REG - GSK PLC - Final Results
01/02/2023 07:00
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RNS Number : 4922O GSK PLC 01 February 2023
Issued: Wednesday, 1 February 2023, London U.K.
GSK delivers strong 2022 performance with full year sales of £29.3 billion
+19% AER, +13% CER; Total EPS 371.4p >100%
Adjusted EPS of 139.7p +27% AER, +15% CER from continuing operations
Highlights
Step change in commercial execution drives strong sales growth across
Specialty Medicines and Vaccines
· Sales of £29.3 billion +19% AER, +13% CER. Sales +15% AER, +10% CER excluding
COVID-19 solutions
· Specialty Medicines £11.3 billion +37% AER, +29% CER; HIV +20% AER, +12% CER;
Oncology +23% AER, +17% CER; Immuno-inflammation and other specialty +29% AER
+20% CER; COVID-19 solutions (Xevudy) sales £2.3 billion
· Vaccines £7.9 billion +17% AER, +11% CER; Shingrix £3 billion +72% AER, +60%
CER
· General Medicines £10.1 billion +5% AER, +1% CER
Prioritised investment and cost discipline support strong growth in operating
profit and EPS
· Total continuing operating margin 21.9%. Total EPS 371.4p > 100% primarily
reflecting the gain from discontinued operations arising on the demerger of
the Consumer Healthcare business. Total continuing EPS 110.8p +34% AER, +18%
CER
· Adjusted operating margin 27.8%. Adjusted operating profit growth +26% AER,
+14% CER. This included a decline in growth from COVID-19 solutions of
approximately 3% AER and CER
· Adjusted EPS 139.7p +27% AER, +15% CER. This included a decline in growth from
COVID-19 solutions of approximately 4% AER, 3% CER
· Full-year 2022 cash generated from operations attributable to continuing
operations £7.9 billion. Full-year free cash flow £3.3 billion
R&D delivery and business development supports future growth
· Innovative pipeline of 69 vaccines and specialty medicines based on science of
the immune system, with 18 in phase III/registration
· Potential best in class RSV older adults candidate vaccine filed in US, EU,
Japan; Shingrix interim 10-year data presented at ID Week 2022; acquisition of
Affinivax completed, including phase II next-generation vaccine for
pneumococcal disease and use of innovative MAPs technology
· Continued progress in development of long-acting HIV treatments; positive
phase II data on N6LS broadly-neutralising antibody presented at HIV Glasgow
· Pivotal phase III trials for gepotidacin antibiotic for uncomplicated UTIs
stopped early for efficacy; positive phase IIb data for bepirovirsen,
potential functional cure for chronic hepatitis B; exclusive licence agreement
with Spero Therapeutics for tebipenem Hbr, late-stage antibiotic for
complicated UTIs
· Expansion of depemokimab phase III programme with trials for long-acting IL-5
inhibitor in three additional eosinophil-driven diseases
· 4 approvals anticipated in 2023: RSV OA vaccine (US, EU, JP); Jemperli in 1L
endometrial cancer (US); momelotinib in myelofibrosis (US) and daprodustat in
chronic kidney disease (US, EU)
Confident in outlooks for turnover and Adjusted operating profit growth
· 2023 Turnover expected to increase between 6% to 8%; Adjusted operating profit
expected to increase between 10% to 12%; EPS expected to increase between 12%
to 15%
· 2023 Guidance at CER and excludes any contribution from COVID-19 solutions
· 13.75p dividend declared for the Q4 2022. No change to expected dividend from
GSK of 56.5p/share for 2023
Emma Walmsley, Chief Executive Officer, GSK:
"2022 was a landmark year for GSK delivering the step change in performance we
committed to, driven by strong growth in specialty medicines and vaccines,
including record sales for Shingrix. We enter 2023 with good momentum,
underpinning confidence in our ambitious sales and profit outlooks for 2026.
At the same time, we continue to build a stronger portfolio and pipeline based
on infectious diseases and the science of the immune system, including our
potential new RSV vaccine. This momentum, together with further targeted
business development, means GSK will also be in a strong position to deliver
growth from 2026 onwards."
The Total results are presented in summary on page 2 and under 'Financial
performance' on pages 9 and 22 and Adjusted results reconciliations are
presented on pages 18, 19, 31 and 32. Adjusted results are a non-IFRS measure
excluding discontinued operations and other adjustments 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 39 and
£% or AER% growth, CER% growth, free cash flow and other non-IFRS measures
are defined on page 67, COVID-19 solutions are also defined on page 67. GSK
provides guidance on an Adjusted results basis only, for the reasons set out
on page 39. All expectations, guidance and targets regarding future
performance and dividend payments should be read together with 'Guidance,
assumptions and cautionary statements' on pages 68 and 69.
2022 results
2022 Q4 2022
£m Growth Growth £m Growth Growth
£% CER% £% CER%
Turnover 29,324 19 13 7,376 4 (3)
Total continuing operating profit* 6,433 48 31 1,868 >100 >100
Total EPS 371.4p >100 >100 37.1p 98 75
Total continuing EPS 110.8p 34 18 37.2p >100 >100
Total discontinued EPS* 260.6p >100 >100 (0.1)p >(100) >(100)
Adjusted operating profit 8,151 26 14 1,595 21 5
Adjusted EPS 139.7p 27 15 25.8p 10 (6)
Cash generated from operations attributable to continuing operations 7,944 10 2,101 (37)
Free cash flow 3,348 1 895 (62)
* The amounts presented in the table above for continuing operations and
Adjusted results excludes the Consumer Healthcare business discontinued
operation. The amounts presented for discontinued EPS are for the demerger of
the Consumer Healthcare business. The presentation of continuing and
discontinued operations under IFRS 5 are set out on page 52.
2023 guidance
The company provides its full-year 2023 guidance at constant exchange rates
(CER). All expectations and full-year growth rates exclude any contributions
from COVID-19 solutions.
Turnover is expected to increase between 6 to 8 per cent
Adjusted operating profit is expected to increase between 10 to 12 per cent
Adjusted earnings per share is expected to increase between 12 to 15 per cent
Due to the phasing of quarterly results in 2022 and the resulting comparators,
GSK expects turnover and Adjusted operating profit growth to be slightly lower
in the first half of 2023 including a challenging comparator in Q1 2022 and
somewhat higher in the second half, relative to full-year expectations.
Despite the recovery of healthcare systems, uncertain economic conditions
prevail across many markets in which GSK operates and we continue to expect to
see variability in performance between quarters.
