%, 1.1 percentage points lower at AER than in Q3
2020 and 1.0 percentage points lower on a CER basis. Adjusted
SG&A costs increased 1% AER and 7% CER which reflected an
adverse comparison to a one-off benefit from restructuring of
post-retirement benefits in Q3 2020 and increased investment for
launches in Pharmaceuticals and Vaccines compared to reduced spend
in Q3 2020 as a result of the COVID-19 lockdowns partly offset by
continued tight control of ongoing costs and the continuing benefit
of restructuring in Consumer Healthcare and support
functions.
Research and development
Total
R&D expenditure was £1,490 million (16.4% of turnover), up
31% AER, and up 34% CER, including an increase in impairment
charges primarily related to bintrafusp alfa. Adjusted R&D
expenditure was £1,169 million (12.9% of turnover), 11% higher
at AER, 15% higher at CER than in Q3 2020.
Pharmaceuticals
R&D expenditure was £869 million, up 8% AER, up 11% CER,
reflecting increases in the Specialty and Oncology portfolios.
Efficiency savings continue from the implementation of the One
Development programme for Pharmaceuticals and Vaccines as part of
the Separation Preparation restructuring programme and variable
spending as a result of COVID-19 lockdowns.
The
growth in the Specialty portfolio excluding Oncology investment was
driven primarily by our two otilimab programmes for COVID-19
treatment and rheumatoid arthritis and in bepirovirsen, our HBV
antisense oligonucleotide programme and depemokimab, our anti-IL5
for asthma, partly offset by reduced spend on daprodustat which is
expected to file in Q1 2022. There has also been an increase in
spend in our early stage research portfolio reflecting the business
returning to normal levels of activity following the impact of
COVID-19 in 2020. In Oncology there is increased investment from
the progression of Zejula,
Jemperli and Blenrep as well as increased spend on
bintrafusp alfa, reflecting recognition of the costs required to
terminate the programme. The increased spend in Oncology also
reflects the benefit in Q3 2020 from recognition of pre-launch
inventory following the successful approval of Blenrep for the treatment of multiple
myeloma. These increases in Oncology were partly offset by a
reduction in spend on feladilimab following the decision to
terminate the programme in April.
R&D
expenditure in Vaccines was £245 million, up 40% AER, 46% CER,
reflecting increased investment in meningitis and RSV, partly
offset by efficiency savings from the implementation of the One
Development programme. R&D expenditure in Consumer Healthcare
was £55 million.
Royalty income
Royalty
income was £116 million (Q3 2020: £85 million), up 36%
AER and up 40% at CER, primarily reflecting increased royalties on
sales of Gardasil.
|
Other operating income/(expense)
Net
other operating expense of £230 million (Q3 2020: £179
million) primarily reflected accounting charges of £281
million (Q3 2020: £395 million) arising from the
re-measurement of the contingent consideration liabilities related
to the acquisitions of the former Shionogi-ViiV Healthcare joint
venture and the former Novartis Vaccines business and the
liabilities for the Pfizer put option and Pfizer and Shionogi
preferential dividends in ViiV Healthcare. This included a
re-measurement charge of £239 million (Q3 2020: £339
million) for the contingent consideration liability due to
Shionogi, as a result of the unwinding of the discount for £94
million and a charge for £145 million primarily from updated
exchange rate assumptions. This was partly offset by fair value
gains on investments and a number of asset disposals.
|
Operating profit
Total
operating profit was £1,938 million in Q3 2021 compared with
£1,858 million in Q3 2020. This reflected lower restructuring
and re-measurement charges on the contingent consideration
liabilities offset by higher impairments.
Excluding
these and other Adjusting items, Adjusted operating profit was
£2,874 million, 8% higher than Q3 2020 at AER, 16% higher at
CER on a turnover increase of 10% CER. The Adjusted operating
margin of 31.7% was 0.8 percentage points higher at AER, and 1.5
percentage points higher on a CER basis than in Q3
2020.
The increase in Adjusted operating profit primarily reflected
leverage from strong growth across all three businesses including
increased demand for Shingrix, £209 million of pandemic sales
(Xevudy £114 million, Pandemic adjuvant £94
million), strong growth in New and Specialty Products and a
favourable prior period RAR adjustment in Pharmaceuticals,
continued tight control of ongoing costs and benefits from
continued restructuring across the business. This was partly offset
by increased investment in R&D, increased investment behind
launches and an adverse comparison to a one-off benefit from
restructuring of post-retirement benefits in Q3
2020.
Contingent
consideration cash payments which are made to Shionogi and other
companies reduce the balance sheet liability and hence are not
recorded in the income statement. Total contingent consideration
cash payments in Q3 2021 amounted to £205 million (Q3 2020:
£209 million). This included cash payments made to Shionogi of
£196 million (Q3 2020: £203 million).
Adjusted operating profit by business
Pharmaceuticals
operating profit was £1,293 million, up 10% AER, and 21% CER
on a turnover increase of 10% CER. The operating margin of 29.4%
was 1.4 percentage
points higher at AER than in Q3 2020 and 2.6 percentage points
higher on a CER basis. This primarily reflected positive leverage
from strong growth in New and Specialty products and a favourable
prior period RAR adjustment as well as continued tight control of
ongoing costs and benefits from continued restructuring. This was
partly offset by increased investment in R&D.
Vaccines
operating profit was £1,033 million, 15% higher than Q3 2020
at AER, and 22% higher at CER on a turnover increase of 13% CER.
The operating margin of 47.5% was 3.3 percentage points higher at
AER than in Q3 2020 and 3.6 percentage points higher on a CER
basis. This was primarily driven by positive operating leverage
from sales growth with favourable mix, as well as higher royalty
income. This was partly offset by higher R&D spend to support
key strategic priorities.
Consumer
Healthcare operating profit was £648 million, up 20% AER but
up 28% CER on a turnover increase of 8% CER. The operating margin
of 25.9% was 3.5 percentage point higher at AER and
4.2 percentage points higher on a CER basis than in Q3 2020. The
margin increase at CER reflected incremental synergy benefits from
the Pfizer Joint Venture integration, price increases, favourable
sales mix and leverage from volume growth partially offset by the
impact of divestments (1.2 percentage points), increased
advertising and promotion investment as well as incremental supply
chain costs, including commodities and freight.
Net finance costs
Total
net finance costs were £193 million compared with £198
million in Q3 2020. Adjusted net finance costs were £192
million compared with £197 million in Q3 2020. The decrease
primarily a reduction in fair value expense on interest rate swaps
partly offset by increased swap interest expense on foreign
currency hedges.
Share of after tax profits of associates and joint
ventures
The
share of after tax profits of associates and joint ventures was
£3 million (Q3 2020: £11 million).
Taxation
The
charge of £380 million represented an effective tax rate on
Total results of 21.7% (Q3 2020: 14.4%) and reflected the different
tax effects of the various Adjusting items. Tax on Adjusted profit
amounted to £554 million and represented an effective Adjusted
tax rate of 20.6% (Q3 2020: 16.8%).
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2020. The Group
continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Non-controlling interests
The
allocation of Total earnings to non-controlling interests amounted
to £200 million (Q3 2020: £186 million). The increase was
primarily due to an increased allocation of Consumer Healthcare
Joint Venture profits of £118 million (Q3 2020: £114
million) and an increased allocation of ViiV Healthcare profits of
£69 million (Q3 2020: £62 million), including reduced
credits for re-measurement of contingent consideration
liabilities.
The
allocation of Adjusted earnings to non-controlling interests
amounted to £296 million (Q3 2020: £287 million). The
increase in allocation primarily reflected an increased allocation
of Consumer Healthcare Joint Venture profits of £161 million
(Q3 2020: £147 million) partly offset by a reduced allocation
of ViiV Healthcare profits of £122 million (Q3 2020: £130
million).
Earnings per share
Total
EPS was 23.3p, compared with 25.0p in Q3 2020. This primarily
reflected increased impairments and lower milestone and disposal
income partly offset by lower restructuring and re-measurement
charges.
Adjusted
EPS was 36.6p compared with 35.6p in Q3 2020, up 3% AER and 10%
CER, on a 16% CER increase in Adjusted operating profit reflecting
strong sales growth across all three businesses, partly offset by a
higher effective tax rate and a higher non-controlling interest
allocation of Consumer Healthcare profits. The contribution to
growth from COVID-19 solutions was approximately 5% AER, 5%
CER.
Currency impact on Q3 2021 results
The
results for Q3 2021 are based on average exchange rates,
principally £1/$1.37, £1/€1.16 and £1/Yen 151.
Comparative exchange rates are given on page 56. The period-end
exchange rates were £1/$1.34, £1/€1.16 and
£1/Yen 151.
In the
quarter, turnover increased 5% AER, 10% CER. Total EPS was 23.3p
compared with 25.0p in Q3 2020. Adjusted EPS was 36.6p compared
with 35.6p in Q3 2020, up 3% AER and 10% CER. The adverse currency
impact primarily reflected the strengthening in Sterling,
particularly against the US as well as Euro and Yen. Exchange gains
or losses on the settlement of intercompany transactions had a 1
percentage point positive impact on the negative currency impact of
seven percentage points on Adjusted EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for Q3
2021 and Q3 2020 are set out below.
|
Three months ended 30 September 2021
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
9,077
|
|
|
|
|
|
|
9,077
|
Cost of sales
|
(2,889)
|
176
|
3
|
57
|
7
|
|
|
(2,646)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
6,188
|
176
|
3
|
57
|
7
|
|
|
6,431
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,646)
|
|
|
53
|
|
14
|
75
|
(2,504)
|
Research and
Development
|
(1,490)
|
25
|
272
|
22
|
|
2
|
|
(1,169)
|
Royalty income
|
116
|
|
|
|
|
|
|
116
|
Other operating
income/(expense)
|
(230)
|
|
|
(1)
|
283
|
(52)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
1,938
|
201
|
275
|
131
|
290
|
(36)
|
75
|
2,874
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
(193)
|
|
|
|
|
1
|
|
(192)
|
Share
of after tax profits
of
associates and joint
ventures
|
3
|
|
|
|
|
|
|
3
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,748
|
201
|
275
|
131
|
290
|
(35)
|
75
|
2,685
|
|
|
|
|
|
|
|
|
|
Taxation
|
(380)
|
(33)
|
(66)
|
(28)
|
(37)
|
6
|
(16)
|
(554)
|
Tax rate %
|
21.7%
|
|
|
|
|
|
|
20.6%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,368
|
168
|
209
|
103
|
253
|
(29)
|
59
|
2,131
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
200
|
|
|
|
96
|
|
|
296
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
1,168
|
168
|
209
|
103
|
157
|
(29)
|
59
|
1,835
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
23.3p
|
3.4p
|
4.1p
|
2.1p
|
3.1p
|
(0.6)p
|
1.2p
|
36.6p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average
number
of shares
(millions)
|
5,007
|
|
|
|
|
|
|
5,007
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Three months ended 30 September 2020
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
8,646
|
|
|
|
|
|
|
8,646
|
Cost of sales
|
(2,885)
|
178
|
1
|
163
|
3
|
|
|
(2,540)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
5,761
|
178
|
1
|
163
|
3
|
|
|
6,106
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(2,669)
|
|
|
160
|
(5)
|
12
|
25
|
(2,477)
|
Research and
development
|
(1,140)
|
16
|
60
|
14
|
|
1
|
|
(1,049)
|
Royalty income
|
85
|
|
|
|
|
|
|
85
|
Other operating
(expense)/income
|
(179)
|
|
|
(1)
|
391
|
(211)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
1,858
|
194
|
61
|
336
|
389
|
(198)
|
25
|
2,665
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
(198)
|
|
|
1
|
|
|
|
(197)
|
Share
of after tax profits
of
associates and joint
ventures
|
11
|
|
|
|
|
|
|
11
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
1,671
|
194
|
61
|
337
|
389
|
(198)
|
25
|
2,479
|
|
|
|
|
|
|
|
|
|
Taxation
|
(241)
|
(37)
|
(11)
|
(89)
|
(72)
|
38
|
(5)
|
(417)
|
Tax rate %
|
14.4%
|
|
|
|
|
|
|
16.8%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
1,430
|
157
|
50
|
248
|
317
|
(160)
|
20
|
2,062
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
186
|
|
|
|
101
|
|
|
287
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
1,244
|
157
|
50
|
248
|
216
|
(160)
|
20
|
1,775
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
25.0p
|
3.1p
|
1.0p
|
5.0p
|
4.3p
|
(3.2)p
|
0.4p
|
35.6p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average
number
of shares
(millions)
|
4,980
|
|
|
|
|
|
|
4,980
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Major restructuring and integration
Within
the Pharmaceuticals sector, the highly regulated manufacturing
operations and supply chains and long lifecycle of the business
mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites
are likely to take several years to complete.
|
Total
Major restructuring charges incurred in Q3 2021 were £131
million (Q3 2020: £336 million), analysed as
follows:
|
|
Q3 2021
|
|
Q3
2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring
programme
(incl. Tesaro)
|
(2)
|
|
7
|
|
5
|
|
19
|
|
25
|
|
44
|
Consumer
Healthcare Joint
Venture
integration
programme
|
31
|
|
2
|
|
33
|
|
106
|
|
7
|
|
113
|
Separation
Preparation
restructuring
programme
|
69
|
|
19
|
|
88
|
|
73
|
|
109
|
|
182
|
Combined
restructuring and
integration
programme
|
1
|
|
4
|
|
5
|
|
13
|
|
(16)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99
|
|
32
|
|
131
|
|
211
|
|
125
|
|
336
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £69 million under the Separation Preparation
programme primarily arose from restructuring of some administrative
functions, central manufacturing functions as well as commercial
pharmaceuticals and R&D functions. Non-cash charge of £19
million primarily related to a write-down of assets in R&D
sites.
Cash
charges of £31 million on the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs.
Total
cash payments made in Q3 2021 were £164 million (Q3 2020:
£212 million), £108 million (Q3 2020: £50 million)
relating to the Separation Preparation restructuring programme, a
further £33 million (Q3 2020: £89 million) relating to
the Consumer Healthcare Joint Venture integration programme,
£16 million (Q3 2020: £45 million) under the 2018 major
restructuring programme including the settlement of certain charges
accrued in previous quarters and £7 million (Q3 2020: £28
million) for the existing Combined restructuring and integration
programme.
The
analysis of Major restructuring charges by business was as
follows:
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
|
|
|
Pharmaceuticals
|
55
|
|
146
|
Vaccines
|
10
|
|
7
|
Consumer
Healthcare
|
35
|
|
124
|
|
100
|
|
277
|
Corporate
and central functions
|
31
|
|
59
|
|
|
|
|
Total
Major restructuring costs
|
131
|
|
336
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
|
|
|
Cost of
sales
|
57
|
|
163
|
Selling,
general and administration
|
53
|
|
160
|
Research
and development
|
22
|
|
14
|
Other
operating expenses
|
(1)
|
|
(1)
|
|
|
|
|
Total
Major restructuring costs
|
131
|
|
336
|
|
|
|
|
The
benefit in the quarter from restructuring programmes was £0.1
billion, with contributions from the Separation Preparation
restructuring programme, Consumer Healthcare Joint Venture
integration and the 2018 major restructuring
programme.
|
Transaction-related adjustments
Transaction-related
adjustments resulted in a net charge of £290 million (Q3 2020:
£389 million). This included a net £281 million (Q3 2020:
£395 million) accounting charge for the re-measurement of the
contingent consideration liabilities related to the acquisitions of
the former Shionogi-ViiV Healthcare joint venture and the former
Novartis Vaccines business and the liabilities for the Pfizer put
option and Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
|
Charge/(credit)
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint
venture
(including
Shionogi preferential dividends)
|
239
|
|
339
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
37
|
|
(101)
|
Contingent
consideration on former Novartis Vaccines business
|
5
|
|
157
|
Other
adjustments
|
9
|
|
(6)
|
|
|
|
|
Total
transaction-related charges
|
290
|
|
389
|
|
|
|
|
The £239 million charge relating to the contingent
consideration for the former Shionogi-ViiV Healthcare joint venture
represented an increase in the valuation of the contingent
consideration due to Shionogi, primarily as a result of the unwind
of the discount for £94 million and a charge of £145
million primarily from updated exchange rate assumptions. The
£37 million charge relating to the ViiV Healthcare put option
and Pfizer preferential dividends represented an increase in the
valuation of the put option primarily as a result of increased cash
and updated exchange rate assumptions.