This guidance is supported by the following turnover expectations for full
year 2023 at CER:
Specialty Medicines - Expected increase of mid to high single-digit per cent
in turnover
Vaccines - Expected increase of mid-teens per cent in turnover
General Medicines - Expected slight decrease in turnover
Adjusted Operating profit is expected to grow between 10 to 12 per cent at CER
reflecting Cost of sales and R&D increasing at a rate slightly below
turnover, while SG&A is anticipated to increase at a rate broadly aligned
to turnover, reflecting targeted support for launches and potential launches
including the RSV older adult candidate vaccine. Adjusted earnings per share
is expected to increase between 12 to 15 per cent at CER reflecting favourable
net finance costs and non-controlling interests plus an expected lower tax
rate, at around 15%.
Additional commentary
Dividend policies and expected pay-out ratios remain unchanged for GSK. The
future dividend policies and guidance regarding the expected dividend pay-out
in 2023 for GSK are provided on page 37.
COVID-19 solutions
Based on known binding agreements with governments, GSK does not anticipate
any significant COVID-19 pandemic-related sales or operating profit in 2023.
Sales of COVID-19 solutions were £2.4 billion in 2022 and therefore we expect
a reduction in Turnover growth by approximately 9% and a reduction in Adjusted
Operating profit growth by 6% to 7%. However, the Company continues to discuss
future opportunities to support governments, healthcare systems, and patients
whereby its COVID-19 solutions can address the emergence of any new COVID-19
variant of concern.
All expectations, guidance and targets regarding future performance and
dividend payments should be read together with 'Guidance, assumptions and
cautionary statements' on pages 68 and 69. If exchange rates were to hold at
the closing rates on 27 January 2023 ($1.24/£1, €1.14/£1 and Yen 161/£1)
for the rest of 2023, the estimated impact on 2023 Sterling turnover growth
for GSK would be stable and if exchange gains or losses were recognised at the
same level as in 2022, the estimated impact on 2023 Sterling Adjusted
Operating Profit growth for GSK would also be stable.
Demerger of Consumer Healthcare
On 18 July 2022, GSK plc separated its Consumer Healthcare business from the
GSK Group to form Haleon, an independent listed company. The separation was
effected by way of a demerger of 80.1% of GSK's 68% holding in the Consumer
Healthcare business to GSK shareholders. Following the demerger, 54.5% of
Haleon was held in aggregate by GSK Shareholders, 6.0% remains held by GSK
(including shares received by GSK's consolidated ESOP trusts) and 7.5% remains
held by certain Scottish Limited Partnerships (SLPs) set up to provide
collateral for a funding mechanism pursuant to which GSK will provide
additional funding for its UK defined benefit Pension Schemes. The aggregate
ownership by GSK (including ownership by the ESOP trusts and SLPs) after the
demerger of 13.5% is measured at fair value with changes through profit and
loss.
The gain on the demerger for the distributed stake was £7.7 billion which was
recognised in the full-year. The asset distributed was the 54.5% ownership of
the Consumer Healthcare business. The net assets derecognised reflected
Consumer Healthcare transactions up to 18 July 2022 which included
pre-separation dividends declared and settled before 18 July 2022. Those
dividends included: £10.4 billion (£7.1 billion attributable to GSK) of
dividends funded by Consumer Healthcare debt that was partially on-lent during
Q1 2022 and dividends of £0.6 billion (£0.4 billion attributable to GSK)
from available cash balances. GSK's share of the pre-separation dividends
funded by debt resulted in a reduction of net debt for GSK on demerger. The
gain on the demerger arising from remeasurement of the retained stake was
£2.4 billion which was recognised in the full-year.
The total gain on the demerger of the Consumer Healthcare business for the
full-year was £10.1 billion. In addition, the Profit after taxation from
discontinued operations for the Consumer Healthcare business from 1 January to
18 July 2022 was £0.6 billion which increased the Total profit after tax of
discontinued operations in the full-year to £10.7 billion. Following
finalisation of the demerger accounting, an adjustment of £0.5 billion to
increase the gain on the demerger of Consumer Healthcare as disclosed in Q3
2022 from £9.6 billion to £10.1 billion for the full-year has been recorded
retrospectively within the Q3 2022 results. See page 55 for further details on
the demerger of Consumer Healthcare.
Results presentation
A conference call and webcast for investors and analysts of the quarterly
results will be hosted by Emma Walmsley, CEO, at 11am GMT on 1 February 2023.
Presentation materials will be published on www.gsk.com prior to the webcast
and a transcript of the webcast will be published subsequently.
Information available on GSK's website does not form part of, and is not
incorporated by reference into, this Results Announcement.
Operating performance summary
The amounts below are from continuing operations unless otherwise specified.
Turnover 2022 Q4 2022
£m Growth Growth £m Growth Growth
£% CER% £% CER%
Specialty Medicines 11,269 37 29 2,681 (3) (11)
Vaccines 7,937 17 11 2,074 15 7
General Medicines 10,118 5 1 2,621 5 -
Commercial Operations 29,324 19 13 7,376 4 (3)
Turnover growth in 2022 reflected strong performance in all three product
groups. Turnover growth in Q4 2022 was impacted by an unfavourable comparator
due to strong sales of COVID-19 solutions in Q4 2021. Turnover grew 16% at
AER, 10% at CER in 2022 and 17% at AER, 9% at CER in Q4 2022 excluding
COVID-19 solutions sales. Specialty Medicines included £2,309 million sales
of Xevudy, and double-digit growth of all therapy areas in 2022. Specialty
Medicines also saw double digit growth of all therapy areas in Q4 2022
excluding COVID-19 solutions.
Specialty Medicines
Specialty Medicines growth in 2022 was driven by consistent growth in all
therapy areas. Total Specialty Medicines sales in the quarter were £2,681
million down 3% at AER, 11% at CER reflecting strong Xevudy sales in Q4 2021.
Specialty Medicines, excluding sales of Xevudy, were £8,960 million up 23% at
AER, 15% at CER in 2022 and £2,556 million, up 32% at AER, 21% at CER in Q4
2022.
Vaccines
Vaccines growth in 2022 and in Q4 2022 reflected strong Shingrix performance,
partially offset by higher pandemic adjuvant sales in 2021. Vaccines grew 24%
at AER, 17% at CER in 2022 and 17% at AER, 9% at CER in Q4 2022, excluding
pandemic adjuvant sales.
General Medicines
In 2022, General Medicines reflected the post pandemic recovery of the
antibiotics market and strong performance of Trelegy in respiratory across all
regions. During Q4 2022 the impact of generic competition in US and other
markets was offset by Trelegy growth in respiratory and the recovery of the
antibiotic market.
Operating profit
2022
Total operating profit from continuing operations was £6,433 million compared
with £4,357 million in 2021. This included the £0.9 billion upfront income
received from the settlement with Gilead Sciences, Inc. (Gilead) increased
profits on turnover growth of 13% at CER and fair value gains on investments,
partly offset by higher remeasurement charges for contingent consideration
liabilities. Adjusted operating profit was £8,151 million, 26% higher at AER
and 14% at CER than 2021. The Adjusted operating margin of 27.8% was 1.5
percentage points higher at AER and 0.3 percentage points higher at CER
compared to 2021. This primarily reflected the impact from low margin COVID-19
solutions sales (Xevudy). This was offset by operating leverage from strong
sales growth, mix benefit, lower inventory adjustments and write offs and
higher royalty income.
Q4 2022
Total operating profit from continuing operations was £1,868 million compared
with £492 million in Q4 2021. The increase primarily reflected fair value
gains on investments, milestone income from disposals and lower remeasurement
charges for contingent consideration liabilities. Adjusted operating profit
was £1,595 million, 21% higher at AER and 5% at CER than Q4 2021. The
Adjusted operating margin of 21.6% was higher by 3.0 percentage points at AER
and 1.5 percentage points at CER than in Q4 2021. This reflected the impact
from lower sales of COVID-19 solutions, lower inventory adjustments and write
offs in Vaccines as well as a favourable mix and higher royalty income. This
was partly offset by increased launch investment in SG&A in Specialty
Medicines.
Earnings per share
2022
Total EPS from continuing operations was 110.8p compared with 82.9p in 2021.
This primarily reflected the £0.9 billion upfront income received from the
settlement with Gilead, increased profits from turnover growth and fair value
gains on investments, partly offset by higher remeasurement charges for
contingent consideration liabilities and an unfavourable comparison due to a
credit of £430 million to Taxation in 2021.
Adjusted EPS from continuing operations was 139.7p compared with 110.3p in
2021. Operating leverage from strong sales growth, beneficial mix and lower
inventory adjustments and write-offs, higher royalty income and a lower
effective tax rate was partly offset by increased investment behind launches,
higher supply chain, freight and distribution costs and higher non-controlling
interests.
Q4 2022
Total EPS from continuing operations was 37.2p compared with 10.6p in Q4 2021.
This primarily reflected higher fair value gains on investments and lower
remeasurement charges for contingent consideration liabilities.
Adjusted EPS from continuing operations was 25.8p compared with 23.6p in Q4
2021. The reduction primarily reflected the impact from lower sales of
COVID-19 solutions low margin Xevudy and pandemic adjuvant, higher interest
costs and a higher effective tax rate compared to Q4 2021.
Cash flow
2022
Cash generated from operations attributable to continuing operations for the
year was £7,944 million (2021: £7,249 million). The increase primarily
reflected a significant increase in operating profit, favourable exchange
impact and favourable timing of collections, partly offset by unfavourable
timing of profit share payments for Xevudy sales, increased cash contributions
to the UK defined benefit pension schemes, increased contingent consideration
payments and a higher increase in inventory. Cash generated from operations
attributable to discontinued operations for the full year was £932 million
(2021: £1,994 million). Net debt reduced by £2,641 million, partly due to
£7,112 million received from demerger dividends and £3,108 million paid for
the acquisitions of Sierra Oncology, Inc (Sierra) and Affinivax Inc.
(Affinivax).
Q4 2022
Cash generated from operations attributable to continuing operations for the
quarter was £2,101 million (Q4 2021: £3,329 million). The decrease primarily
reflected unfavourable timing of profit share payments for Xevudy, increased
cash contributions to the UK defined benefit pension schemes and unfavourable
timing of returns and rebates partly offset by an increase in operating
profit. Cash generated from operations attributable to discontinued operations
for the quarter was £4 million (Q4 2021: £872 million).
Profit/(loss) and earnings per share from discontinued operations
2022
Profit after taxation from discontinued operations amounted to £10,700
million (2021: £1,580 million). This includes £10,084 million for the gain
arising on the demerger of Consumer Healthcare split between the amount
distributed to shareholders on demerger of £7,651 million and profit after
taxation on discontinued operations for the retained stake of £2,433 million.
In addition, the Profit after taxation from discontinued operations for the
Consumer Healthcare business was £621 million (2021: £1,580 million).
EPS from discontinued operations was 260.6p, compared with 26.7p in 2021. The
increase primarily reflected the gain arising on the demerger of Consumer
Healthcare recognised in Profit after taxation for discontinued operations.
Q4 2022
The loss after taxation from discontinued operations amounted to £5 million
(Q4 2021: profit of £510 million).
Loss per share from discontinued operations was (0.1)p compared with EPS of
8.1p in Q4 2021.
Total earnings per share
2022
Total EPS was 371.4p compared with 109.6p in 2021. The increase primarily
reflected the profit after taxation for discontinued operations recognised on
the Consumer Healthcare business demerger, upfront income received from the
settlement with Gilead, increased profits and fair value gains on investments,
partly offset by higher remeasurement charges for contingent consideration
liabilities and an unfavourable comparison due to a credit of £397 million to
Taxation in 2021.
Q4 2022
Total EPS was 37.1p compared with 18.7p in Q4 2021. The increase primarily
reflected higher fair value gains on investments and lower remeasurement
charges for contingent consideration liabilities.