The
ViiV Healthcare contingent consideration liability is fair valued
under IFRS. The potential impact of the COVID-19 pandemic remains
uncertain and at 30 September 2021, it has been assumed that there
will be no significant impact on the long-term value of the
liability. This position remains under review and the amount of the
liability will be updated in future quarters as further information
on the impact of the pandemic becomes available. An explanation of
the accounting for the non-controlling interests in ViiV Healthcare
is set out on page 10.
Divestments, significant legal charges and other items
Divestments
and other items also included fair value gains on investments and a
number of asset disposals and certain other Adjusting items. There
was a charge of £1 million (Q3 2020: £nil) for
significant legal matters arising in the quarter. Significant legal
cash payments were £2 million (Q3 2020: £1
million).
Separation costs
From Q2
2020, the Group started to report additional costs to prepare for
Consumer Healthcare separation. Separation costs incurred in the
quarter were £75 million (Q3 2020: £25
million).
|
Financial performance – nine months 2021
|
Total results
|
The
Total results for the Group are set out below.
|
|
9 months 2021
£m
|
|
9
months 2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
24,587
|
|
25,360
|
|
(3)
|
|
3
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(7,923)
|
|
(8,533)
|
|
(7)
|
|
(5)
|
|
|
|
|
|
|
|
|
Gross
profit
|
16,664
|
|
16,827
|
|
(1)
|
|
6
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(7,715)
|
|
(8,294)
|
|
(7)
|
|
(3)
|
Research
and development
|
(3,830)
|
|
(3,628)
|
|
6
|
|
10
|
Royalty income
|
284
|
|
227
|
|
25
|
|
26
|
Other
operating income/(expense)
|
(97)
|
|
1,590
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
5,306
|
|
6,722
|
|
(21)
|
|
(11)
|
|
|
|
|
|
|
|
|
Finance
income
|
24
|
|
39
|
|
|
|
|
Finance
expense
|
(593)
|
|
(653)
|
|
|
|
|
Loss on
disposal of interests in associates
|
(36)
|
|
-
|
|
|
|
|
Share
of after tax profits of
associates
and joint ventures
|
35
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation
|
4,736
|
|
6,147
|
|
(23)
|
|
(12)
|
|
|
|
|
|
|
|
|
Taxation
|
(570)
|
|
(598)
|
|
|
|
|
Tax rate %
|
12.0%
|
|
9.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation
|
4,166
|
|
5,549
|
|
(25)
|
|
(15)
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
530
|
|
477
|
|
|
|
|
Profit
attributable to shareholders
|
3,636
|
|
5,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,166
|
|
5,549
|
|
(25)
|
|
(15)
|
|
|
|
|
|
|
|
|
Earnings per share
|
72.7p
|
|
102.0p
|
|
(29)
|
|
(19)
|
|
|
|
|
|
|
|
|
Adjusted results
The
Adjusted results for the Group are set out below. Reconciliations
between Total results and Adjusted results for nine months 2021 and
nine months 2020 are set out on pages 35 and 36.
|
|
9 months 2021
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Turnover
|
24,587
|
|
100
|
|
(3)
|
|
3
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(7,230)
|
|
29.4
|
|
(2)
|
|
-
|
Selling,
general and administration
|
(7,317)
|
|
29.8
|
|
(6)
|
|
(2)
|
Research
and development
|
(3,411)
|
|
13.9
|
|
3
|
|
8
|
Royalty
income
|
284
|
|
1.2
|
|
25
|
|
26
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
6,913
|
|
28.1
|
|
(2)
|
|
8
|
|
|
|
|
|
|
|
|
Adjusted
profit before tax
|
6,381
|
|
|
|
(2)
|
|
9
|
Adjusted
profit after tax
|
5,143
|
|
|
|
(5)
|
|
5
|
Adjusted
profit attributable to shareholders
|
4,385
|
|
|
|
(5)
|
|
6
|
|
|
|
|
|
|
|
|
Adjusted
earnings per share
|
87.7p
|
|
|
|
(5)
|
|
5
|
|
|
|
|
|
|
|
|
Operating profit by business
|
9 months 2021
|
||||||
|
|
|
|
|
|
|
|
|
£m
|
|
%
of
turnover
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
6,135
|
|
49.0
|
|
5
|
|
14
|
Pharmaceuticals
R&D*
|
(2,482)
|
|
|
|
(1)
|
|
4
|
|
|
|
|
|
|
|
|
Total
Pharmaceuticals
|
3,653
|
|
29.2
|
|
10
|
|
21
|
Vaccines
|
1,853
|
|
37.3
|
|
(8)
|
|
-
|
Consumer
Healthcare
|
1,681
|
|
23.6
|
|
(8)
|
|
(1)
|
|
|
|
|
|
|
|
|
|
7,187
|
|
29.2
|
|
-
|
|
10
|
Corporate
and other unallocated costs
|
(274)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
6,913
|
|
28.1
|
|
(2)
|
|
8
|
|
|
|
|
|
|
|
|
*
|
Operating
profit of Pharmaceuticals R&D segment, which is the
responsibility of the Chief Scientific Officer and President,
R&D. It excludes ViiV Healthcare R&D expenditure, which is
reported within the Pharmaceuticals segment.
|
Turnover
|
Pharmaceuticals turnover
|
|
9 months 2021
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Respiratory
|
2,077
|
|
24
|
|
32
|
HIV
|
3,517
|
|
(3)
|
|
4
|
Immuno-inflammation
|
638
|
|
22
|
|
31
|
Pandemic
|
130
|
|
-
|
|
-
|
Oncology
|
357
|
|
39
|
|
46
|
|
|
|
|
|
|
New and
Specialty
|
6,719
|
|
11
|
|
18
|
Established
Pharmaceuticals
|
5,789
|
|
(13)
|
|
(7)
|
|
|
|
|
|
|
|
12,508
|
|
(1)
|
|
5
|
|
|
|
|
|
|
US
|
5,767
|
|
5
|
|
14
|
Europe
|
2,866
|
|
(6)
|
|
(4)
|
International
|
3,875
|
|
(7)
|
|
(1)
|
|
|
|
|
|
|
|
12,508
|
|
(1)
|
|
5
|
|
|
|
|
|
|
Pharmaceuticals
turnover in the nine months was £12,508 million, down 1% AER
but up 5% CER. Sales of Xevudy, the monoclonal antibody
treatment for COVID-19, of £130 million contributed
approximately 1 percentage point to total Pharmaceuticals
growth.
HIV
sales were down 3% AER but up 4% CER, to £3,517 million, with
growth in Dovato and
Juluca partly offset by
Tivicay and Triumeq. Respiratory sales were up 24%
AER, 32% CER, to £2,077 million, on growth of Trelegy and Nucala. Sales of Established
Pharmaceuticals declined 13% AER, 7% CER to £5,789
million.
In the
US, sales grew 5% AER, 14% CER with continued strong growth of
Nucala, Trelegy, Benlysta and Dovato. Established Products also grew,
reflecting strong demand for Established Respiratory products in
the COVID-19 environment and certain supply challenges faced by
generic competitor products, plus the benefit of a favourable prior
period RAR adjustment.
In
Europe, sales declined 6% AER, 4% CER, with growth of Trelegy, Nucala, Benlysta and Oncology
products offset by declines in the Established Pharmaceuticals
portfolio. This portfolio was impacted by generic competition
including Seretide, Duodart and
Volibris, lower antibiotic demand, and a one-off UK
Relenza contract last year.
Growth in Dovato offset
declines in Tivicay and
Triumeq.
International
declined 7% AER, 1% CER. Declines in Established Pharmaceuticals
reflecting impact of COVID-19 suppressed antibiotics markets and
increased generic competition in the first half of the year were
offset by strong growth in Respiratory, Dovato, Tivicay tenders and sales of
Xevudy, which added 3
percentage points to International growth.
Respiratory
Total
Respiratory sales were up 24% AER, 32% CER, with strong growth from
all regions. International Respiratory sales grew 34% AER, 43% CER
including Nucala up 24%
AER, 33% CER, and Trelegy
up 85% AER, 95% CER including the impact of Trelegy Asthma launched in Japan in Q4
2020. In Europe, Respiratory grew 12% AER, 14% CER with double
digit growth of Trelegy and
Nucala. In the US,
Respiratory grew 26% AER, 36% CER, driven by Trelegy and Nucala and the impact of a prior period
RAR adjustment.
Sales
of Nucala were £831
million in the nine months and grew 18% AER, 26% CER, with
consistent, strong growth across all three regions. US sales were
up 21% AER, 31% CER to £501 million and International sales of
£140 million grew 24% AER, 33% CER. Europe sales of £190
million grew 9% AER, 10% CER.
Trelegy sales were up 49% AER, 59% CER to £865 million
driven by growth in all regions. In the US, sales continued to grow
strongly, including the benefit of the asthma indication approved
and launched in Q3 2020, with sales up 52% AER, 64% CER. In Europe,
sales grew 22% AER, 23% CER and in International, where
Trelegy asthma was approved
in Japan in Q4 2020, sales grew 85% AER, 95% CER to £113
million.
HIV
HIV
sales were £3,517 million with a decline of 3% AER but growth
of 4% CER in the nine months. Triumeq sales were £1,406 million,
down 19% AER, 14% CER and Tivicay sales were £1,060 million,
down 9% AER, 2% CER. The mature portfolio drove 1 percentage point
of CER decline.
New HIV
products Dovato,
Juluca, Rukobia and Cabenuva delivered sales of £955
million representing 27% of the total HIV portfolio. Sales of the
two drug regimens Dovato
and Juluca were £533
million and £374 million, respectively, with combined growth
of 54% AER, 63% CER. Rukobia sales were £30 million.
Sales of Cabenuva, the
first long-acting injectable, were £18 million.
In the
US, total sales were £2,095 million with decline of 5% AER,
but growth of 3% CER. New HIV products delivered sales of £613
million, including: Dovato
£286 million, with growth of 91% AER and more than double CER;
Juluca £283 million,
with growth of 1% AER, 9% CER; Rukobia £29 million and
Cabenuva £15 million.
Combined Tivicay and
Triumeq sales were
£1,445 million declining 16% AER, 10% CER. In Europe, total
sales were £876 million with decline of 1% AER, but growth of
1% CER. New HIV products delivered sales of £294 million,
including: Dovato £209
million growth of more than double AER and more than double CER and
Juluca £81 million
growth of 17% AER, 20% CER. Combined Tivicay and Triumeq sales were £557 million
declining 21% AER, 20% CER. International continued to grow
strongly with total sales growth of 5% AER, 12% CER, driven
primarily by Tivicay tender
business.
Oncology
Sales
of Zejula, the PARP
inhibitor treatment for ovarian cancer, were £287 million, up
15% AER, 21% CER. Sales included £161 million in the US and
£118 million in Europe.
Blenrep for the treatment of patients with relapsed or
refractory multiple myeloma was approved and launched in the US and
Europe in Q3 2020, with ongoing launches throughout Europe in 2021.
Blenrep sales globally
totalled £67 million.
Immuno-inflammation
Immuno-inflammation
sales were £638 million, with growth of 22% AER, 31% CER on
Benlysta sales up 23% AER,
32% CER to £630 million, including the impact of lupus
nephritis launches in US and Japan in H2 2020.
Established Pharmaceuticals
Sales
of Established Pharmaceuticals in the nine months were £5,789
million, down 13% AER, 7% CER.
Established
Respiratory products declined 8% AER 3% CER to £3,252 million.
This reflects the impact of generic competition to Xyzal in Japan, and to Advair/Seretide globally. The decline
was partially offset by an impact of approximately 5 percentage
points on growth of favourable prior period RAR
adjustments.
The
remainder of the Established Pharmaceuticals portfolio declined by
18% AER, 13% CER to £2,537 million on lower demand for
antibiotics during the COVID-19 pandemic period and the impact of
government mandated changes increasing use of generics in markets
including France, Japan and China.
|
Vaccines turnover
|
|
9 months 2021
|
||||
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
Meningitis
|
767
|
|
2
|
|
8
|
Influenza
|
435
|
|
(10)
|
|
(3)
|
Shingles
|
1,124
|
|
(16)
|
|
(11)
|
Established
Vaccines
|
2,288
|
|
(4)
|
|
-
|
|
|
|
|
|
|
|
4,614
|
|
(7)
|
|
(2)
|
Pandemic
Vaccines
|
355
|
|
-
|
|
-
|
|
|
|
|
|
|
|
4,969
|
|
-
|
|
5
|
|
|
|
|
|
|
US
|
2,623
|
|
-
|
|
8
|
Europe
|
984
|
|
(3)
|
|
(2)
|
International
|
1,362
|
|
2
|
|
5
|
|
|
|
|
|
|
|
4,969
|
|
-
|
|
5
|
|
|
|
|
|
|
Vaccines turnover was flat at AER, but grew 5% CER to £4,969
million, primarily driven by pandemic adjuvant sales, partially
offset by the adverse impact of the COVID-19 pandemic on
Shingrix. Unfavourable US
prior period returns and rebates adjustments reduced Vaccines
growth by approximately 3 percentage points.
Vaccines turnover excluding pandemic vaccines declined 7% AER, 2%
CER to £4,614 million.
Vaccines performance was affected by lower demand for routine adult
vaccination due to COVID-19 vaccination programme deployment mainly
in the US and Europe and COVID-19 disease circulation, resulting in
lower Shingrix sales.
Demand for paediatric and adolescent vaccinations improved year on
year, as lifting of stay-at-home directives resulted in increased
visits to healthcare practitioners, the return to a normal
US back-to-school season and partial
catch up of prior period missed vaccinations.
Meningitis
Meningitis sales grew 2% AER, 8% CER to £767 million.
Bexsero
sales grew 7% AER, 12% CER to
£523 million, reflecting higher demand and increased market
share partially offset by unfavorable returns and rebates
adjustments in the US, and strong
performance in Europe and International.
Menveo sales were up 23% AER,
32% CER to £224 million, primarily driven by higher demand and
increased market share in the US.
Influenza
Fluarix/FluLaval sales declined
10% AER, 3% CER, to £435 million as a result of unfavourable
prior period return and rebates movements in the US which had an
impact of 8 percentage points of growth and phasing in Europe
partially offset by strong southern hemisphere demand in
International.
Shingles
Shingrix declined by 16% AER,
11% CER to £1,124 million, primarily driven by lower demand in
the US due to prioritised focus on COVID-19 mass vaccination of
older adults and an unfavourable comparison resulting from
US channel stocking and favourable prior period returns and rebates
movements in the prior period.
US prior period RAR adjustments contributed approximately 4
percentage points to the overall Shingrix decline. In Europe, sales
growth was driven by launches in the UK, Spain and Italy and higher
demand in Germany.
Established Vaccines
Hepatitis vaccines were down 21% AER, 16% CER to £347 million,
adversely impacted in Europe by travel restrictions and in the US
by competitive pressure, unfavourable CDC stockpile
movements and de-prioritisation of
adult vaccination.
Sales of DTPa-containing vaccines (Infanrix, Pediarix and
Boostrix) grew by 3% AER, 9%
CER. Infanrix/Pediarix
sales declined 6% AER, 1% CER to
£428 million, reflecting the change in recommendation for the
dosing schedule in Germany and lower tender volume in
Europe, partly offset by demand in the US. Boostrix sales grew 16% AER, 22% CER to £407 million,
largely driven by higher demand and share in the US and demand
recovery in International.
Rotarix sales were down 3% AER
but up 1% CER to £399 million, reflecting demand
recovery in the
US.
Synflorix sales declined by 14%
AER, 12% CER to £265 million, primarily due to lower tender
demand in Emerging Markets and Europe.
MMRV vaccines sales grew 13% AER, 16% CER to £206 million,
largely driven by improved supply in International.