Q4 2022 pipeline highlights (since 2 November 2022)
Medicine/vaccine Trial (indication, presentation) Event
Regulatory approvals or other regulatory action Rotarix Rotavirus, liquid formulation Regulatory approval (US)
VidPrevtyn Beta (Sanofi) COVID-19 Regulatory approval (EU)
Triumeq HIV (paediatric) Positive CHMP opinion (EU)
Regulatory submissions or acceptances momelotinib MOMENTUM (myelofibrosis with anaemia) Regulatory acceptance (EU)
cabotegravir Pre-exposure prophylaxis, long-acting injectable Regulatory submission (CN)
Phase III data readouts or other significant events Blenrep DREAMM-3 (3L+ multiple myeloma) Phase III data readout, did not meet primary endpoint
Jemperli RUBY (1L endometrial cancer) Positive phase III data readout (interim analysis)
gepotidacin EAGLE (uncomplicated urinary tract infection) Positive phase III data readout (interim analysis)
GSK3036656 (leucyl t-RNA inhibitor) Tuberculosis Positive phase IIa data readout
Benlysta Systemic sclerosis Orphan Drug Designation granted (US)
Anticipated news flow
Timing Medicine/vaccine Trial (indication, presentation) Event
H1 2023 bepirovirsen B-Together (hepatitis B virus) Phase IIb data readout
daprodustat ASCEND (anaemia of chronic kidney disease) Regulatory decision
(US, EU)
Nucala Severe asthma Regulatory submission (CN)
momelotinib MOMENTUM (myelofibrosis with anaemia) Regulatory decision (US)
Jemperli RUBY (1L endometrial cancer) Regulatory submission
(US, EU)
gepotidacin EAGLE (uncomplicated urinary tract infection) Regulatory submission (US)
MenABCWY (gen 1) vaccine candidate Meningitis ABCWY Phase III data readout
RSV older adult vaccine candidate RSV, older adults aged 60+ years Regulatory decision (US)
Shingrix Shingles, at-risk adults aged 18+ years Regulatory decision (JP)
SKYCovione COVID-19 vaccine COVID-19 Regulatory decision (EU)
H2 2023 Nucala Nasal polyposis Regulatory submission
(CN, JP)
Blenrep DREAMM-8 (2L+ multiple myeloma) Phase III data readout
Blenrep DREAMM-7 (2L+ multiple myeloma) Phase III data readout
Blenrep DREAMM-8 (2L+ multiple myeloma) Regulatory submission
(US, EU)
Blenrep DREAMM-7 (2L+ multiple myeloma) Regulatory submission
(US, EU)
Jemperli RUBY (1L endometrial cancer) Regulatory decision
(US)
Zejula FIRST (1L maintenance ovarian cancer) Phase III data readout
cabotegravir Pre-exposure prophylaxis, long-acting injectable Regulatory decision (EU)
Vocabria HIV Regulatory decision (CN)
gepotidacin EAGLE (urogenital gonorrhoea) Phase III data readout
gepotidacin EAGLE (uncomplicated urinary tract infection) Regulatory submission (EU)
MenABCWY (gen 1) vaccine candidate Meningitis ABCWY Regulatory submission (US)
MenABCWY (gen 2) vaccine candidate Meningitis ABCWY Phase II data readout
RSV older adult vaccine candidate RSV, older adults aged Regulatory decision
60+ years (EU, JP)
RSV older adult vaccine candidate RSV, older adults aged Phase III data readout
50-59 years
RSV older adult vaccine candidate RSV, older adults aged Regulatory submission
50-59 years (US, EU, JP)
2024 linerixibat GLISTEN (cholestatic pruritus in primary biliary cholangitis) Phase III data readout
linerixibat GLISTEN (cholestatic pruritus in primary biliary cholangitis) Regulatory submission
(US, EU)
Nucala Severe asthma Regulatory decision (CN)
Nucala Nasal polyposis Regulatory decision (JP)
Nucala MATINEE (chronic obstructive pulmonary disease) Phase III data readout
Nucala MATINEE (chronic obstructive pulmonary disease) Regulatory submission
(US, EU, CN, JP)
Blenrep DREAMM-8 (2L+ multiple myeloma) Regulatory decision
(US, EU)
Blenrep DREAMM-7 (2L+ multiple myeloma) Regulatory decision (EU)
cobolimab COSTAR (NSCLC) Phase III data readout
Jemperli RUBY (1L endometrial cancer) Regulatory decision
(EU)
momelotinib MOMENTUM (myelofibrosis with anaemia) Regulatory decision (EU)
Zejula ZEAL (1L maintenance NSCLC) Phase III data readout
gepotidacin EAGLE (uncomplicated urinary tract infection) Regulatory decision
(US, EU)
gepotidacin EAGLE (uncomplicated urinary tract infection) Regulatory submission
(JP)
gepotidacin EAGLE (urogenital gonorrhoea) Regulatory submission
(US, EU)
MenABCWY (gen 1) vaccine candidate Meningitis ABCWY Regulatory decision (US)
Pneumococcal 24 valent (MAPS) vaccine candidate Pneumococcal (paediatric) Phase II data readout
RSV older adult vaccine candidate RSV, older adults aged Regulatory decision (US, EU, JP)
50-59 years
Refer to pages 58 to 66 for further details on several key medicines and
vaccines in development by therapy area.
Contents Page
Q4 2022 R&D pipeline highlights 6
Financial performance - 2022 9
Financial performance - three months to 31 December 2022 22
Cash generation 35
Returns to shareholders 37
Total and Adjusted results 39
Income statement 41
Statement of comprehensive income 42
Balance sheet 46
Statement of changes in equity 47
Cash flow statement - year ended 31 December 2022 48
Segment information 49
Legal matters 51
Additional information 52
Reconciliation of cash flow to movements in net debt 57
Net debt analysis 57
Free cash flow reconciliation 57
R&D commentary 58
Reporting definitions 67
Guidance, assumptions and cautionary statements 68
Contacts
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science, technology, and talent to get ahead of disease together. Find out
more at www.gsk.com.
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Financial performance - 2022
Total results
The Total results for the Group are set out below.
2022 2021((a)) Growth Growth
£m £m £% CER%
Turnover 29,324 24,696 19 13
Cost of sales (9,554) (8,163) 17 16
Gross profit 19,770 16,533 20 12
Selling, general and administration (8,372) (7,070) 18 13
Research and development (5,488) (5,019) 9 4
Royalty income 758 417 82 81
Other operating expense (235) (504)
Operating profit 6,433 4,357 48 31
Finance income 76 14
Finance expense (879) (769)
Loss on disposal of interest in associates - (36)
Share of after tax (loss)/profits of associates and joint ventures (2) 33
Profit before taxation 5,628 3,599 56 37
Taxation (707) (83)
Tax rate % 12.6% 2.3%
Profit after taxation from continuing operations 4,921 3,516 40 23
Profit after taxation from discontinued operations and 3,049 1,580
other gains/(losses) from the demerger
Remeasurement of discontinued operations 7,651 -
distributed to shareholders on demerger
Profit after taxation from discontinued operations 10,700 1,580 >100 >100
Total Profit after taxation for the period 15,621 5,096 >100 >100
Profit attributable to non-controlling interests 460 200
from continuing operations
Profit attributable to shareholders from 4,461 3,316
continuing operations
Profit attributable to non-controlling interests 205 511
from discontinued operations
Profit attributable to shareholders from 10,495 1,069
discontinued operations
15,621 5,096 >100 >100
Total Profit attributable to non-controlling interests 665 711
Total Profit attributable to shareholders 14,956 4,385
15,621 5,096
Earnings per share from continuing operations 110.8p 82.9p 34 18
Earnings per share from discontinued operations 260.6p 26.7p >100 >100
Total earnings per share 371.4p 109.6p >100 >100
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34) and the impact of Share Consolidation implemented on 18 July
2022 (see page 56).