Pandemic Vaccines
Pandemic vaccines sales of £355 million included
£352 million of pandemic adjuvant sales, which represented
most of the contracted volumes with the US and Canadian
governments.
|
Consumer Healthcare turnover
|
|
|
|
9 months 2021
|
||||
|
|
|
|
|
|
|
|
|
|
|
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Oral
health
|
|
|
2,060
|
|
(1)
|
|
5
|
Pain
relief
|
|
|
1,696
|
|
1
|
|
6
|
Vitamins,
minerals and supplements
|
|
|
1,114
|
|
(1)
|
|
3
|
Respiratory
health
|
|
|
781
|
|
(18)
|
|
(13)
|
Digestive
health and other
|
|
|
1,340
|
|
(4)
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
6,991
|
|
(3)
|
|
2
|
Brands
divested/under review
|
|
|
119
|
|
(74)
|
|
(73)
|
|
|
|
|
|
|
|
|
|
|
|
7,110
|
|
(7)
|
|
(3)
|
|
|
|
|
|
|
|
|
US
|
|
|
2,277
|
|
(12)
|
|
(5)
|
Europe
|
|
|
1,856
|
|
(7)
|
|
(6)
|
International
|
|
|
2,977
|
|
(4)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
7,110
|
|
(7)
|
|
(3)
|
|
|
|
|
|
|
|
|
Consumer Healthcare sales for the nine months declined 7% AER, 3%
CER to £7,110 million.
Sales excluding brands divested/under review declined 3% AER but
increased 2% CER. The same period last year’s growth included
the benefit from the inclusion of the Pfizer portfolio and a
particularly strong first quarter given the accelerated purchases
during the COVID-19 pandemic.
Oral health
Oral health sales declined 1% AER but increased 5% CER to
£2,060 million. Sensodyne delivered high single digit growth reflecting
underlying brand strength, continued innovation and good consumer up take in traditional retail
and ecommerce channels particularly in India and China, in addition
to purchasing ahead of the price increase in the US. Gum health
delivered high single digit growth, whilst Denture care was
flat.
Pain relief
Pain relief sales increased 1% AER, 6% CER to £1,696
million. Advil declined by mid-single digit compared to low
single digit growth in the nine months to September 2020.
Voltaren
and Panadol both grew by high single digits and low-double
digits respectively, similar to the same period last
year.
Vitamins, minerals and supplements
Vitamins,
minerals and supplements sales declined by 1% AER but increased by
3% CER to £1,114 million. The growth rate was impacted by a
strong comparative in the prior year given increased consumer
demand due to the pandemic. Caltrate delivered high single digit
growth and Centrum grew by
low double digit compared with growth in the high teens over the
same period in 2020. Emergen-C saw a mid-single digit
decline due to a particularly challenging comparator in the nine
months to September 2020 when volumes almost doubled.
Respiratory health
Respiratory health sales declined by 18% AER, 13% CER to £781
million reflecting the historically weak cold and flu season in the
first quarter. Theraflu and Robitussin declined by double digits given the impact of a
significantly lower cold and flu season due to the COVID-19
pandemic and social distancing at the start of the year.
Otrivin
declined by low single digits
and Flonase grew by mid-single digits helped by the good
allergy season in the second quarter.
Digestive health and other
Digestive health and other brands sales declined by 4% AER but
increased by 2% CER at £1,340 million. Growth in Digestive
health products particularly in ENO and Tums as well as in the Skin Health portfolio offset a
slight decline in Smokers’ health
products.
|
Operating performance
|
Cost of sales
Total
cost of sales as a percentage of turnover was 32.2%, 1.4 percentage
points lower at AER and 2.3 percentage points lower in CER terms
compared with 2020. This primarily reflected lower write downs in a
number of manufacturing sites and the unwind in Q1 2020 of the fair
market value uplift on inventory arising on completion of the
Consumer Healthcare Joint Venture with Pfizer.
Excluding
these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 29.4%, 0.2 percentage points higher at
AER but 0.6 percentage points lower at CER compared with 2020. This
reflected price benefits in Pharmaceuticals, including the benefit
from a prior period RAR adjustment, a further contribution from
restructuring savings across all three businesses and favourable
mix in Vaccines, partly offset by higher supply chain costs and
under-recoveries resulting from lower demand in Vaccines and
adverse mix in Pharmaceuticals.
Selling, general and administration
Total
SG&A costs as a percentage of turnover were 31.4%, 1.3
percentage points lower at AER and 1.7 percentage points lower at
CER compared with 2020. This included lower restructuring charges
partly offset by increased separation costs.
Excluding
Adjusting items, Adjusted SG&A costs as a percentage of
turnover were 29.8%, 1.0 percentage points lower at AER than in
2020 and 1.3 percentage points lower on a CER basis. Adjusted
SG&A costs declined 6% AER, 2% CER which reflected the tight
control of ongoing costs and reduced variable spending across all
three businesses as a result of the COVID-19 lockdowns, and the
continuing benefit of restructuring in Pharmaceuticals, Consumer
Healthcare and support functions. The decline also reflected a
favourable legal settlement in the nine months compared to
increased legal costs in 2020 which was partly offset by the
one-off benefit from restructuring of post-retirement benefits in
Q3 2020.
Research and development
Total
R&D expenditure was £3,830 million (15.6% of turnover), up
6% AER, 10% CER, including an increase in impairments partly offset
by a decrease in major restructuring charges. Adjusted R&D
expenditure was £3,411 million (13.9% of turnover), 3% higher
at AER, 8% higher at CER than in 2020.
Pharmaceuticals
R&D expenditure was £2,586 million, flat at AER, up 5%
CER, primarily driven by the increased investment in our Specialty
and Oncology portfolios as well as our early stage research
portfolio. Efficiency savings continued from the implementation of
the One Development programme for Pharmaceuticals and Vaccines as
part of the Separation Preparation restructuring programme and
variable spending as a result of COVID-19 lockdowns.
The
increased investment in the Specialty portfolio excluding Oncology
is primarily driven by our two otilimab programmes for COVID-19
treatment and rheumatoid arthritis as well as the progression of a
number of other key programmes, including bepirovirsen, our HBV
antisense oligonucleotide programme and depemokimab, our anti-IL5
for asthma, partly offset by reduced spend on daprodustat which is
expected to file in Q1 2022. There has been increased spend in the
early stage research portfolio reflecting the business returning to
normal levels of activity following the impact of COVID-19 in 2020.
In Oncology there has been increased investment in Zejula, Jemperli, Blenrep and together with termination
costs for bintrafusp alfa, reflecting recognition in Q3 2021 of the
costs required to terminate the programme, partly offset by a
reduction in spend on feladilimab following the decision to
terminate the programme in April.
R&D
expenditure in Vaccines was £657 million, up 29% AER, 33% CER,
reflecting increased investment in clinical programmes for
meningitis and RSV, and investment in our mRNA platform, partly
offset by efficiency savings from the implementation of the One
Development programme and variable spending as a result of COVID-19
lockdowns. R&D expenditure in Consumer Healthcare was £168
million.
Royalty income
Royalty
income was £284 million (2020: £227 million), up 25% AER,
26% CER, primarily driven by higher sales of Gardasil.
|
Other operating income/(expense)
Net
other operating expenses of £97 million (2020: £1,590
million income) primarily reflected accounting charges of £489
million (2020: £1,236 million) arising from the re-measurement
of the contingent consideration liabilities related to the
acquisitions of the former Shionogi-ViiV Healthcare joint venture
and the former Novartis Vaccines business and the liabilities for
the Pfizer put option and Pfizer and Shionogi preferential
dividends in ViiV Healthcare. This included a re-measurement charge
of £498 million (2020: £1,117 million) for the contingent
consideration liability due to Shionogi, as a result of the
unwinding of the discount for £279 million and a charge for
£219 million primarily from adjustments to sales forecasts.
This was partly offset by a number of asset disposals including the
disposal of royalty rights on cabozantinib, disposal of a number of
Consumer brands and fair value uplifts on investments. 2020
included the net profit on disposal of the Horlicks and other
Consumer Healthcare brands of £2,815 million, partly offset by
the related loss on sale of the shares in Hindustan Unilever of
£476 million.
|
Operating profit
Total
operating profit was £5,306 million compared with £6,722
million in 2020. This primarily reflected an unfavourable
comparison to the net profit on disposal in Q2 2020 of the Horlicks
and other Consumer brands and resultant sale of shares in Hindustan
Unilever. This was partly offset by lower major restructuring
costs, lower re-measurement charges on the contingent consideration
liabilities and the unwind in 2020 of the fair market value uplift
on inventory arising on completion of the Consumer Healthcare Joint
Venture with Pfizer.
Excluding
these and other Adjusting items, Adjusted operating profit was
£6,913 million, 2% lower than 2020 at AER, but 8% higher at
CER on a turnover increase of 3% CER. The Adjusted operating margin
of 28.1% was 0.2 percentage points higher at AER, 1.4 percentage
points higher on a CER basis than in 2020.
The increase in Adjusted operating profit primarily reflected the
benefit from incremental pandemic sales (Xevudy and adjuvant), sales growth in
Pharmaceuticals including
the benefit from a prior period RAR adjustment and tight control of
ongoing costs including reduced promotional and variable spending
across all three businesses as a result of the COVID-19 lockdowns,
favourable legal settlements compared to increased legal costs in
2020 and benefits from continued restructuring across the business.
This was partly offset by lower non-pandemic sales in Vaccines,
primarily Shingrix, an adverse mix in Vaccines as well as higher
supply chain costs and under-recoveries, divestments in Consumer
Healthcare and increased investment in R&D across Vaccines and
Pharmaceuticals.
Contingent
consideration cash payments which are made to Shionogi and other
companies reduce the balance sheet liability and hence are not
recorded in the income statement. Total contingent consideration
cash payments in 2021 amounted to £631 million (2020:
£664 million). This included cash payments made to Shionogi of
£615 million (2020: £648 million).
Adjusted operating profit by business
Pharmaceuticals
operating profit was £3,653 million, up 10% AER, 21% CER on a
turnover increase of 5% CER. The operating margin of 29.2% was 2.9
percentage points higher at AER than in 2020 and 4.2 percentage
points higher on a CER basis. This primarily reflected price
benefits in Pharmaceuticals, including the benefit from a prior
period RAR adjustment, as well as reduced supply chain costs, the
tight control of ongoing costs, reduced variable spending as a
result of the COVID-19 lockdowns, a favourable legal settlement in
2021 compared to increased legal costs in 2020 and the continuing
benefit of restructuring. This was partly offset by increased
investment in R&D.
Vaccines
operating profit was £1,853 million, down 8% AER, but flat on
CER basis on 5% turnover increase at CER. The operating margin of
37.3% was 3.4 percentage points lower at AER than in 2020 and 2.0
percentage points lower on a CER basis. This was primarily driven
by higher supply chain costs resulting from lower demand and
adverse mix due to Shingrix
sales in the US, along with higher R&D spend to support key
strategic priorities. This was partly offset by pandemic adjuvant
beneficial mix and higher royalty income.
Consumer
Healthcare operating profit was £1,681 million, down 8% AER,
1% CER on a turnover decrease of 3% CER. The operating margin of
23.6% was 0.2 percentage points lower at AER and 0.5 percentage
points higher on a CER basis than in 2020. This primarily reflected
the impact of divestments (1.6 percentage points), increased
advertising and promotion investment, increased commodity and
freight costs as well as investment into manufacturing sites,
partially offset by synergy benefits from the Pfizer Joint Venture
integration, price increases, favourable sales mix and tight cost
control.
Net finance costs
Total
net finance costs were £569 million compared with £614
million in 2020. Adjusted net finance costs were £567 million
compared with £611 million in 2020. The decrease is primarily
as a result of reduced interest expense from lower debt levels and
favourable movements in foreign exchange rates, partly offset by
lower interest income on overseas cash post-closing of the
divestment of Horlicks and other Consumer Healthcare nutrition
products in India and a number of other countries.
Share of after tax profits of associates and joint
ventures
The
share of after tax profits of associates and joint ventures was
£35 million (2020: £39 million).
Loss on disposal of interests in associates
The net
loss on disposal of interests in associates was £36 million,
primarily driven by a loss of disposal of our interest in the
associate Innoviva Inc.
Taxation
The
charge of £570 million represented an effective tax rate on
Total results of 12.0% (2020: 9.7%) and reflected the different tax
effects of the various Adjusting items, including a credit of
£325 million in Q2 2021 resulting from the revaluation of
deferred tax assets following enactment of an increase in the
headline rate of UK corporation tax (effective 1 April 2023). 2020
reflected the disposal of Horlicks and other Consumer brands and
the subsequent disposal of shares received in Hindustan Unilever.
Tax on Adjusted profit amounted to £1,238 million and
represented an effective Adjusted tax rate of 19.4% (2020:
16.5%).
Issues
related to taxation are described in Note 14,
‘Taxation’ in the Annual Report 2020. The Group
continues to believe it has made adequate provision for the
liabilities likely to arise from periods which are open and not yet
agreed by tax authorities. The ultimate liability for such matters
may vary from the amounts provided and is dependent upon the
outcome of agreements with relevant tax authorities.
Non-controlling interests
The
allocation of Total earnings to non-controlling interests amounted
to £530 million (2020: £477 million). The increase was
primarily due to an increased allocation of ViiV Healthcare profits
of £205 million (2020: £126 million), including reduced
credits for re-measurement of contingent consideration liabilities,
partly offset by a reduced allocation of Consumer Healthcare Joint
Venture profits of £281 million (2020: £310
million).
The
allocation of Adjusted earnings to non-controlling interests
amounted to £758 million (2020: £836 million). The
reduction in allocation primarily reflected a reduced allocation of
Consumer Healthcare Joint Venture profits of £383 million
(2020: £424 million) and a reduced allocation of ViiV
Healthcare profits of £331 million (2020: £371
million).
Earnings per share
Total
EPS was 72.7p, compared with 102.0p in 2020. This primarily
reflected an unfavourable comparison to the net profit on disposal
in Q2 2020 of the Horlicks and other Consumer brands partly offset
by the related loss on sale of the shares in Hindustan Unilever, as
well as by a credit of £325 million to Taxation in Q2 2021
resulting from the revaluation of deferred tax assets following
enactment of an increase in the headline rate of UK corporation tax
(effective 1 April 2023), lower major restructuring costs and lower
re-measurement charges on the contingent consideration
liabilities.
Adjusted
EPS was 87.7p compared with 92.6p in 2020, down 5% AER but up 5%
CER, on a 8% CER increase in Adjusted operating profit reflecting
incremental pandemic adjuvant sales, sales increases in
Pharmaceuticals, tight cost control and favourable legal
settlements, lower interest costs and a lower non-controlling
interest allocation of Consumer Healthcare and ViiV profits, partly
offset by lower non-pandemic sales in Vaccines, primarily
Shingrix, increased R&D
investment and a higher effective tax rate. The contribution to
growth from COVID-19 solutions was approximately 6% AER, 6%
CER.
Currency impact on 2021 results
The
results for 2021 are based on average exchange rates, principally
£1/$1.38, £1/€1.15 and £1/Yen 150. Comparative
exchange rates are given on page 56. The period-end exchange rates
were £1/$1.34, £1/€1.16 and
£1/151.
In the
nine months, turnover decreased 3% AER, but was up 3% CER. Total
EPS was 72.7p compared with 102.0p in 2020. Adjusted EPS was 87.7p
compared with 92.6p in 2020, down 5% AER but up 5% CER. The adverse
currency impact primarily reflected the strengthening in Sterling,
particularly against the US Dollar as well as the Japanese Yen.
Exchange gains or losses on the settlement of intercompany
transactions had a negligible impact on the negative currency
impact of ten percentage points on Adjusted EPS.
|
Adjusting items
The
reconciliations between Total results and Adjusted results for 2021
and 2020 are set out below.
|
Nine months ended 30 September 2021
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
24,587
|
|
|
|
|
|
|
24,587
|
Cost of sales
|
(7,923)
|
522
|
4
|
119
|
21
|
27
|
|
(7,230)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
16,664
|
522
|
4
|
119
|
21
|
27
|
|
17,357
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(7,715)
|
|
|
211
|
|
3
|
184
|
(7,317)
|
Research and
development
|
(3,830)
|
76
|
291
|
50
|
|
2
|
|
(3,411)
|
Royalty income
|
284
|
|
|
|
|
|
|
284
|
Other operating
income/(expense)
|
(97)
|
|
|
(1)
|
515
|
(417)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
5,306
|
598
|
295
|
379
|
536
|
(385)
|
184
|
6,913
|
|
|
|
|
|
|
|
|
|
Net
finance costs
|
(569)
|
|
|
1
|
|
1
|
|
(567)
|
Loss on
disposal of
interest
in associates
|
(36)
|
|
|
|
|
36
|
|
-
|
Share
of after tax profits
of
associates and joint
ventures
|
35
|
|
|
|
|
|
|
35
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
4,736
|
598
|
295
|
380
|
536
|
(348)
|
184
|
6,381
|
|
|
|
|
|
|
|
|
|
Taxation
|
(570)
|
(110)
|
(70)
|
(81)
|
(101)
|
(269)
|
(37)
|
(1,238)
|
Tax rate %
|
12.0%
|
|
|
|
|
|
|
19.4%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
4,166
|
488
|
225
|
299
|
435
|
(617)
|
147
|
5,143
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
530
|
|
|
|
228
|
|
|
758
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
3,636
|
488
|
225
|
299
|
207
|
(617)
|
147
|
4,385
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
72.7p
|
9.8p
|
4.5p
|
6.0p
|
4.1p
|
(12.3)p
|
2.9p
|
87.7p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average
number
of shares
(millions)
|
5,001
|
|
|
|
|
|
|
5,001
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Nine months ended 30 September 2020
|
|
Total
results
£m
|
Intangible
amort-
isation
£m
|
Intangible
impair-
ment
£m
|
Major
restruct-
uring
£m
|
Transaction-
related
£m
|
Divestments,
significant
legal and
other items
£m
|
Separation
costs
£m
|
Adjusted
results
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Turnover
|
25,360
|
|
|
|
|
|
|
25,360
|
Cost of sales
|
(8,533)
|
529
|
28
|
468
|
109
|
|
|
(7,399)
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Gross profit
|
16,827
|
529
|
28
|
468
|
109
|
|
|
17,961
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
(8,294)
|
|
17
|
448
|
(25)
|
18
|
43
|
(7,793)
|
Research and
development
|
(3,628)
|
50
|
176
|
96
|
|
|
|
(3,306)
|
Royalty income
|
227
|
|
|
|
|
|
|
227
|
Other operating
income/(expense)
|
1,590
|
|
|
|
1,223
|
(2,813)
|
|
-
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Operating profit
|
6,722
|
579
|
221
|
1,012
|
1,307
|
(2,795)
|
43
|
7,089
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
(614)
|
|
|
2
|
|
1
|
|
(611)
|
Share of after tax profits
of associates and joint
ventures
|
39
|
|
|
|
|
|
|
39
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit before taxation
|
6,147
|
579
|
221
|
1,014
|
1,307
|
(2,794)
|
43
|
6,517
|
|
|
|
|
|
|
|
|
|
Taxation
|
(598)
|
(110)
|
(39)
|
(241)
|
(186)
|
107
|
(8)
|
(1,075)
|
Tax rate %
|
9.7%
|
|
|
|
|
|
|
16.5%
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit after taxation
|
5,549
|
469
|
182
|
773
|
1,121
|
(2,687)
|
35
|
5,442
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Profit
attributable to
non-controlling
interests
|
477
|
|
|
|
359
|
|
|
836
|
|
|
|
|
|
|
|
|
|
Profit attributable to
shareholders
|
5,072
|
469
|
182
|
773
|
762
|
(2,687)
|
35
|
4,606
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
102.0p
|
9.4p
|
3.7p
|
15.5p
|
15.3p
|
(54.0)p
|
0.7p
|
92.6p
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
(millions)
|
4,974
|
|
|
|
|
|
|
4,974
|
|
––––––––––––
|
|
|
|
|
|
|
––––––––––––
|
Major restructuring and integration
Within
the Pharmaceuticals sector, the highly regulated manufacturing
operations and supply chains and long lifecycle of the business
mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites
are likely to take several years to complete.
|
Total
Major restructuring charges incurred in 2021 were £379 million
(2020: £1,012 million), analysed as follows:
|
|
9 months 2021
|
|
9
months 2020
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
Cash
£m
|
|
Non-cash
£m
|
|
Total
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
major restructuring
programme
(incl. Tesaro)
|
8
|
|
10
|
|
18
|
|
75
|
|
195
|
|
270
|
Consumer
Healthcare Joint
Venture
integration
programme
|
106
|
|
4
|
|
110
|
|
245
|
|
24
|
|
269
|
Separation
Preparation
restructuring
programme
|
252
|
|
18
|
|
270
|
|
352
|
|
112
|
|
464
|
Combined
restructuring and
integration
programme
|
5
|
|
(24)
|
|
(19)
|
|
13
|
|
(4)
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371
|
|
8
|
|
379
|
|
685
|
|
327
|
|
1,012
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
charges of £252 million under the Separation Preparation
programme primarily arose from restructuring of some administrative
and central manufacturing functions as well as commercial
pharmaceuticals and R&D functions.
Cash
charges of £106 million on the Consumer Healthcare Joint
Venture programme primarily related to severance and integration
costs. The non-cash credit in the Combined restructuring and
integration programme primarily reflected a write back on disposal
of a site.
Total
cash payments made in 2021 were £572 million (2020: £543
million), £322 million (2020: £81 million)
relating to the Separation Preparation restructuring programme, a
further £141 million (2020: £224 million) relating to the
Consumer Healthcare Joint Venture integration programme, £70
million (2020: £145 million) under the 2018 major
restructuring programme including the settlement of certain charges
accrued in previous quarters and £39 million (2020: £93
million) for the existing Combined restructuring and integration
programme.
|
|
9 months 2021
£m
|
|
9
months 2020
£m
|
|
|
|
|
Pharmaceuticals
|
146
|
|
362
|
Vaccines
|
(30)
|
|
203
|
Consumer
Healthcare
|
120
|
|
303
|
|
236
|
|
868
|
Corporate
and central functions
|
143
|
|
144
|
|
|
|
|
Total
Major restructuring costs
|
379
|
|
1,012
|
|
|
|
|
The
analysis of Major restructuring charges by Income statement line
was as follows:
|
|
9 months 2021
£m
|
|
9
months 2020
£m
|
|
|
|
|
Cost of
sales
|
119
|
|
468
|
Selling,
general and administration
|
211
|
|
448
|
Research
and development
|
50
|
|
96
|
Other
operating income
|
(1)
|
|
-
|
|
|
|
|
Total
Major restructuring costs
|
379
|
|
1,012
|
|
|
|
|
The
benefit in the nine months from restructuring programmes was
£0.4 billion, the benefit from the Separation Preparation
restructuring programme was £0.2 billion, the benefit from the
Consumer Healthcare Joint Venture integration was £0.1 billion
and the benefit from the 2018 Restructuring programme was £0.1
billion.
The
2018 major
restructuring programme, including Tesaro, is now expected
to cost £1.6 billion to the end of 2021, with cash costs of
£0.7 billion and non-cash costs of £0.9 billion, and is
expected to deliver annual savings of around £0.45 billion by
the end of 2021 (at 2019 rates). These savings are intended to be
fully re-invested to help fund targeted increases in R&D and
commercial support of new products.
The
completion of the Consumer Healthcare Joint Venture with Pfizer is
expected to realise substantial cost synergies, generating total
annual cost savings of £0.5 billion by 2022 for expected cash
costs of £0.7 billion and non-cash charges expected to be
£0.1 billion, plus additional capital expenditure of £0.2
billion. Up to 25% of the cost savings are intended to be
reinvested in the business to support innovation and other growth
opportunities.
The
Group initiated in Q1 2020 a two-year Separation Preparation
programme to prepare for the separation of GSK into two companies:
New GSK, a biopharma company with an R&D approach focused on
science related to the immune system, the use of genetics and new
technologies, and a new leader in Consumer Healthcare. The
programme aims to
|
●
|
Drive a
common approach to R&D with improved capital
allocation
|
●
|
Align
and improve the capabilities and efficiency of global support
functions to support New GSK
|
●
|
Further
optimise the supply chain and product portfolio, including the
divestment of non-core assets. A strategic review of prescription
dermatology is underway
|
●
|
Prepare
Consumer Healthcare to operate as a standalone company
|
The
programme now expects to deliver £0.8 billion of annual
savings by 2022 and £1.0 billion by 2023, with total costs
estimated at £2.4 billion, of which £1.6 billion is
expected to be cash costs. The proceeds of delivered and
anticipated divestments are largely expected to cover the cash
costs of the programme.
|
Transaction-related adjustments
Transaction-related
adjustments resulted in a net charge of £536 million (2020:
£1,307 million). This included a net £489 million
accounting charge for the re-measurement of the contingent
consideration liabilities related to the acquisitions of the former
Shionogi-ViiV Healthcare joint venture and the former Novartis
Vaccines business and the liabilities for the Pfizer put option and
Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
|
Charge/(credit)
|
9 months 2021
£m
|
|
9
months 2020
£m
|
|
|
|
|
Contingent
consideration on former Shionogi-ViiV Healthcare joint
venture
(including
Shionogi preferential dividends)
|
498
|
|
1,117
|
ViiV
Healthcare put options and Pfizer preferential
dividends
|
(53)
|
|
(42)
|
Contingent
consideration on former Novartis Vaccines business
|
44
|
|
161
|
Release
of fair value uplift on acquired Pfizer inventory
|
-
|
|
91
|
Other
adjustments
|
47
|
|
(20)
|
|
|
|
|
Total
transaction-related charges
|
536
|
|
1,307
|
|
|
|
|
The £498 million charge relating to the contingent
consideration for the former Shionogi-ViiV Healthcare joint venture
represented an increase in the valuation of the contingent
consideration due to Shionogi, primarily as a result of the unwind
of the discount for £279 million and a charge of £219
million primarily from adjustments to sales forecasts. The £53
million credit relating to the ViiV Healthcare put option and
Pfizer preferential dividends represented a reduction in the
valuation of the put option as a result of lower cash and updated
exchange rate assumptions.
The
ViiV Healthcare contingent consideration liability is fair valued
under IFRS. The potential impact of the COVID-19 pandemic remains
uncertain and at 30 September 2021, it has been assumed that there
will be no significant impact on the long-term value of the
liability. This position remains under review and the amount of the
liability will be updated in future quarters as further information
on the impact of the pandemic becomes available. An explanation of
the accounting for the non-controlling interests in ViiV Healthcare
is set out on page 10.
Divestments, significant legal charges and other items
Divestments
and other items also included gains from a number of asset
disposals, including the disposal of royalty rights on cabozantinib
and disposal of a number of Consumer brands, fair value gains on
investments and certain other Adjusting items. The Consumer Brands
disposal programme is complete and has delivered net proceeds of
£1.1 billion. In 2021 the net loss on disposal of interests in
associates was £36 million, primarily driven by a loss on
disposal of the interest in the associate Innoviva Inc. A credit of
£11 million (2020: £6 million charge) was recorded for
significant legal matters arising in the period. Significant legal
cash payments were £4 million (2020: £7
million).
Separation costs
From Q2
2020, the Group started to report additional costs to prepare for
Consumer Healthcare separation. Separation costs incurred in 2021
were £184 million (2020: £43 million). Separation costs
incurred in the nine months to date were £252 million. Total
separation costs are estimated to be £600-700 million,
excluding transaction costs.
|
Cash generation
|
Cash flow
|
|
Q3 2021
|
|
9
months 2021
|
|
9
months 2020
|
|
|
|
|
|
|
Net
cash inflow from operating activities (£m)
|
2,562
|
|
4,185
|
|
4,586
|
Free
cash inflow* (£m)
|
1,223
|
|
1,536
|
|
2,300
|
Free
cash flow growth (%)
|
>100%
|
|
(33)%
|
|
(7)%
|
Free
cash flow conversion* (%)
|
105%
|
|
42%
|
|
45%
|
Net
debt** (£m)
|
22,091
|
|
22,091
|
|
23,882
|
*
|
Free
cash flow and free cash flow conversion are defined on page
59.
|
**
|
Net
debt is analysed on page 58.
|
Q3 2021
The net
cash inflow from operating activities for the quarter was
£2,562 million (Q3 2020: £861 million). The increase
primarily reflected increased operating profit net of adverse
exchange, a decrease in inventory, a favourable comparison to the
increase in trade receivables in Q3 2020 as a result of collections
following lower sales in Q2 2020 and favourable timing of taxes and
returns and rebates compared to Q3 2020.
Total
cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the quarter were £196
million (Q3 2020: £203 million), of which £171 million
was recognised in cash flows from operating activities and £25
million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax
purposes.
Free
cash inflow was £1,223 million for the quarter (Q3 2020:
£180 million outflow). The increase primarily reflected
increased operating profit net of adverse exchange, a decrease in
inventory, a favourable comparison to the increase in trade
receivables in Q3 2020 as a result of collections following lower
sales in Q2 2020, favourable timing of taxes and returns and
rebates compared to Q3 2020, lower dividends to non-controlling
interests and higher proceeds from intangible assets. This was
partly offset by increased purchases of intangible
assets.
|
9 months 2021
The net
cash inflow from operating activities for the nine months was
£4,185 million (2020: £4,586 million). The decrease
primarily reflected adverse exchange impacts, increased inventory,
increased trade receivables, adverse timing of returns and rebates,
partly offset by improved adjusted operating profit at CER reduced
tax payments including tax on disposals.
Total
cash payments to Shionogi in relation to the ViiV Healthcare
contingent consideration liability in the nine months were
£615 million (2020: £648 million), of which £537
million was recognised in cash flows from operating activities and
£78 million was recognised in contingent consideration paid
within investing cash flows. These payments are deductible for tax
purposes.
Free
cash inflow was £1,536 million for the nine months (2020:
£2,300 million). The decrease primarily reflected adverse
exchange impacts, increased inventory, increased trade receivables,
adverse timing of returns and rebates, increased purchases of
intangible assets and reduced proceeds from intangible assets. This
was partly offset by improved adjusted operating profit at CER
reduced tax payments including tax on disposals and lower dividends
to non-controlling interests.
|
Net debt
At 30
September 2021, net debt was £22.1 billion, compared with
£20.8 billion at 31 December 2020, comprising gross debt of
£25.6 billion and cash and liquid investments of £3.5
billion. Net debt increased due to the dividends paid to
shareholders of £3.0 billion, additional investments of
£0.1 billion and £0.1 billion of net adverse exchange
impacts from the translation of non-Sterling denominated debt and
exchange on other financing items, partly offset by £1.5
billion free cash flow and £0.4 billion proceeds from
investments, including £0.3 billion proceeds from the Innoviva
disposal.
At 30
September 2021, GSK had short-term borrowings (including overdrafts
and lease liabilities) repayable within 12 months of £4.9
billion with loans of £3.1 billion repayable in the subsequent
year.
|
Returns to shareholders
|
Quarterly dividends
The
Board has declared a third interim dividend for 2021 of 19 pence
per share (Q3 2020: 19 pence per share).
GSK
recognises the importance of dividends to shareholders and aims to
distribute regular dividend payments that will be determined
primarily with reference to the free cash flow generated by the
business after funding the investment necessary to support the
Group’s future growth.
The
Board currently intends to maintain the dividend for 2021 at the
current level of 80p per share, subject to any material change in
the external environment or performance expectations.
At the
New GSK Investor Update on 23 June GSK set out that from 2022 a
progressive dividend policy will be implemented, guided by a 40 to
60 percent pay-out ratio through the investment cycle. This is a
key part of the capital allocation framework. For 2022, for the
first half of the year, GSK expects to declare a 27p dividend for
the current group. GSK is on track to separate into two companies
early in the second half of 2022. GSK expects the aggregate
dividend, across the two new businesses to be 28p per share for the
second half. In aggregate this would represent on a full year 2022
basis the equivalent of a Group dividend of 55p per share,
representing a 31% decrease from the 80p/share dividend expected
for 2021. This expected, aggregate 55p per share dividend for full
year 2022 is comprised of 44p representing New GSK's policy, and an
expected 11p from the Consumer Healthcare business. Dividend policy
for the new Consumer Healthcare company will be set by its Board of
Directors. In 2023, the first full year of standalone operations
for New GSK, GSK expects to declare a full year dividend of 45p per
share.
Payment of dividends
The
equivalent interim dividend receivable by ADR holders will be
calculated based on the exchange rate on 11 January 2022. An annual fee of $0.03 per
ADS (or $0.0075 per ADS per quarter) is charged by the
Depositary.