Adjusted results
The Adjusted results for the Group are set out below. Adjusted results are
from continuing operations and excludes the Consumer Healthcare business (see
details on page 55). Reconciliations between Total results and Adjusted
results for 2022 and 2021 are set out on pages 18 to 19.
2022 % of Growth Growth
£m turnover £% CER%
Turnover 29,324 100 19 13
Cost of sales (8,741) (29.8) 19 18
Selling, general and administration (8,128) (27.7) 20 15
Research and development (5,062) (17.3) 12 6
Royalty income 758 2.6 82 81
Adjusted operating profit 8,151 27.8 26 14
Adjusted profit before tax 7,358 27 15
Adjusted profit after tax 6,220 28 16
Adjusted profit attributable to shareholders 5,625 27 15
Adjusted earnings per share 139.7p 27 15
Operating profit by segment
2022 % of Growth Growth
£m turnover £% CER%
Commercial Operations 13,590 46.3 19 10
Research and Development (5,060) 11 5
Segment profit 8,530 29.1 24 13
Corporate & other unallocated costs (379)
Adjusted operating profit 8,151 27.8 26 14
Turnover
Commercial Operations
2022
£m Growth Growth
£% CER%
HIV 5,749 20 12
Oncology 602 23 17
Immuno-inflammation, respiratory and other 2,609 29 20
8,960 23 15
Pandemic 2,309 >100 >100
Specialty Medicines 11,269 37 29
Meningitis 1,116 16 11
Influenza 714 5 (4)
Shingles 2,958 72 60
Established Vaccines 3,085 4 -
7,873 24 17
Pandemic Vaccines 64 (86) (86)
Vaccines 7,937 17 11
Respiratory 6,548 8 3
Other General Medicines 3,570 (1) (2)
General Medicines 10,118 5 1
Commercial Operations 29,324 19 13
US 14,542 22 10
Europe 6,348 18 19
International 8,434 14 14
Commercial Operations by region 29,324 19 13
Total turnover in 2022 was £29,324 million, up 19% at AER, 13% at CER,
reflecting strong performance in all three product groups. Commercial
Operations turnover, excluding COVID-19 solution sales, grew 16% at AER, 10%
at CER. Specialty Medicines included £2,309 million sales of Xevudy, and
double-digit growth across all therapy areas. Vaccines growth reflected strong
Shingrix and Meningitis performance, partially offset by pandemic adjuvant
sales in 2021. General Medicines reflected the recovery of the antibiotics
market and the strong performance of Trelegy in respiratory across all
regions.
Specialty Medicines
Specialty Medicines sales were £11,269 million, up 37% at AER, 29% at CER,
driven by consistent double- digit growth in all therapy areas. Specialty
Medicines, excluding sales of Xevudy, were £8,960 million up 23% at AER, 15%
at CER.
HIV
HIV sales were £5,749 million with growth of 20% at AER,12% at CER. The
performance benefited from strong patient demand for the new HIV medicines
(Dovato, Cabenuva, Juluca, Rukobia and Apretude), which contributed
approximately three quarters of the growth. US pricing favourability and
year-end inventory build together contributed one third of the growth which
was partially offset by International tender decline.
New HIV products delivered sales of over two billion to £2,474 million, up
78% at AER, 67% at CER, representing 43% of the total HIV portfolio compared
to 29% last year. Growth was primarily driven by sales of Dovato and Cabenuva.
Dovato recorded sales of £1,375 million up 75% at AER and 65% at CER and
Cabenuva, the first long acting injectable for the treatment of HIV-1
infection, recorded sales of £340 million. Apretude, the first long acting
injectable for the prevention of HIV-1 delivered sales of £41 million.
Oncology
Oncology sales were £602 million, up 23% at AER, 17% at CER. Zejula sales of
£463 million were up 17% at AER, 12% at CER driven by the first line
indication, but with diagnosis and treatment rates continuing to be impacted
by the pandemic especially in the US. Sales of Blenrep of £118 million grew
33% at AER, 25% at CER, and included the impact of withdrawal from US market
in Q4 2022.
Immuno-inflammation, Respiratory and Other
Immuno-inflammation, Respiratory and Other sales were £2,609 million up 29%
at AER, 20% at CER on strong performance of Benlysta and Nucala. Benlysta
sales were £1,146 million, up 31% at AER, 20% at CER, representing strong
underlying demand in US and worldwide. Nucala sales were £1,423 million, up
25% at AER, 18% at CER, reflecting continued strong patient demand and the
launch of additional indications.
Pandemic
Sales of Xevudy were £2,309 million, compared to £958 million sales in 2021.
Sales were delivered in all regions, comprising £828 million in the US, £456
million in Europe, and £1,025 million in International.
Vaccines
Vaccines turnover was £7,937 million, up 17% at AER, 11% at CER in total, and
up 24% at AER, 17% at CER excluding pandemic adjuvant sales. The performance
reflected a favourable comparator, which was impacted by COVID-19 related
disruptions in several markets primarily in H1 2021, and strong commercial
execution of Shingrix, particularly in the US and Europe.
Meningitis
Meningitis vaccines sales grew 16% at AER, 11% at CER to £1,116 million
mainly driven by Bexsero up 16% at AER, 12% at CER to £753 million resulting
from higher CDC (Center for Disease Control) demand and increased share in the
US. Menveo sales were also up 27% AER, 18% CER to £345 million, primarily
driven by post-pandemic vaccination catch-up and higher public demand in
International, together with favourable pricing mix and share gain in the US.
Shingles
Shingrix sales grew 72% at AER, 60% at CER to £2,958 million. All regions
grew significantly reflecting post-pandemic rebound, strong uptake and new
market launches with more than half of the growth contributed from outside of
the US. In the US, Shingrix grew 46% at AER, 32% at CER to £1,964 million due
to higher non-retail and retail demand and strong commercial execution.
Germany and China contributed strongly to the Shingrix growth. Shingrix was
launched in 9 markets during 2022 and is now available in 26 countries.