The
ex-dividend date will be 18 November 2021, with a record date of 19
November 2021 and a payment date of 13 January 2022.
|
|
Paid/
payable
|
|
Pence
per
share
|
|
£m
|
|
|
|
|
|
|
2021
|
|
|
|
|
|
First
interim
|
8 July
2021
|
|
19
|
|
951
|
Second
interim
|
7
October 2021
|
|
19
|
|
951
|
Third
interim
|
13
January 2022
|
|
19
|
|
952
|
|
|
|
|
|
|
2020
|
|
|
|
|
|
First
interim
|
9 July
2020
|
|
19
|
|
946
|
Second
interim
|
8
October 2020
|
|
19
|
|
946
|
Third
interim
|
14
January 2021
|
|
19
|
|
946
|
Fourth
interim
|
8 April
2021
|
|
23
|
|
1,151
|
|
|
|
|
|
|
|
|
|
80
|
|
3,989
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
Q3 2021
millions
|
|
Q3
2020
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
5,007
|
|
4,980
|
Dilutive
effect of share options and share awards
|
|
|
53
|
|
60
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,060
|
|
5,040
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
9 months
2021
millions
|
|
9
months
2020
millions
|
|
|
|
|
|
|
Weighted
average number of shares – basic
|
|
|
5,001
|
|
4,974
|
Dilutive
effect of share options and share awards
|
|
|
61
|
|
60
|
|
|
|
|
|
|
Weighted
average number of shares – diluted
|
|
|
5,062
|
|
5,034
|
At 30
September 2021, 5,008 million shares (30 September 2020: 4,980
million) were in free issue (excluding Treasury shares and shares
held by the ESOP Trusts). GSK made no share repurchases during the
period. The company issued 0.1 million shares under employee share
schemes in the quarter for proceeds of £1 million (Q3 2020:
£2 million).
|
At 30
September 2021, the ESOP Trust held 23.8 million GSK shares against
the future exercise of share options and share awards. The carrying
value of £61 million has been deducted from other reserves.
The market value of these shares was £339
million.
At 30
September 2021, the company held 355.2 million Treasury shares at a
cost of £4,969 million, which has been deducted from retained
earnings.
|
Financial information
|
Income statements
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
9 months
2021
£m
|
|
9
months
2020
£m
|
|
|
|
|
|
|
|
|
TURNOVER
|
9,077
|
|
8,646
|
|
24,587
|
|
25,360
|
|
|
|
|
|
|
|
|
Cost of
sales
|
(2,889)
|
|
(2,885)
|
|
(7,923)
|
|
(8,533)
|
|
|
|
|
|
|
|
|
Gross
profit
|
6,188
|
|
5,761
|
|
16,664
|
|
16,827
|
|
|
|
|
|
|
|
|
Selling,
general and administration
|
(2,646)
|
|
(2,669)
|
|
(7,715)
|
|
(8,294)
|
Research
and development
|
(1,490)
|
|
(1,140)
|
|
(3,830)
|
|
(3,628)
|
Royalty income
|
116
|
|
85
|
|
284
|
|
227
|
Other
operating income/(expense)
|
(230)
|
|
(179)
|
|
(97)
|
|
1,590
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
1,938
|
|
1,858
|
|
5,306
|
|
6,722
|
|
|
|
|
|
|
|
|
Finance
income
|
7
|
|
(3)
|
|
24
|
|
39
|
Finance
expense
|
(200)
|
|
(195)
|
|
(593)
|
|
(653)
|
Loss on
disposal of interests in associates
|
-
|
|
-
|
|
(36)
|
|
-
|
Share
of after tax profits of
associates
and joint ventures
|
3
|
|
11
|
|
35
|
|
39
|
|
|
|
|
|
|
|
|
PROFIT BEFORE TAXATION
|
1,748
|
|
1,671
|
|
4,736
|
|
6,147
|
|
|
|
|
|
|
|
|
Taxation
|
(380)
|
|
(241)
|
|
(570)
|
|
(598)
|
Tax rate %
|
21.7%
|
|
14.4%
|
|
12.0%
|
|
9.7%
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAXATION
|
1,368
|
|
1,430
|
|
4,166
|
|
5,549
|
|
|
|
|
|
|
|
|
Profit
attributable to non-controlling
interests
|
200
|
|
186
|
|
530
|
|
477
|
Profit
attributable to shareholders
|
1,168
|
|
1,244
|
|
3,636
|
|
5,072
|
|
|
|
|
|
|
|
|
|
1,368
|
|
1,430
|
|
4,166
|
|
5,549
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE
|
23.3p
|
|
25.0p
|
|
72.7p
|
|
102.0p
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
23.1p
|
|
24.7p
|
|
71.8p
|
|
100.7p
|
|
|
|
|
|
|
|
|
Statement of comprehensive income
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
|
|
|
Profit
for the period
|
1,368
|
|
1,430
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
98
|
|
(171)
|
Fair
value movements on cash flow hedges
|
(2)
|
|
-
|
Reclassification
of cash flow hedges to income statement
|
(5)
|
|
1
|
Deferred
tax on fair value movements on cash flow hedges
|
2
|
|
1
|
|
|
|
|
|
93
|
|
(169)
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
36
|
|
(65)
|
Fair
value movements on equity investments
|
(453)
|
|
528
|
Tax on
fair value movements on equity investments
|
60
|
|
(102)
|
Re-measurement
gains on defined benefit plans
|
53
|
|
63
|
Tax on
re-measurement losses on defined benefit plans
|
(13)
|
|
(14)
|
|
|
|
|
|
(317)
|
|
410
|
|
|
|
|
Other
comprehensive (expense)/income for the period
|
(224)
|
|
241
|
|
|
|
|
Total
comprehensive income for the period
|
1,144
|
|
1,671
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
Shareholders
|
908
|
|
1,550
|
Non-controlling
interests
|
236
|
|
121
|
|
|
|
|
|
1,144
|
|
1,671
|
|
|
|
|
Statement of comprehensive
income
|
|
9 months
2021
£m
|
|
9
months
2020
£m
|
|
|
|
|
Profit
for the period
|
4,166
|
|
5,549
|
|
|
|
|
Items that may be reclassified subsequently to income
statement:
|
|
|
|
Exchange
movements on overseas net assets and net investment
hedges
|
(109)
|
|
189
|
Reclassification
of exchange movements on liquidation or disposal of
overseas
subsidiaries
and associates
|
(10)
|
|
36
|
Fair
value movements on cash flow hedges
|
(4)
|
|
(23)
|
Reclassification
of cash flow hedges to income statement
|
11
|
|
53
|
Deferred
tax on fair value movements on cash flow hedges
|
(1)
|
|
(2)
|
|
|
|
|
|
(113)
|
|
253
|
|
|
|
|
Items that will not be reclassified to income
statement:
|
|
|
|
Exchange
movements on overseas net assets of non-controlling
interests
|
(1)
|
|
30
|
Fair
value movements on equity investments
|
(295)
|
|
713
|
Tax on
fair value movements on equity investments
|
98
|
|
(116)
|
Re-measurement
gains/(losses) on defined benefit plans
|
334
|
|
(382)
|
Tax on
re-measurement (losses)/gains on defined benefit plans
|
(65)
|
|
78
|
|
|
|
|
|
71
|
|
323
|
|
|
|
|
Other
comprehensive income for the period
|
(42)
|
|
576
|
|
|
|
|
Total
comprehensive income for the period
|
4,124
|
|
6,125
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period attributable to:
|
|
|
|
Shareholders
|
3,595
|
|
5,618
|
Non-controlling
interests
|
529
|
|
507
|
|
|
|
|
|
4,124
|
|
6,125
|
|
|
|
|
Pharmaceuticals turnover –
three months ended 30 September 2021
|
|
Total
|
US
|
Europe
|
International
|
|
||||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
|
||||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
|||||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|||||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Respiratory
|
741
|
27
|
33
|
473
|
31
|
38
|
153
|
12
|
17
|
115
|
31
|
39
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Anoro Ellipta
|
130
|
(7)
|
(2)
|
75
|
(13)
|
(8)
|
38
|
9
|
14
|
17
|
(11)
|
(5)
|
|||
Trelegy Ellipta
|
326
|
68
|
77
|
229
|
82
|
92
|
52
|
24
|
26
|
45
|
73
|
85
|
|||
Nucala
|
285
|
14
|
20
|
169
|
13
|
19
|
63
|
7
|
12
|
53
|
23
|
30
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
HIV
|
1,251
|
3
|
8
|
782
|
4
|
10
|
297
|
-
|
5
|
172
|
4
|
8
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Dolutegravir
products
|
1,194
|
2
|
6
|
747
|
1
|
7
|
287
|
1
|
5
|
160
|
5
|
8
|
|||
Tivicay
|
352
|
(7)
|
(2)
|
204
|
(7)
|
(2)
|
68
|
(22)
|
(18)
|
80
|
14
|
17
|
|||
Triumeq
|
504
|
(13)
|
(8)
|
334
|
(9)
|
(4)
|
109
|
(19)
|
(16)
|
61
|
(18)
|
(16)
|
|||
Juluca
|
130
|
6
|
11
|
99
|
4
|
9
|
28
|
17
|
21
|
3
|
(25)
|
(25)
|
|||
Dovato
|
208
|
>100
|
>100
|
110
|
96
|
>100
|
82
|
>100
|
>100
|
16
|
>100
|
>100
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Rukobia
|
13
|
>100
|
>100
|
12
|
>100
|
>100
|
1
|
-
|
-
|
-
|
-
|
-
|
|||
Cabenuva
|
12
|
>100
|
>100
|
10
|
-
|
-
|
2
|
-
|
-
|
-
|
-
|
-
|
|||
Other
|
32
|
(13)
|
-
|
13
|
2
|
13
|
7
|
(42)
|
(25)
|
12
|
1
|
9
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Immuno-
inflammation
|
241
|
25
|
32
|
200
|
27
|
34
|
17
|
13
|
20
|
24
|
20
|
25
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Benlysta
|
238
|
28
|
35
|
200
|
27
|
34
|
17
|
13
|
20
|
21
|
62
|
69
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Pandemic
|
114
|
-
|
-
|
16
|
-
|
-
|
1
|
-
|
-
|
97
|
-
|
-
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Xevudy
|
114
|
-
|
-
|
16
|
-
|
-
|
1
|
-
|
-
|
97
|
-
|
-
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Oncology
|
128
|
29
|
34
|
73
|
20
|
26
|
51
|
46
|
51
|
4
|
33
|
-
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Zejula
|
101
|
10
|
15
|
56
|
(2)
|
4
|
41
|
24
|
30
|
4
|
>100
|
>100
|
|||
Blenrep
|
25
|
>100
|
>100
|
16
|
>100
|
>100
|
7
|
>100
|
>100
|
2
|
-
|
-
|
|||
Jemperli
|
2
|
-
|
-
|
1
|
-
|
-
|
1
|
-
|
-
|
-
|
-
|
-
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
New and Specialty
Pharmaceuticals
|
2,475
|
18
|
24
|
1,544
|
16
|
22
|
519
|
8
|
12
|
412
|
49
|
57
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Established
Pharmaceuticals
|
1,922
|
(8)
|
(4)
|
524
|
(10)
|
(5)
|
434
|
(12)
|
(9)
|
964
|
(6)
|
-
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Established
Respiratory
|
1,036
|
(7)
|
(3)
|
441
|
(6)
|
(2)
|
232
|
(8)
|
(5)
|
363
|
(8)
|
(3)
|
|||
Arnuity Ellipta
|
18
|
29
|
29
|
15
|
15
|
31
|
-
|
-
|
-
|
3
|
>100
|
-
|
|||
Avamys/Veramyst
|
61
|
9
|
16
|
-
|
-
|
-
|
14
|
8
|
8
|
47
|
9
|
19
|
|||
Flixotide/Flovent
|
115
|
25
|
32
|
81
|
80
|
91
|
16
|
7
|
13
|
18
|
(44)
|
(44)
|
|||
Incruse Ellipta
|
51
|
(9)
|
(5)
|
26
|
(21)
|
(15)
|
17
|
6
|
12
|
8
|
14
|
-
|
|||
Relvar/Breo Ellipta
|
261
|
(19)
|
(15)
|
106
|
(37)
|
(34)
|
82
|
12
|
16
|
73
|
(10)
|
(4)
|
|||
Seretide/Advair
|
324
|
(12)
|
(8)
|
117
|
4
|
10
|
70
|
(33)
|
(30)
|
137
|
(10)
|
(7)
|
|||
Ventolin
|
178
|
1
|
5
|
93
|
(7)
|
(3)
|
27
|
8
|
8
|
58
|
12
|
19
|
|||
Other
Respiratory
|
28
|
(13)
|
(3)
|
3
|
>100
|
>100
|
6
|
(14)
|
(14)
|
19
|
(27)
|
(4)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Dermatology
|
96
|
(13)
|
(8)
|
-
|
-
|
-
|
31
|
(14)
|
(8)
|
65
|
(12)
|
(8)
|
|||
Augmentin
|
114
|
8
|
15
|
-
|
-
|
-
|
34
|
13
|
20
|
80
|
5
|
13
|
|||
Avodart
|
85
|
(11)
|
(7)
|
-
|
-
|
-
|
29
|
(19)
|
(19)
|
56
|
(3)
|
2
|
|||
Imigran/Imitrex
|
28
|
(7)
|
(7)
|
8
|
(27)
|
(27)
|
13
|
8
|
17
|
7
|
-
|
(14)
|
|||
Lamictal
|
124
|
(1)
|
4
|
60
|
(2)
|
3
|
29
|
(3)
|
-
|
35
|
3
|
9
|
|||
Seroxat/Paxil
|
33
|
(13)
|
(8)
|
-
|
-
|
-
|
10
|
11
|
11
|
23
|
(21)
|
(14)
|
|||
Valtrex
|
23
|
(4)
|
-
|
3
|
(25)
|
(50)
|
8
|
-
|
-
|
12
|
-
|
17
|
|||
Other
|
383
|
(15)
|
(11)
|
12
|
(66)
|
(54)
|
48
|
(38)
|
(37)
|
323
|
(5)
|
-
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|||
Pharmaceuticals
|
4,397
|
5
|
10
|
2,068
|
8
|
14
|
953
|
(2)
|
2
|
1,376
|
6
|
12
|
|||
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals turnover – nine
months ended 30 September 2021
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Respiratory
|
2,077
|
24
|
32
|
1,322
|
26
|
36
|
446
|
12
|
14
|
309
|
34
|
43
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Anoro Ellipta
|
381
|
(4)
|
2
|
215
|
(9)
|
(2)
|
110
|
7
|
9
|
56
|
-
|
5
|
Trelegy Ellipta
|
865
|
49
|
59
|
606
|
52
|
64
|
146
|
22
|
23
|
113
|
85
|
95
|
Nucala
|
831
|
18
|
26
|
501
|
21
|
31
|
190
|
9
|
10
|
140
|
24
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIV
|
3,517
|
(3)
|
4
|
2,095
|
(5)
|
3
|
876
|
(1)
|
1
|
546
|
5
|
12
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Dolutegravir
products
|
3,373
|
(3)
|
3
|
2,014
|
(7)
|
1
|
847
|
-
|
2
|
512
|
8
|
15
|
Tivicay
|
1,060
|
(9)
|
(2)
|
563
|
(12)
|
(5)
|
215
|
(23)
|
(22)
|
282
|
17
|
28
|
Triumeq
|
1,406
|
(19)
|
(14)
|
882
|
(19)
|
(12)
|
342
|
(20)
|
(18)
|
182
|
(16)
|
(13)
|
Juluca
|
374
|
5
|
12
|
283
|
1
|
9
|
81
|
17
|
20
|
10
|
25
|
25
|
Dovato
|
533
|
>100
|
>100
|
286
|
91
|
>100
|
209
|
>100
|
>100
|
38
|
>100
|
>100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rukobia
|
30
|
>100
|
>100
|
29
|
>100
|
>100
|
1
|
-
|
-
|
-
|
-
|
-
|
Cabenuva
|
18
|
>100
|
>100
|
15
|
-
|
-
|
3
|
-
|
-
|
-
|
-
|
-
|
Other
|
96
|
(25)
|
(20)
|
37
|
(12)
|
(5)
|
25
|
(34)
|
(34)
|
34
|
(29)
|
(23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immuno-
inflammation
|
638
|
22
|
31
|
524
|
20
|
29
|
50
|
22
|
24
|
64
|
49
|
60
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Benlysta
|
630
|
23
|
32
|
524
|
20
|
29
|
50
|
22
|
24
|
56
|
56
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pandemic
|
130
|
-
|
-
|
16
|
-
|
-
|
1
|
-
|
-
|
113
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Xevudy
|
130
|
-
|
-
|
16
|
-
|
-
|
1
|
-
|
-
|
113
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
357
|
39
|
46
|
206
|
32
|
42
|
143
|
44
|
46
|
8
|
>100
|
>100
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Zejula
|
287
|
15
|
21
|
161
|
6
|
14
|
118
|
23
|
25
|
8
|
>100
|
>100
|
Blenrep
|
67
|
>100
|
>100
|
44
|
>100
|
>100
|
22
|
>100
|
>100
|
1
|
-
|
-
|
Jemperli
|
3
|
-
|
-
|
1
|
-
|
-
|
2
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New and Specialty
Pharmaceuticals
|
6,719
|
11
|
18
|
4,163
|
8
|
17
|
1,516
|
6
|
8
|
1,040
|
30
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Pharmaceuticals
|
5,789
|
(13)
|
(7)
|
1,604
|
(2)
|
6
|
1,350
|
(17)
|
(16)
|
2,835
|
(16)
|
(10)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Established