Influenza
Fluarix/FluLaval sales grew by 5% AER but decreased 4% CER to £714 million,
primarily driven by lower post-pandemic demand in Europe and the US, partly
offset by lower expected returns in the US.
Established Vaccines
Established Vaccines grew 4% AER but was stable at CER to £3,085 million
mainly resulting from supply constraints in MMR/V vaccines and lower tender
demand in International for Synflorix. This was offset by hepatitis vaccines
demand rebound in the US and Europe and Boostrix post-pandemic demand recovery
and increased share in the US.
Pandemic Vaccines
Pandemic Vaccines decreased 86% AER and CER primarily reflecting comparison to
2021 pandemic adjuvant sales to the US and Canadian governments partly offset
by GSK's share of 2022 contracted European volumes related to the COVID-19
booster vaccine developed through a collaboration with Sanofi Pasteur
(Sanofi).
General Medicines
General Medicines sales in the year were £10,118 million, up 5% at AER, 1% at
CER, with the impact of generic competition in US, Europe and Japan offset by
Trelegy growth in respiratory and the post-pandemic rebound of the antibiotic
market since H2 2021, in Other General Medicines.
Respiratory
Respiratory sales were £6,548 million, up 8% at AER, 3% at CER. The
performance was driven by Trelegy sales of £1,729 million, up 42% AER, 32%
CER, including strong growth across all regions. Advair/Seretide sales of
£1,159 million decreased 15% at AER, 17% at CER predominantly reflecting the
adverse impact of generic competition, with growth in certain International
markets due to targeted promotion offsetting the decrease.
Other General Medicines
Other General Medicines sales were £3,570 million, decreasing 1% at AER, 2%
at CER. Augmentin sales were £576 million, up 35% at AER, 38% at CER,
reflecting the post pandemic rebound of the antibiotic market since H2 2021 in
the International and Europe regions. This partially offsets the ongoing
adverse impact of generic competition, and approximately two percentage points
impact at AER and CER from the divestment of cephalosporin products in Q4
2021.
By Region
US
In the US, sales were £14,542 million, up 22% at AER, 10% at CER. Sales
adjusted for COVID-19 solutions were up 24% AER, 12% CER. Sales of Xevudy were
£828 million.
In Specialty, HIV sales of £3,756 million were up 30% at AER, 17% at CER.
Growth benefited from strong patient demand for all new HIV products, pricing
favourability and year-end inventory build. New HIV medicines (Dovato,
Cabenuva, Juluca, Rukobia and Apretude) sales were £1,685 million up 88% at
AER, 70% at CER. Nucala in respiratory and Benlysta in immunology both
continued to grow double-digit and reflected ongoing and strong patient
demand. Oncology sales increased 14% at AER, 3% at CER with diagnosis and
treatment rates continuing to be impacted by the pandemic for Zejula, and the
withdrawal of Blenrep from the US market in Q4 2022.
Vaccine sales were £4,243 million, up 22% at AER, 10% at CER, excluding the
impact of pandemic adjuvant sales in 2021, sales increased 31% at AER, 18% at
CER. The performance was primarily driven by Shingrix sales of £1,964 million
up 46% at AER, 32% at CER, mostly due to higher non-retail and retail demand
and strong commercial execution. Demand recovery in Established Vaccines and
share gains in Meningitis vaccines also contributed to growth.
General Medicines sales were £3,572 million up 10% at AER down 1% at CER.
Trelegy was up 47% at AER, 32% at CER reflecting increased patient demand and
growth of the single inhaler triple therapy market, and Flovent grew on launch
of authorised generics in the year. Overall, there was a three-percentage
point reduction in growth of US General Medicines due to prior period Returns
and Rebates (RAR) adjustments in the year.
Europe
In Europe, sales were £6,348 million, up 18% at AER, 19% at CER, including
COVID-19 solution sales of £513 million contributing 8 percentage points of
growth at AER and CER.
In Specialty Medicines, HIV sales were £1,310 million up 10% at AER, 10% at
CER primarily driven by strong patient demand for Dovato, Cabenuva and Juluca.
Dovato delivered sales of £478 million, Juluca £127 million and Cabenuva
£40 million. Benlysta in immunology, Nucala in respiratory, and Oncology
medicines Zejula, Blenrep and Jemperli all continued to show strong
double-digit growth.
Vaccine sales were £1,884 million, up 31% at AER, 32% at CER. The performance
was driven by Shingrix sales of £688 million, >100% at AER and CER,
particularly in Germany. Pandemic adjuvant sales of £57 million contributed
four percentage points of growth at AER and CER.
General Medicines sales of £2,079 million decreased 3% at AER and CER,
reflecting the ongoing impact of generic competitive pressures on Seretide and
the divestment in Q4 2021 of cephalosporin products which caused one
percentage point of drag on growth at AER and CER. This was partly offset,
however, by strong demand for Trelegy and the growth of Augmentin following
the post-pandemic rebound of the antibiotic market since H2 2021.
International
International sales were £8,434 million, up 14% at AER and CER, including
Xevudy sales of £1,025 million. Sales grew 7% AER and 6% CER excluding sales
of COVID-19 solutions.
In Specialty, HIV sales were £683 million, stable at AER and decreased 3% at
CER, primarily driven by tender decline. Excluding tenders, International grew
driven by strong Dovato growth. Combined Tivicay and Triumeq sales were £506
million, down 12% at AER and 15% at CER. Nucala sales of £242 million grew
24% at AER and 28% at CER reflecting strong market growth and patient uptake.
Benlysta sales of £114 million grew 44% at AER, 43% at CER reflecting growth
in biological market in Japan and inclusion on China's National Reimbursement
Drug List.
Vaccine sales were £1,810 million, down 3% at AER, 5% at CER, reflecting an
11 percentage point drag at AER and CER from COVID-19 vaccine adjuvant sales
in 2021. Growth excluding COVID-19 solutions was driven by strong Shingrix
take-up in China, Canada and Japan more than offsetting the impact of supply
constraints in MMR/V vaccines and lower Synflorix tender demand across several
markets.
General Medicines sales were £4,467 million up 5% at AER and CER. Respiratory
sales of £1,955 million increased 10% at AER, 9% at CER, with Trelegy sales
up 47% at AER, 48% at CER reflecting strong demand and inclusion on China's
National Reimbursement Drug List. Sales of Advair/Seretide were up 3% at AER,
1% at CER with the adverse impact of generic competition offset by growth in
certain markets due to targeted promotion. Other General Medicines sales of
£2,512 million increased 1% at AER, 2% at CER, and reflected growth of
Augmentin following the post-pandemic rebound of the antibiotic market since
H2 2021, partially offset by generic competition and price reductions in
certain markets.
Operating performance
Cost of sales
Total cost of sales as a percentage of turnover was 32.6%, 0.5 percentage
points lower at AER and 0.9 percentage points higher in CER terms than 2021.
Adjusted cost of sales as a percentage of turnover was 29.8%, 0.1 percentage
points higher at AER and 1.3 percentage points higher at CER compared with
2021. This primarily reflected higher sales of lower margin Xevudy compared to
2021 which included higher margin pandemic adjuvant sales, increasing cost of
sales margin by 2.5 percentage points at AER and CER, as well as the impact of
increased commodity prices and freight costs. This was partially offset by a
favourable mix primarily from increased sales of Shingrix in the US and Europe
and increased sales of HIV medicines in the US, lower inventory adjustments
and write offs in Vaccines and continued contribution from restructuring
savings.
Selling, general and administration
Total SG&A costs as a percentage of turnover were 28.6%, 0.1 percentage
points lower at AER and stable at CER compared to 2021. This included a
reduction in restructuring charges.
Adjusted SG&A costs as a percentage of turnover were 27.7%, 0.4 percentage
points higher at AER and 0.5 percentage points higher at CER than in 2021.
Adjusted SG&A costs increased 20% at AER, 15% at CER which primarily
reflected an increased level of launch investment in Specialty Medicines
particularly HIV and Vaccines including Shingrix to drive post-pandemic
recovery demand and support market expansion. The growth in Adjusted SG&A
also reflected an unfavourable comparison to a beneficial legal settlement in
2021 as well as impairment provisions relating to Russia and Ukraine. This
growth was partly offset by the continuing benefit of restructuring and tight
control of ongoing costs.
Research and development
Total R&D expenditure was £5,488 million up 9% at AER, 4% at CER. This
included amortisation and impairments.
Adjusted R&D expenditure in the full-year increased by 12% at AER, and 6%
at CER, to £5,062 million. This reflected continued increased investment
across Vaccines clinical development, including investments into our mRNA
technology platforms, continued investment in the late-stage portfolio and
several early discovery programmes, as well as expenditure related to our
recent acquisition of Affinivax, Inc (Affinivax).
In addition, in Specialty Medicines, the level of R&D investment increased
to support the phase III respiratory programme for depemokimab, a potential
new medicine to treat severe asthma, and bepirovirsen, our study in chronic
hepatitis B, in preparation for the start of the phase III trial. In Oncology,
investment increased in our early-stage immuno-oncology assets and in
momelotinib, our potential new treatment of myelofibrosis patients with
anaemia, acquired as part of the recent Sierra Oncology acquisition. These
increases in investment were offset by decreases related to the completion of
several late-stage clinical development programmes and reduced R&D
investment in COVID-19 pandemic solutions versus 2021.
Royalty income
Royalty income was £758 million (2021: £417 million), up 82% at AER, 81% at
CER, the increase primarily reflecting royalty income from Gilead under the
settlement and licensing agreement with Gilead announced on 1 February 2022
and Gardasil royalty income increasing to £446 million due to higher sales.
Other operating income/(expense)
Net other operating expense was £235 million (2021: £504 million) reflecting
accounting charges of £1,726 million (2021: £1,101 million) arising from the
remeasurement of contingent consideration liabilities and the liabilities for
the Pfizer, Inc. (Pfizer) put option and Pfizer and Shionogi & Co. Ltd
(Shionogi) preferential dividends in ViiV Healthcare. This included a
remeasurement charge of £1,431 million (2021: £1,026 million) for the
contingent consideration liability due to Shionogi, including the unwinding of
the discount for £410 million and a charge for £1,021 million primarily from
changes to exchange rates as well as adjustments to sales forecasts. This was
partly offset by £0.9 billion upfront income received from the settlement
with Gilead, fair value gain on investments including £229 million on the
retained stake in Haleon reflecting an increase in share price since listing
and milestone income from disposals.
Operating profit
Total operating profit from continuing operations was £6,433 million compared
with £4,357 million in 2021. This included the £0.9 billion upfront income
received from the settlement with Gilead, increased profits on turnover growth
of 19% at AER, 13% at CER and fair value gains on investments including £229
million on the retained stake in Haleon, partly offset by higher remeasurement
charges for contingent consideration liabilities. Adjusted operating profit
was £8,151 million, 26% higher at AER and 14% at CER than 2021 on a turnover
increase of 13% at CER. The Adjusted operating margin of 27.8% was 1.5
percentage points higher at AER and 0.3 percentage points higher at CER
compared to 2021. This primarily reflected the impact from low margin COVID-19
solutions sales (Xevudy), which reduced Adjusted Operating profit growth by 3%
AER and CER and reduced the Adjusted operating margin by approximately 1.4
percentage points at AER and approximately 1.3 percentage points at CER. This
was offset by operating leverage from strong sales growth, mix benefit, lower
inventory adjustments and write offs and higher royalty income.
Contingent consideration cash payments made to Shionogi and other companies
reduce the balance sheet liability and hence are not recorded in the income
statement. Total contingent consideration cash payments in 2022 amounted to
£1,137 million (2021: £856 million). These included cash payments made to
Shionogi of £1,100 million (2021: £826 million).
Adjusted operating profit by business
Commercial Operations operating profit was £13,590 million, up 19% at AER and
10% at CER on a turnover increase of 13% at CER. The operating margin of 46.3%
was 0.1 percentage points lower at AER, 1.2 percentage points lower at CER
than in 2021. This primarily reflected strong sales of lower margin Xevudy,
increased investment behind launches in Specialty Medicines including HIV and
Vaccines plus higher commodity, freight and distribution costs as well as an
adverse comparison to a favourable legal settlement in 2021. This was partly
offset by leverage from strong sales growth, mix and lower inventory
adjustments and write-offs, continued tight control of ongoing costs, benefits
from continued restructuring and increased royalty income from Biktarvy and
Gardasil sales.
R&D segment operating expenses were £5,060 million, up 11% at AER, 5% at
CER, primarily reflecting increased investment in Vaccines including priority
investments for mRNA, late stage portfolio and expenditure from the
acquisition of Affinivax and in Specialty Medicines in early stage HIV and
depemokimab. This was partly offset by decreases related to the completion of
several late-stage clinical development programmes and reduced R&D
investment in COVID-19 pandemic solutions versus 2021.