Respiratory
|
3,252
|
(8)
|
(3)
|
1,361
|
4
|
13
|
740
|
(14)
|
(12)
|
1,151
|
(17)
|
(12)
|
Arnuity Ellipta
|
34
|
10
|
16
|
28
|
8
|
19
|
-
|
-
|
-
|
6
|
20
|
-
|
Avamys/Veramyst
|
227
|
-
|
7
|
-
|
-
|
-
|
50
|
(2)
|
(2)
|
177
|
1
|
9
|
Flixotide/Flovent
|
337
|
2
|
8
|
219
|
47
|
58
|
47
|
(22)
|
(20)
|
71
|
(42)
|
(38)
|
Incruse Ellipta
|
156
|
(9)
|
(5)
|
82
|
(15)
|
(7)
|
54
|
(2)
|
-
|
20
|
(5)
|
(5)
|
Relvar/Breo Ellipta
|
841
|
(1)
|
5
|
371
|
1
|
9
|
248
|
4
|
5
|
222
|
(9)
|
(3)
|
Seretide/Advair
|
1,022
|
(14)
|
(9)
|
366
|
1
|
9
|
244
|
(29)
|
(28)
|
412
|
(14)
|
(9)
|
Ventolin
|
534
|
(7)
|
(1)
|
294
|
(4)
|
4
|
77
|
(11)
|
(10)
|
163
|
(10)
|
(5)
|
Other
Respiratory
|
101
|
(43)
|
(39)
|
1
|
>100
|
>100
|
20
|
(5)
|
(5)
|
80
|
(49)
|
(45)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dermatology
|
298
|
(6)
|
-
|
-
|
-
|
-
|
100
|
(4)
|
(2)
|
198
|
(6)
|
1
|
Augmentin
|
296
|
(21)
|
(15)
|
-
|
-
|
-
|
86
|
(20)
|
(19)
|
210
|
(21)
|
(14)
|
Avodart
|
253
|
(32)
|
(28)
|
1
|
(75)
|
(75)
|
89
|
(28)
|
(27)
|
163
|
(33)
|
(28)
|
Imigran/Imitrex
|
79
|
(13)
|
(11)
|
23
|
(36)
|
(33)
|
37
|
-
|
3
|
19
|
6
|
6
|
Lamictal
|
356
|
(10)
|
(5)
|
170
|
(13)
|
(7)
|
85
|
(6)
|
(4)
|
101
|
(9)
|
(3)
|
Seroxat/Paxil
|
96
|
(13)
|
(7)
|
-
|
-
|
-
|
26
|
(4)
|
(4)
|
70
|
(16)
|
(8)
|
Valtrex
|
68
|
(12)
|
(6)
|
8
|
(27)
|
(27)
|
25
|
4
|
4
|
35
|
(17)
|
(7)
|
Other
|
1,091
|
(19)
|
(14)
|
41
|
(50)
|
(45)
|
162
|
(36)
|
(35)
|
888
|
(12)
|
(6)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Pharmaceuticals
|
12,508
|
(1)
|
5
|
5,767
|
5
|
14
|
2,866
|
(6)
|
(4)
|
3,875
|
(7)
|
(1)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
––––––––
|
–––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines turnover – three
months ended 30 September 2021
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
352
|
(3)
|
3
|
226
|
15
|
23
|
82
|
(12)
|
(8)
|
44
|
(40)
|
(37)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
224
|
2
|
9
|
127
|
7
|
15
|
77
|
(11)
|
(8)
|
20
|
54
|
62
|
Menveo
|
126
|
21
|
30
|
99
|
27
|
36
|
4
|
-
|
25
|
23
|
5
|
9
|
Other
|
2
|
(95)
|
(95)
|
-
|
-
|
-
|
1
|
(50)
|
(50)
|
1
|
(97)
|
(97)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
384
|
(14)
|
(8)
|
326
|
(14)
|
(7)
|
23
|
(30)
|
(27)
|
35
|
6
|
6
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
384
|
(14)
|
(8)
|
326
|
(14)
|
(7)
|
23
|
(30)
|
(27)
|
35
|
6
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
502
|
34
|
41
|
387
|
35
|
43
|
90
|
70
|
74
|
25
|
(26)
|
(24)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
502
|
34
|
41
|
387
|
35
|
43
|
90
|
70
|
74
|
25
|
(26)
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Vaccines
|
841
|
(1)
|
4
|
354
|
23
|
30
|
185
|
(9)
|
(6)
|
302
|
(16)
|
(12)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
156
|
(1)
|
4
|
103
|
26
|
34
|
24
|
(40)
|
(38)
|
29
|
(19)
|
(19)
|
Boostrix
|
167
|
2
|
9
|
106
|
12
|
18
|
37
|
(12)
|
(7)
|
24
|
(8)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
142
|
3
|
8
|
92
|
16
|
24
|
27
|
(13)
|
(13)
|
23
|
(18)
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
153
|
16
|
22
|
36
|
38
|
46
|
29
|
-
|
-
|
88
|
14
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
66
|
(20)
|
(17)
|
-
|
-
|
-
|
11
|
(15)
|
(8)
|
55
|
(21)
|
(19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,
Varilrix
|
89
|
24
|
28
|
-
|
-
|
-
|
41
|
5
|
5
|
48
|
45
|
55
|
Cervarix
|
34
|
(31)
|
(33)
|
-
|
-
|
-
|
7
|
40
|
40
|
27
|
(39)
|
(41)
|
Other
|
34
|
(38)
|
(35)
|
17
|
>100
|
>100
|
9
|
80
|
>100
|
8
|
(82)
|
(84)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines excluding
pandemic vaccines
|
2,079
|
2
|
8
|
1,293
|
12
|
20
|
380
|
(1)
|
3
|
406
|
(18)
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pandemic vaccines
|
95
|
-
|
-
|
29
|
-
|
-
|
-
|
-
|
-
|
66
|
-
|
-
|
Pandemic
adjuvant
|
94
|
-
|
-
|
29
|
-
|
-
|
-
|
-
|
-
|
65
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Total Vaccines
|
2,174
|
7
|
13
|
1,322
|
15
|
22
|
380
|
(1)
|
3
|
472
|
(5)
|
(2)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines turnover – nine months
ended 30 September 2021
|
|
Total
|
US
|
Europe
|
International
|
||||||||
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
–––––––––––––––––––––––––––––––––––––
|
||||||||
|
|
Growth
|
|
Growth
|
|
Growth
|
|
Growth
|
||||
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
|
–––––––––––––––––––––––
|
||||
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
£m
|
£%
|
CER%
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meningitis
|
767
|
2
|
8
|
390
|
21
|
30
|
268
|
1
|
3
|
109
|
(35)
|
(29)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Bexsero
|
523
|
7
|
12
|
218
|
9
|
18
|
251
|
4
|
5
|
54
|
10
|
24
|
Menveo
|
224
|
23
|
32
|
172
|
40
|
50
|
13
|
(28)
|
(22)
|
39
|
(5)
|
2
|
Other
|
20
|
(76)
|
(76)
|
-
|
-
|
-
|
4
|
(20)
|
(20)
|
16
|
(79)
|
(79)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Influenza
|
435
|
(10)
|
(3)
|
326
|
(14)
|
(8)
|
23
|
(30)
|
(27)
|
86
|
28
|
34
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Fluarix, FluLaval
|
435
|
(10)
|
(3)
|
326
|
(14)
|
(8)
|
23
|
(30)
|
(27)
|
86
|
28
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shingles
|
1,124
|
(16)
|
(11)
|
893
|
(23)
|
(17)
|
165
|
41
|
43
|
66
|
(8)
|
(8)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Shingrix
|
1,124
|
(16)
|
(11)
|
893
|
(23)
|
(17)
|
165
|
41
|
43
|
66
|
(8)
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established
Vaccines
|
2,288
|
(4)
|
-
|
774
|
3
|
11
|
528
|
(13)
|
(11)
|
986
|
(5)
|
(1)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Infanrix, Pediarix
|
428
|
(6)
|
(1)
|
245
|
16
|
26
|
91
|
(33)
|
(32)
|
92
|
(16)
|
(13)
|
Boostrix
|
407
|
16
|
22
|
215
|
15
|
24
|
108
|
4
|
6
|
84
|
40
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hepatitis
|
347
|
(21)
|
(16)
|
207
|
(17)
|
(10)
|
76
|
(32)
|
(31)
|
64
|
(18)
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotarix
|
399
|
(3)
|
1
|
84
|
-
|
8
|
86
|
(2)
|
(1)
|
229
|
(4)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Synflorix
|
265
|
(14)
|
(12)
|
-
|
-
|
-
|
32
|
(24)
|
(21)
|
233
|
(13)
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priorix, Priorix Tetra,
Varilrix
|
206
|
13
|
16
|
-
|
-
|
-
|
97
|
2
|
3
|
109
|
24
|
31
|
Cervarix
|
115
|
21
|
21
|
-
|
-
|
-
|
22
|
57
|
57
|
93
|
15
|
15
|
Other
|
121
|
(18)
|
(15)
|
23
|
-
|
-
|
16
|
14
|
21
|
82
|
(25)
|
(23)
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Vaccines excluding
pandemic vaccines
|
4,614
|
(7)
|
(2)
|
2,383
|
(9)
|
(2)
|
984
|
(3)
|
(2)
|
1,247
|
(7)
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pandemic vaccines
|
355
|
-
|
-
|
240
|
-
|
-
|
-
|
-
|
-
|
115
|
-
|
-
|
Pandemic
adjuvant
|
352
|
-
|
-
|
240
|
-
|
-
|
-
|
-
|
-
|
112
|
-
|
-
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Total Vaccines
|
4,969
|
-
|
5
|
2,623
|
-
|
8
|
984
|
(3)
|
(2)
|
1,362
|
2
|
5
|
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
––––––––
|
Balance sheet
|
|
30 September 2021
£m
|
|
30
September 2020
£m
|
|
31
December 2020
£m
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property,
plant and equipment
|
9,934
|
|
10,307
|
|
10,176
|
Right
of use assets
|
733
|
|
898
|
|
830
|
Goodwill
|
10,582
|
|
10,888
|
|
10,597
|
Other
intangible assets
|
30,241
|
|
30,664
|
|
29,824
|
Investments
in associates and joint ventures
|
87
|
|
396
|
|
364
|
Other
investments
|
2,731
|
|
2,576
|
|
3,060
|
Deferred
tax assets
|
4,876
|
|
4,381
|
|
4,287
|
Derivative
financial instruments
|
6
|
|
4
|
|
5
|
Other
non-current assets
|
1,245
|
|
932
|
|
1,041
|
|
|
|
|
|
|
Total non-current assets
|
60,435
|
|
61,046
|
|
60,184
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Inventories
|
6,244
|
|
6,440
|
|
5,996
|
Current
tax recoverable
|
587
|
|
567
|
|
671
|
Trade
and other receivables
|
7,697
|
|
7,854
|
|
6,952
|
Derivative
financial instruments
|
194
|
|
206
|
|
152
|
Liquid
investments
|
61
|
|
83
|
|
78
|
Cash
and cash equivalents
|
3,453
|
|
4,283
|
|
6,292
|
Assets
held for sale
|
18
|
|
448
|
|
106
|
|
|
|
|
|
|
Total current assets
|
18,254
|
|
19,881
|
|
20,247
|
|
|
|
|
|
|
TOTAL ASSETS
|
78,689
|
|
80,927
|
|
80,431
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term
borrowings
|
(4,869)
|
|
(4,914)
|
|
(3,725)
|
Contingent
consideration liabilities
|
(765)
|
|
(776)
|
|
(765)
|
Trade
and other payables
|
(15,230)
|
|
(15,142)
|
|
(15,840)
|
Derivative
financial instruments
|
(114)
|
|
(127)
|
|
(221)
|
Current
tax payable
|
(717)
|
|
(428)
|
|
(545)
|
Short-term
provisions
|
(722)
|
|
(792)
|
|
(1,052)
|
|
|
|
|
|
|
Total current liabilities
|
(22,417)
|
|
(22,179)
|
|
(22,148)
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Long-term
borrowings
|
(20,736)
|
|
(23,334)
|
|
(23,425)
|
Corporation
tax payable
|
(182)
|
|
(195)
|
|
(176)
|
Deferred
tax liabilities
|
(3,666)
|
|
(3,917)
|
|
(3,600)
|
Pensions
and other post-employment benefits
|
(3,380)
|
|
(3,771)
|
|
(3,650)
|
Other
provisions
|
(687)
|
|
(782)
|
|
(707)
|
Derivative
financial instruments
|
(1)
|
|
(6)
|
|
(10)
|
Contingent
consideration liabilities
|
(5,047)
|
|
(5,329)
|
|
(5,104)
|
Other
non-current liabilities
|
(825)
|
|
(789)
|
|
(803)
|
|
|
|
|
|
|
Total non-current liabilities
|
(34,524)
|
|
(38,123)
|
|
(37,475)
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
(56,941)
|
|
(60,302)
|
|
(59,623)
|
|
|
|
|
|
|
NET ASSETS
|
21,748
|
|
20,625
|
|
20,808
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
1,347
|
|
1,346
|
|
1,346
|
Share
premium account
|
3,300
|
|
3,280
|
|
3,281
|
Retained
earnings
|
7,783
|
|
7,055
|
|
6,755
|
Other
reserves
|
2,996
|
|
2,605
|
|
3,205
|
|
|
|
|
|
|
Shareholders’ equity
|
15,426
|
|
14,286
|
|
14,587
|
|
|
|
|
|
|
Non-controlling
interests
|
6,322
|
|
6,339
|
|
6,221
|
|
|
|
|
|
|
TOTAL EQUITY
|
21,748
|
|
20,625
|
|
20,808
|
|
|
|
|
|
|
Statement of changes in
equity
|
|
Share
capital
£m
|
Share
premium
£m
|
Retained
earnings
£m
|
Other
reserves
£m
|
Share-
holders’
equity
£m
|
Non-
controlling
interests
£m
|
Total
equity
£m
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
At 1
January 2021
|
1,346
|
3,281
|
6,755
|
3,205
|
14,587
|
6,221
|
20,808
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
3,636
|
|
3,636
|
530
|
4,166
|
Other
comprehensive income/(expense)
for
the period
|
|
|
148
|
(189)
|
(41)
|
(1)
|
(42)
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income for the period
|
|
|
3,784
|
(189)
|
3,595
|
529
|
4,124
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(435)
|
(435)
|
Contributions
from non-controlling interests
|
|
|
|
|
|
7
|
7
|
Dividends
to shareholders
|
|
|
(3,048)
|
|
(3,048)
|
|
(3,048)
|
Shares
issued
|
1
|
19
|
|
|
20
|
|
20
|
Realised
after tax profits on disposal of
equity
investments
|
|
|
146
|
(146)
|
-
|
|
-
|
Share
of associates and joint ventures
realised
profits on disposal of equity
investments
|
|
|
9
|
(9)
|
-
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(135)
|
135
|
-
|
|
-
|
Share-based
incentive plans
|
|
|
272
|
|
272
|
|
272
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 30 September 2021
|
1,347
|
3,300
|
7,783
|
2,996
|
15,426
|
6,322
|
21,748
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
|
|
|
|
|
|
|
|
At 1
January 2020
|
1,346
|
3,174
|
4,530
|
2,355
|
11,405
|
6,952
|
18,357
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
|
5,072
|
|
5,072
|
477
|
5,549
|
Other
comprehensive income
for
the period
|
|
|
(83)
|
629
|
546
|
30
|
576
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Total
comprehensive income for
the
period
|
|
|
4,989
|
629
|
5,618
|
507
|
6,125
|
|
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Distributions
to non-controlling interests
|
|
|
|
|
|
(1,006)
|
(1,006)
|
Contributions
from non-controlling interests
|
|
|
|
|
|
3
|
3
|
Changes
to non-controlling interests
|
|
|
|
|
|
(117)
|
(117)
|
Dividends
to shareholders
|
|
|
(3,031)
|
|
(3,031)
|
|
(3,031)
|
Shares
issued
|
|
28
|
|
|
28
|
|
28
|
Realised
after tax profits on disposal of
equity
investments
|
|
|
260
|
(260)
|
-
|
|
-
|
Shares
acquired by ESOP Trusts
|
|
78
|
361
|
(439)
|
-
|
|
-
|
Write-down
on shares held by ESOP Trusts
|
|
|
(320)
|
320
|
-
|
|
-
|
Share-based
incentive plans
|
|
|
266
|
|
266
|
|
266
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
At 30
September 2020
|
1,346
|
3,280
|
7,055
|
2,605
|
14,286
|
6,339
|
20,625
|
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
––––––––––––
|
Cash
flow statement – nine months ended 30 September
2021
|
|
9 months 2021
£m
|
|
9
months 2020
£m
|
|
|
|
|
|
|
Profit after tax
|
4,166
|
|
5,549
|
|
Tax on
profits
|
570
|
|
598
|
|
Share
of after tax profits of associates and joint ventures
|
(35)
|
|
(39)
|
|
Loss on
disposal of interests in associates
|
36
|
|
-
|
|
Net
finance expense
|
569
|
|
614
|
|
Depreciation,
amortisation and other adjusting items
|
2,011
|
|
(330)
|
|
Increase
in working capital
|
(1,567)
|
|
(1,444)
|
|
Contingent
consideration paid
|
(548)
|
|
(573)
|
|
(Decrease)/increase
in other net liabilities (excluding contingent
consideration
paid)
|
(160)
|
|
1,547
|
|
|
|
|
|
|
Cash generated from operations
|
5,042
|
|
5,922
|
|
Taxation
paid
|
(857)
|
|
(1,336)
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
4,185
|
|
4,586
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
Purchase
of property, plant and equipment
|
(719)
|
|
(712)
|
|
Proceeds
from sale of property, plant and equipment
|
125
|
|
35
|
|
Purchase
of intangible assets
|
(1,580)
|
|
(682)
|
|
Proceeds
from sale of intangible assets
|
489
|
|
637
|
|
Purchase
of equity investments
|
(146)
|
|
(396)
|
|
Proceeds
from sale of equity investments
|
195
|
|
3,134
|
|
Purchase
of businesses, net of cash acquired
|
1
|
|
9
|
|
Contingent
consideration paid
|
(83)
|
|
(91)
|
|
Disposal
of businesses
|
(25)
|
|
234
|
|
Investment
in associates and joint ventures
|
(1)
|
|
(1)
|
|
Interest
received
|
24
|
|
33
|
|
Decrease/(increase)
in liquid investments
|
18
|
|
(1)
|
|
Dividends
from associates and joint ventures
|
9
|
|
14
|
|
Proceeds
from disposal of associates and JVs
|
277
|
|
-
|
|
|
|
|
|
|
Net cash (outflow)/inflow from investing activities
|
(1,416)
|
|
2,213
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
Issue
of share capital
|
20
|
|
28
|
|
Increase
in long-term loans
|
-
|
|
2,333
|
|
Net
repayment of short-term loans
|
(578)
|
|
(5,824)
|
|
Repayment
of lease liabilities
|
(157)
|
|
(166)
|
|
Interest
paid
|
(486)
|
|
(517)
|
|
Dividends
paid to shareholders
|
(3,048)
|
|
(3,031)
|
|
Distributions
to non-controlling interests
|
(435)
|
|
(1,006)
|
|
Contributions
from non-controlling interests
|
7
|
|
3
|
|
Other
financing items
|
(138)
|
|
223
|
|
|
|
|
|
|
Net cash outflow from financing activities
|
(4,815)
|
|
(7,957)
|
|
|
|
|
|
|
Increase/(decrease) in cash and bank overdrafts in the
period
|
(2,046)
|
|
(1,158)
|
|
|
|
|
|
|
Cash
and bank overdrafts at beginning of the period
|
5,261
|
|
4,831
|
|
Exchange
adjustments
|
(21)
|
|
(17)
|
|
Increase/(decrease)
in cash and bank overdrafts
|
(2,046)
|
|
(1,158)
|
|
|
|
|
|
|
Cash and bank overdrafts at end of the period
|
3,194
|
|
3,656
|
|
|
|
|
|
|
Cash
and bank overdrafts at end of the period comprise:
|
|
|
|
|
|
Cash
and cash equivalents
|
3,453
|
|
4,283
|
|
|
|
|
|
|
|
3,453
|
|
4,283
|
|
Overdrafts
|
(259)
|
|
(627)
|
|
|
|
|
|
|
3,194
|
|
3,656
|
|
|
|
|
|
Segment
information
|
|
Operating
segments are reported based on the financial information provided
to the Chief Executive Officer and the responsibilities of the
Corporate Executive Team (CET). GSK reports results under four
segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines and
Consumer Healthcare, and individual members of the CET are
responsible for each segment.
The
Pharmaceuticals R&D segment is the responsibility of the Chief
Scientific Officer and President, R&D and is reported as a
separate segment. The operating profit of this segment excludes the
ViiV Healthcare operating profit (including R&D expenditure)
that is reported within the Pharmaceuticals segment.
The
Group’s management reporting process allocates intra-Group
profit on a product sale to the market in which that sale is
recorded, and the profit analyses below have been presented on that
basis.
Corporate
and other unallocated turnover and costs include the results of
certain Consumer Healthcare products which are being held for sale
in a number of markets in order to meet anti-trust approval
requirements, together with the costs of corporate
functions.
|
Turnover by
segment
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
4,397
|
|
4,192
|
|
5
|
|
10
|
Vaccines
|
2,174
|
|
2,032
|
|
7
|
|
13
|
Consumer
Healthcare
|
2,506
|
|
2,422
|
|
3
|
|
8
|
|
|
|
|
|
|
|
|
Total
turnover
|
9,077
|
|
8,646
|
|
5
|
|
10
|
Operating profit by
segment
|
|
Q3 2021
£m
|
|
Q3
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
2,131
|
|
1,945
|
|
10
|
|
17
|
Pharmaceuticals
R&D
|
(838)
|
|
(770)
|
|
9
|
|
12
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
1,293
|
|
1,175
|
|
10
|
|
21
|
Vaccines
|
1,033
|
|
899
|
|
15
|
|
22
|
Consumer
Healthcare
|
648
|
|
541
|
|
20
|
|
28
|
|
|
|
|
|
|
|
|
Segment
profit
|
2,974
|
|
2,615
|
|
14
|
|
23
|
Corporate
and other unallocated costs
|
(100)
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
2,874
|
|
2,665
|
|
8
|
|
16
|
Adjusting
items
|
(936)
|
|
(807)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
1,938
|
|
1,858
|
|
4
|
|
15
|
|
|
|
|
|
|
|
|
Finance
income
|
7
|
|
(3)
|
|
|
|
|
Finance
costs
|
(200)
|
|
(195)
|
|
|
|
|
Share
of after tax profits of associates
and
joint ventures
|
3
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
1,748
|
|
1,671
|
|
5
|
|
16
|
|
|
|
|
|
|
|
|
Turnover by
segment
|
|
9 months
2021
£m
|
|
9
months
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
12,508
|
|
12,690
|
|
(1)
|
|
5
|
Vaccines
|
4,969
|
|
4,970
|
|
-
|
|
5
|
Consumer
Healthcare
|
7,110
|
|
7,673
|
|
(7)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
24,587
|
|
25,333
|
|
(3)
|
|
3
|
Corporate
and other unallocated turnover
|
-
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
turnover
|
24,587
|
|
25,360
|
|
(3)
|
|
3
|
|
|
|
|
|
|
|
|
Operating profit by
segment
|
|
9 months
2021
£m
|
|
9
months
2020
£m
|
|
Growth
£%
|
|
Growth
CER%
|
|
|
|
|
|
|
|
|
Pharmaceuticals
|
6,135
|
|
5,849
|
|
5
|
|
14
|
Pharmaceuticals
R&D
|
(2,482)
|
|
(2,515)
|
|
(1)
|
|
4
|
|
|
|
|
|
|
|
|
Pharmaceuticals
including R&D
|
3,653
|
|
3,334
|
|
10
|
|
21
|
Vaccines
|
1,853
|
|
2,022
|
|
(8)
|
|
-
|
Consumer
Healthcare
|
1,681
|
|
1,828
|
|
(8)
|
|
(1)
|
|
|
|
|
|
|
|
|
Segment
profit
|
7,187
|
|
7,184
|
|
-
|
|
10
|
Corporate
and other unallocated costs
|
(274)
|
|
(95)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
6,913
|
|
7,089
|
|
(2)
|
|
8
|
Adjusting
items
|
(1,607)
|
|
(367)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating profit
|
5,306
|
|
6,722
|
|
(21)
|
|
(11)
|
|
|
|
|
|
|
|
|
Finance
income
|
24
|
|
39
|
|
|
|
|
Finance
costs
|
(593)
|
|
(653)
|
|
|
|
|
Loss on
disposal of interests in associates
|
(36)
|
|
-
|
|
|
|
|
Share
of after tax profits of associates
and
joint ventures
|
35
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before taxation
|
4,736
|
|
6,147
|
|
(23)
|
|
(12)
|
|
|
|
|
|
|
|
|
Legal matters
The
Group is involved in significant legal and administrative
proceedings, principally product liability, intellectual property,
tax, anti-trust, consumer fraud and governmental investigations,
which are more fully described in the ‘Legal
Proceedings’ note in the Annual Report 2020. At 30 September
2021, the Group’s aggregate provision for legal and other
disputes (not including tax matters described on page 20) was
£0.2 billion (31 December 2020: £0.3
billion).
The
Group may become involved in significant legal proceedings in
respect of which it is not possible to make a reliable estimate of
the expected financial effect, if any, that could result from
ultimate resolution of the proceedings. In these cases, the Group
would provide appropriate disclosures about such cases, but no
provision would be made.
The
ultimate liability for legal claims may vary from the amounts
provided and is dependent upon the outcome of litigation
proceedings, investigations and possible settlement negotiations.
The Group’s position could change over time, and, therefore,
there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material
amount the amount of the provisions reported in the Group’s
financial accounts.
There
have been no significant legal developments this
quarter.
|
Additional
information
|
Accounting policies and basis of preparation
|
This
unaudited Results Announcement contains condensed financial
information for the three and nine months ended 30 September 2021, and should be read in
conjunction with the Annual Report 2020, which was prepared
in accordance with International Financial
Reporting Standards as adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. This Results
Announcement has been prepared applying consistent accounting
policies to those applied by the Group in the Annual Report
2020.
The
Group has not identified any changes to its key sources of
accounting judgements or estimations of uncertainty compared with
those disclosed in the Annual Report 2020.
|
This
Results Announcement does not constitute statutory accounts of the
Group within the meaning of sections 434(3) and 435(3) of the
Companies Act 2006. The full Group accounts for 2020 were published
in the Annual Report 2020, which has been delivered to the
Registrar of Companies and on which the report of the independent
auditor was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
COVID-19 pandemic
The
potential impact of the COVID-19 pandemic on GSK’s trading
performance and all our principal risks has been assessed with
mitigation plans put in place. During 2021, as anticipated, the
pandemic impacted Group performance primarily in demand for
Vaccines as a result of governments’ prioritisation of
COVID-19 vaccination programmes and of ongoing containment measures
impacting customers’ ability and willingness to access
vaccination services across all regions. We continue to remain
confident in the underlying demand for our Vaccine products and are
encouraged by the rate at which COVID-19 vaccinations are being
deployed in many countries, which provides support for healthcare
systems returning to normal. We continue to monitor the situation
closely, as this continues to be a dynamic situation, with the
ultimate severity, duration and impact unknown at this point
including potential impacts on trading results, clinical trials,
supply continuity and our employees. The situation could change at
any time and there can be no assurance that the COVID-19 pandemic
will not have a material adverse impact on the future results of
the Group.
|
Exchange rates
|
GSK
operates in many countries, and earns revenues and incurs costs in
many currencies. The results of the Group, as reported in Sterling,
are affected by movements in exchange rates between Sterling and
other currencies. Average exchange rates, as modified by specific
transaction rates for large transactions, prevailing during the
period, are used to translate the results and cash flows of
overseas subsidiaries, associates and joint ventures into Sterling.
Period-end rates are used to translate the net assets of those
entities. The currencies which most influenced these translations
and the relevant exchange rates were:
|
|
Q3 2021
|
|
Q3
2020
|
|
9 months 2021
|
|
9
months 2020
|
|
2020
|
||
|
|
|
|
|
|
|
|
|
|
||
Average
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
1.37
|
|
1.30
|
|
1.38
|
|
1.28
|
|
1.29
|
|
|
Euro/£
|
1.16
|
|
1.11
|
|
1.15
|
|
1.13
|
|
1.13
|
|
|
Yen/£
|
151
|
|
138
|
|
150
|
|
137
|
|
137
|
|
|
|
|
|
|
|
|
|
|
||
Period-end
rates:
|
|
|
|
|
|
|
|
|
|
||
|
|
US$/£
|
1.34
|
|
1.28
|
|
1.34
|
|
1.28
|
|
1.36
|
|
|
Euro/£
|
1.16
|
|
1.10
|
|
1.16
|
|
1.10
|
|
1.11
|
|
|
Yen/£
|
151
|
|
136
|
|
151
|
|
136
|
|
141
|
During Q3 2021 average Sterling exchange rates were stronger
against the US Dollar, the Yen and the Euro compared with the same
period in 2020. During the nine months ended 30 September 2021,
average Sterling exchange rates were stronger against the US
Dollar, the Yen and the Euro compared with the same period in 2020.
Period-end Sterling exchange rates were stronger against the Euro
and the Yen and weaker against the US Dollar compared with the 2020
period-end rates.
|
Net assets
|
The
book value of net assets increased by £940 million from
£20,808 million at 31 December 2020 to £21,748 million at
30 September 2021. This primarily reflected the Total profit for
the period, the re-measurement gains on the defined benefit plans,
increases in deferred tax and intangible assets and the fair value
of equity investments exceeding the adverse exchange movements and
the dividends paid during the period.
The
carrying value of investments in associates and joint ventures at
30 September 2021 was £87 million (31 December 2020: £364
million), with a market value of £87 million (31 December
2020: £364 million).
At 30
September 2021, the net deficit on the Group’s pension plans
was £1,802 million compared with £2,104 million at 31
December 2020. The decrease in the net deficit primarily arose from
an increase in the rates used to discount UK pension liabilities
from 1.4% to 2.1%, and US pension liabilities from 2.3% to 2.7%,
partly offset by an increase in the UK inflation rate from 2.8% to
3.3% and lower UK asset values.
The
estimated present value of the potential redemption amount of the
Pfizer put option related to ViiV Healthcare, recorded in Other
payables in Current liabilities, was £907 million (31 December
2020: £960 million).
Contingent
consideration amounted to £5,812 million at 30 September 2021
(31 December 2020: £5,869 million), of which £5,242
million (31 December 2020: £5,359 million) represented the
estimated present value of amounts payable to Shionogi relating to
ViiV Healthcare and £511 million (31 December 2020: £477
million) represented the estimated present value of contingent
consideration payable to Novartis related to the Vaccines
acquisition.
Of the
contingent consideration payable (on a post-tax basis) to Shionogi
at 30 September 2021, £737 million (31 December 2020:
£745 million) is expected to be paid within one
year.
|
Movements in contingent consideration are as follows:
|
9 months 2021
|
ViiV Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the period
|
5,359
|
|
5,869
|
Re-measurement
through income statement
|
498
|
|
574
|
Cash
payments: operating cash flows
|
(537)
|
|
(548)
|
Cash
payments: investing activities
|
(78)
|
|
(83)
|
|
|
|
|
Contingent
consideration at end of the period
|
5,242
|
|
5,812
|
|
|
|
|
9 months 2020
|
ViiV
Healthcare
£m
|
|
Group
£m
|
|
|
|
|
Contingent
consideration at beginning of the period
|
5,103
|
|
5,479
|
Re-measurement
through income statement
|
1,117
|
|
1,290
|
Cash
payments: operating cash flows
|
(566)
|
|
(573)
|
Cash
payments: investing activities
|
(82)
|
|
(91)
|
|
|
|
|
Contingent
consideration at end of the period
|
5,572
|
|
6,105
|
|
|
|
|
Contingent liabilities and commitments
|
There
were contingent liabilities at 30 September 2021 in respect of
guarantees and indemnities entered into as part of the ordinary
course of the Group’s business. No material losses are
expected to arise from such contingent liabilities. Provision is
made for the outcome of legal and tax disputes where it is both
probable that the Group will suffer an outflow of funds and it is
possible to make a reliable estimate of that outflow. Descriptions
of the significant legal disputes to which the Group is a party are
set out on page 55.
|
Reconciliation of cash flow to
movements in net debt
|
|
9 months
2021
£m
|
|
9
months
2020
£m
|
|
|
|
|
Net
debt at beginning of the period
|
(20,780)
|
|
(25,215)
|
|
|
|
|
(Decrease)/increase
in cash and bank overdrafts
|
(2,046)
|
|
(1,158)
|
(Decrease)/increase
in liquid investments
|
(18)
|
|
1
|
Net
decrease in short-term loans
|
578
|
|
5,824
|
Increase
in long-term loans
|
-
|
|
(2,333)
|
Repayment
of lease liabilities
|
157
|
|
166
|
Exchange
adjustments
|
103
|
|
(1,084)
|
Other
non-cash movements
|
(85)
|
|
(83)
|
|
|
|
|
(Increase)/decrease
in net debt
|
(1,311)
|
|
1,333
|
|
|
|
|
Net
debt at end of the period
|
(22,091)
|
|
(23,882)
|
|
|
|
|
Net debt analysis
|
|
30 September
2021
£m
|
|
30
September
2020
£m
|
|
31
December
2020
£m
|
|
|
|
|
|
|
Liquid
investments
|
61
|
|
83
|
|
78
|
Cash
and cash equivalents
|
3,453
|
|
4,283
|
|
6,292
|
Short-term
borrowings
|
(4,869)
|
|
(4,914)
|
|
(3,725)
|
Long-term
borrowings
|
(20,736)
|
|
(23,334)
|
|
(23,425)
|
|
|
|
|
|
|
Net
debt at end of the period
|
(22,091)
|
|
(23,882)
|
|
(20,780)
|
|
|
|
|
|
|
Free cash flow
reconciliation
|
|
Q3 2021
£m
|
|
9
months 2021
£m
|
|
9
months 2020
£m
|
|
|
|
|
|
|
Net
cash inflow from operating activities
|
2,562
|
|
4,185
|
|
4,586
|
Purchase
of property, plant and equipment
|
(279)
|
|
(719)
|
|
(712)
|
Proceeds
from sale of property, plant and equipment
|
23
|
|
125
|
|
35
|
Purchase
of intangible assets
|
(1,005)
|
|
(1,580)
|
|
(682)
|
Proceeds
from disposals of intangible assets
|
105
|
|
489
|
|
637
|
Net
finance costs
|
(40)
|
|
(462)
|
|
(484)
|
Dividends
from joint ventures and associates
|
-
|
|
9
|
|
14
|
Contingent
consideration paid (reported in investing
activities)
|
(28)
|
|
(83)
|
|
(91)
|
Distributions
to non-controlling interests
|
(115)
|
|
(435)
|
|
(1,006)
|
Contributions
from non-controlling interests
|
-
|
|
7
|
|
3
|
|
|
|
|
|
|
Free
cash inflow
|
1,223
|
|
1,536
|
|
2,300
|
|
|
|
|
|
|
Reporting definitions
|
Total and Adjusted results
Total
reported results represent the Group’s overall
performance.
GSK
also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS
measures may be considered in addition to, but not as a substitute
for or superior to, information presented in accordance with IFRS.
Adjusted results are defined on page 9 and other non-IFRS measures
are defined below.
Free cash flow
Free
cash flow is defined as the net cash inflow/outflow from operating
activities less capital expenditure on property, plant and
equipment and intangible assets, contingent consideration payments,
net finance costs, and dividends paid to non-controlling interests
plus proceeds from the sale of property, plant and equipment and
intangible assets, and dividends received from joint ventures and
associates. It is used by management for planning and reporting
purposes and in discussions with and presentations to investment
analysts and rating agencies. Free cash flow growth is calculated
on a reported basis. A reconciliation of net cash inflow from
operations to free cash flow is set out on page 58.
Free cash flow conversion
Free
cash flow conversion is free cash flow as a percentage of
earnings.
Working capital
Working
capital represents inventory and trade receivables less trade
payables.
CER and AER growth
In
order to illustrate underlying performance, it is the Group’s
practice to discuss its results in terms of constant exchange rate
(CER) growth. This represents growth calculated as if the exchange
rates used to determine the results of overseas companies in
Sterling had remained unchanged from those used in the comparative
period. CER% represents growth at constant exchange rates. £%
or AER% represents growth at actual exchange rates.
Pro-forma growth
The
acquisition of the Pfizer consumer healthcare business completed on
31 July 2019 and so GSK’s reported results for 2020 included
nine months of results of the former Pfizer consumer healthcare
business from 1 January 2020.
The
Group has presented in this Results Announcement reference to
pro-forma growth rates at CER in 2020 for sales excluding brands
divested/under review for Consumer Healthcare and sales for certain
categories of consumer healthcare products taking account of this
transaction. Pro-forma growth rates for the nine months are
calculated comparing reported results for 2020, calculated applying
the exchange rates used in the comparative period, with the results
for 2019 adjusted to include the equivalent nine months of results
of the former Pfizer consumer healthcare business during 2019, as
consolidated (in US$) and included in Pfizer’s US GAAP
results.
2 year Compound Annual Growth Rate
CAGR is
defined as the compound annual growth rate and shows the annualised
average rate of pro-forma revenue growth between two given years,
assuming growth takes place at an exponentially compounded rate.
For Consumer Healthcare, the 2 year revenue CAGR has been presented
showing the annualised average rate of pro-forma revenue growth
between 2019 and 2021.
COVID-19 solutions
COVID-19 solutions include the sales of pandemic adjuvant and other
COVID-19 solutions including vaccine manufacturing and
Xevudy
and the associated costs but does not
include reinvestment in R&D. This categorisation is used by
management and we believe is helpful to investors through providing
clarity on the results of the Group by showing the contribution to
growth from COVID-19 solutions.
|
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.
|
Outlook, assumptions and cautionary statements
|
2021 guidance
GSK now
expects 2021 Adjusted EPS to decline by between -2% to -4% at CER,
excluding any contribution from COVID-19 solutions. This updated
guidance represents an improvement to that previously given in July
2021 of an expected decline of mid to high-single digit percent
Adjusted EPS at CER, excluding any contribution from COVID-19
solutions.
2021-2026 sales and adjusted operating profit growth outlooks, 2026
cash generated from operations outlook, 2031 sales ambition and
2021-2023 dividend expectations
In June
2021, GSK announced that it expected New GSK to deliver sales growth and adjusted operating
profit growth of more than 5% and more than 10%, respectively, CAGR
at constant exchange rates over the five year period 2021-2026
(with 2021 as the base year). These financial outlooks exclude any
contribution from COVID-19 related revenues. New GSK expects to
improve adjusted operating margin from the mid-20s% in 2021 to over
30% by 2026 and cash generated from operations is expected
to exceed £10 billion by 2026. By
2031, New GSK aims to deliver sales of more than £33 billion
(at constant exchange rates).
Assumptions related to 2021 guidance, 2021-2026 outlooks, 2031
sales ambition and 2021-2023 dividend expectations
In
outlining the guidance for 2021 and future five-year 2021-26
outlook, 2031 ambition and dividend expectations, the Group has
made certain assumptions about the healthcare sector (including
regarding possible governmental, legislative and regulatory
reform), the different markets and competitive landscape in which
it operates and the delivery of revenues and financial benefits
from its current portfolio, its development pipeline of drugs and
vaccines, its restructuring programmes and its plans for the
separation of Consumer Healthcare.
2021 guidance
The
Group has updated its planning assumptions for 2021, to consider
the different impacts of the pandemic recovery on our
Pharmaceuticals and Vaccines businesses. We now expect
Pharmaceutical revenue for 2021 to grow in low-single digits at CER
(previously flat to low-single digits at CER) and Vaccines revenue
for 2021 to decline by mid-single digits at CER (previously broadly
flat at CER), with no change for Consumer Healthcare excluding
brands/divested under review with low to mid-single digit growth.
These planning assumptions as well as earnings guidance and
dividend expectations assume no material interruptions to supply of
the Group’s products, no material mergers, acquisitions or
disposals, no material litigation or investigation costs for the
Company (save for those that are already recognised or for which
provisions have been made), no share repurchases by the Company,
and no change in the Group’s shareholdings in ViiV
Healthcare. The assumptions also assume no material changes in the
healthcare environment. The 2021 guidance factors in all
divestments and product exits announced to date, including product
divestments planned in connection with the formation of the
Consumer Healthcare Joint Venture with Pfizer, and the non-core
divestments planned to fund the cash costs of the Separation
Preparation restructuring programme.
The
Group’s guidance assumes successful delivery of the
Group’s integration and restructuring plans. It also assumes
that the integration and investment programmes following the
creation of the Consumer Healthcare Joint Venture with Pfizer are
delivered successfully. Material costs for investment in new
product launches and R&D have been factored into the
expectations given. Given the potential development options in the
Group’s pipeline, the outlook may be affected by additional
data-driven R&D investment decisions. The guidance is given on
a constant currency basis.
New GSK’s revenue, operating profit, operating margin and
cash flow outlooks, revenue ambition and dividend
expectations
GSK
expects and assumes the next several years to be challenging for
the healthcare industry with continued uncertainty related to the
impact of the COVID-19 pandemic on adult vaccinations and continued
pressure on pricing of pharmaceuticals. GSK also expects volume
demand for its products to increase, particularly for Shingrix in the US, as healthcare
systems are expected to return to normal following disruption from
governments’ prioritisation of COVID-19 vaccination
programmes and ongoing measures to contain the pandemic, and for
Shingrix in
China.
The
assumptions for New GSK’s revenue, operating profit,
operating margin and cash flow outlooks, revenue ambition and
dividend expectations assume successful delivery of the ongoing and
planned integration and restructuring plans and the planned
demerger of Consumer Healthcare; the delivery of revenues and
financial benefits from its current and development pipeline
portfolio of drugs and vaccines (which have been assessed for this
purpose on a risk-adjusted basis, as described further below);
regulatory approvals of the pipeline portfolio of drugs and
vaccines that underlie these expectations (which have also been
assessed for this purpose on a risk-adjusted basis, as described
further below); no material interruptions to supply of the
Group’s products; no material mergers, acquisitions or
disposals or other material business development transactions; no
material litigation or investigation costs for the company (save
for those that are already recognised or for which provisions have
been made); no share repurchases by the company; and no change in
the shareholdings in ViiV Healthcare. GSK assumes no premature loss
of exclusivity for key products over the period.
The
assumptions for New GSK’s revenue, operating profit,
operating margin and cash flow outlooks, revenue ambition and
dividend expectations also factor in all divestments and product
exits announced to date as well as material costs for investment in
new product launches and R&D. Pipeline risk-adjusted sales are
based on the latest internal estimate of the probability of
technical and regulatory success for each asset in
development.
Notwithstanding
these outlooks and expectations, there is still uncertainty as to
whether our assumptions, targets, outlooks expectations and
ambitions will be achieved, including based on the other
assumptions outlined above.
All
outlook and ambition statements are given on a constant currency
basis and use 2021 forecast exchange rates as a base, assuming a
continuation of Q1 2021 closing rates (£1/$1.38,
£1/€1.17, £1/Yen 152). 2021-2026 outlook refers to
the 5 years to 2026 with 2021 as the base year.
Assumptions and cautionary statement regarding forward-looking
statements
The
Group’s management believes that the assumptions outlined
above are reasonable, and that the guidance, outlooks, ambitions
and expectations described in this report are achievable based on
those assumptions. However, given the forward-looking nature of
these guidance, outlooks, ambitions and expectations, they are
subject to greater uncertainty, including potential material
impacts if the above assumptions are not realised, and other
material impacts related to foreign exchange fluctuations,
macro-economic activity, the impact of outbreaks, epidemics or
pandemics, such as the COVID-19 pandemic and ongoing challenges and
uncertainties posed by the COVID-19 pandemic for businesses and
governments around the world, changes in legislation, regulation,
government actions or intellectual property protection, product
development and approvals, actions by our competitors, and other
risks inherent to the industries in which we operate.
This
document contains statements that are, or may be deemed to be,
“forward-looking statements”. Forward-looking
statements give the Group’s current expectations or forecasts
of future events. An investor can identify these statements by the
fact that they do not relate strictly to historical or current
facts. They use words such as ‘anticipate’,
‘estimate’, ‘expect’, ‘intend’,
‘will’, ‘project’, ‘plan’,
‘believe’, ‘target’, ‘aim’,
‘ambition’ and other words and terms of similar meaning
in connection with any discussion of future operating or financial
performance. In particular, these include statements relating to
future actions, prospective products or product approvals, future
performance or results of current and anticipated products, sales
efforts, expenses, the outcome of contingencies such as legal
proceedings, dividend payments and financial results. Other than in
accordance with its legal or regulatory obligations (including
under the Market Abuse Regulation, the UK Listing Rules and the
Disclosure and Transparency Rules of the Financial Conduct
Authority), the Group undertakes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. The reader should, however, consult any
additional disclosures that the Group may make in any documents
which it publishes and/or files with the SEC. All readers, wherever
located, should take note of these disclosures. Accordingly, no
assurance can be given that any particular expectation will be met
and investors are cautioned not to place undue reliance on the
forward-looking statements.
Forward-looking
statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the
Group’s control or precise estimate. The Group cautions
investors that a number of important factors, including those in
this document, could cause actual results to differ materially from
those expressed or implied in any forward-looking statement. Such
factors include, but are not limited to, those discussed under Item
3.D ‘Risk Factors’ in the Group’s Annual Report
on Form 20-F for 2020 and any impacts of the COVID-19 pandemic. Any
forward looking statements made by or on behalf of the Group speak
only as of the date they are made and are based upon the knowledge
and information available to the Directors on the date of this
report.
|
Independent review report to
GlaxoSmithKline plc
|
We have
been engaged by GlaxoSmithKline plc (“the Company”) to
review the condensed financial information in the Results
Announcement of the Company for the three and nine months ended 30
September 2021.
|
What we have reviewed
|
|
The
condensed financial statements comprise:
|
|
●
|
the
income statement and statement of comprehensive income for the
three and nine months ended 30 September 2021 on pages 43 to
45;
|
●
|
the
balance sheet as at 30 September 2021 on page 50;
|
●
|
the
statement of changes in equity for the nine month period then ended
on page 51;
|
●
|
the
cash flow statement for the nine month period then ended on page
52; and
|
●
|
the
accounting policies and basis of preparation and the explanatory
notes to the condensed financial statements on pages 46 to 49 and
53 to 57.
|
We have
read the other information contained in the Results Announcement,
including the non-IFRS measures contained on pages 46 to 49 and 53
to 57, and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This
report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
“Review of Interim Financial Information Performed by the
Independent Auditor of the Entity” issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have
formed.
Directors’ responsibilities
The
Results Announcement of GlaxoSmithKline plc, including the
condensed financial information, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the Results Announcement by applying consistent
accounting policies to those applied by the Group in the Annual
Report 2020, which was prepared in accordance with IFRS as adopted
by the European Union.
Our responsibility
Our
responsibility is to express to the Company a conclusion on the
condensed financial statements in the Results Announcement based on
our review.
Scope of review
We
conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity” issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based
on our review, nothing has come to our attention that causes us to
believe that the condensed financial information in the Results
Announcement for the three and nine months ended 30 September 2021
are not prepared, in all material respects in accordance with the
accounting policies set out in the accounting policies and basis of
preparation section on page 56.
Deloitte LLP
Statutory
Auditor
London,
United Kingdom
27
October 2021
|
|
GlaxoSmithKline plc
|
|
(Registrant)
|
|
|
Date: October
27, 2021
|
|
|
|
|
By:/s/ VICTORIA
WHYTE
--------------------------
|
|
|
|
Victoria Whyte
|
|
Authorised
Signatory for and on
|
|
behalf
of GlaxoSmithKline plc
|