Net finance costs
Total net finance costs were £803 million compared with £755 million in
2021. Adjusted net finance costs were £791 million compared with £752
million in 2021. The increase is mainly driven by costs associated with the
Sterling Notes repurchase in Q4 2022 and higher interest on tax offset by
increased interest income due to higher interest rates and larger cash
balances as a result of the Consumer Healthcare demerger.
Share of after tax profits of associates and joint ventures
The share of after tax loss of associates and joint ventures was £2 million
(2021: £33 million share of profit). In 2021, the Group also reported a net
loss on disposal of interests in associates of £36 million, primarily driven
by a loss on disposal of our interest in the associate Innoviva Inc.
(Innoviva).
Taxation
The charge of £707 million represented an effective tax rate on Total results
of 12.6% (2021: 2.3%) and reflected the different tax effects of the various
Adjusting items. Included in 2021 was a credit of £430 million resulting from
the revaluation of deferred tax assets following enactment of the proposed
change of UK corporation tax rates from 19% to 25%. Tax on Adjusted profit
amounted to £1,138 million and represented an effective Adjusted tax rate of
15.5% (2021: 15.9%).
Issues related to taxation are described in Note 14, 'Taxation' in the Annual
Report 2021. The Group continues to believe it has made adequate provision for
the liabilities likely to arise from periods that are open and not yet agreed
by relevant tax authorities. The ultimate liability for such matters may vary
from the amounts provided and is dependent upon the outcome of agreements with
relevant tax authorities.
Non-controlling interests
The allocation of Total profit from continuing operations to non-controlling
interests amounted to £460 million (2021: £200 million). The increase was
primarily due to an increased allocation of ViiV Healthcare profits of £416
million (2021: £197 million), including the Gilead upfront settlement income
partly offset by increased credits for remeasurement of contingent
consideration liabilities, as well as higher net profits in some of the
Group's other entities with non-controlling interests.
The allocation of Adjusted earnings from continuing operations to
non-controlling interests amounted to £595 million (2021: £441 million). The
increase in allocation primarily reflected an increased allocation of ViiV
Healthcare profits of £551 million (2021: £438 million), as well as higher
net profits in some of the Group's other entities with non-controlling
interests.
Earnings per share from continuing operations
Total EPS from continuing operations was 110.8p compared with 82.9p in 2021.
This primarily reflected the £0.9 billion upfront income received from the
settlement with Gilead, increased profits on turnover growth of 13% at CER and
fair value gains on investments including the retained stake in Haleon, partly
offset by higher remeasurement charges for contingent consideration
liabilities and an unfavourable comparison due to a credit of £325 million to
Taxation in Q2 2021 resulting from the revaluation of deferred tax assets.
Adjusted EPS was 139.7p compared with 110.3p in 2021, up 27% at AER, 15% at
CER on a 13% CER turnover increase. Operating leverage from growth in sales of
Specialty Medicines including HIV and Vaccines, beneficial mix and lower
inventory adjustments and write-offs, higher royalty income and a lower
effective tax rate was partly offset by increased investment behind launches
in Specialty Medicines including HIV and Vaccines plus higher supply chain
costs, freight and distribution costs and higher non-controlling interests.
Growth in lower margin COVID-19 solutions sales reduced Adjusted EPS growth by
4% AER and 3% CER.
Profit and earnings per share from discontinued operations
Discontinued operations include the Consumer Healthcare business and certain
Corporate costs directly attributable to the Consumer Healthcare business.
Profit after taxation from discontinued operations amounted to £10,700
million (2021: £1,580 million). This includes £10,084 million for the gain
arising on the demerger of Consumer Healthcare split between the amount
distributed to shareholders on demerger of £7,651 million and profit after
taxation on discontinued operations for the retained stake of £2,433 million.
In addition, the Profit after taxation from discontinued operations for the
Consumer Healthcare business was £621 million (2021: £1,580 million).
EPS from discontinued operations was 260.6p, compared with 26.7p in 2021. The
increase primarily reflected the gain arising on the demerger of the Consumer
Healthcare business. For further details see page 55, discontinued operations.
Total earnings per share
Total EPS was 371.4p compared with 109.6p in 2021. The increase primarily
reflected the profit after taxation for discontinued operations recognised on
the Consumer Healthcare business demerger, upfront income received from the
settlement with Gilead, increased profits and fair value gains on investments,
partly offset by higher remeasurement charges for contingent consideration
liabilities and an unfavourable comparison due to a credit of £397 million to
Taxation in 2021.
Currency impact on 2022 results
The results for 2022 are based on average exchange rates, principally
£1/$1.24, £1/€1.17 and £1/Yen 161. Comparative exchange rates are given
on page 52. The period-end exchange rates were £1/$1.20, £1/€1.13 and
£1/Yen 159.
In 2022, turnover was up 19% at AER and 13% at CER. Total EPS from continuing
operations was 110.8p compared with 82.9p in 2021. Adjusted EPS was 139.7p
compared with 110.3p in 2021, up 27% at AER and 15% at CER. The favourable
currency impact primarily reflected the weakening of Sterling against the US
Dollar, partly offset by strengthening in Sterling against the Euro and
Japanese Yen. Exchange gains or losses on the settlement of intercompany
transactions had a negligible impact on the twelve percentage point favourable
currency impact on Adjusted EPS.
Adjusting items
The reconciliations between Total results and Adjusted results for 2022 and
2021 are set out below.
Year ended 31 December 2022
Total Profit from Intangible Intangible Major Trans- Divest- Adjusted
results discon- amort- impair- restruct- action- ments, results
£m tinued isation ment uring related significant £m
operations £m £m £m £m legal and
£m other
items
£m
Turnover 29,324 29,324
Cost of sales (9,554) 648 102 45 18 (8,741)
Gross profit 19,770 648 102 45 18 20,583
Selling, general and administration (8,372) 180 13 51 (8,128)
Research and development (5,488) 91 296 39 (5,062)
Royalty income 758 758
Other operating income/(expense) (235) 1,692 (1,457) -
Operating profit 6,433 739 296 321 1,750 (1,388) 8,151
Net finance cost (803) 2 10 (791)
Share of after tax losses and joint (2) (2)
of associates ventures
Profit before taxation 5,628 739 296 323 1,750 (1,378) 7,358
Taxation (707) (150) (64) (87) (242) 112 (1,138)
Tax rate % 12.6% 15.5%
Profit after taxation from 4,921 589 232 236 1,508 (1,266) 6,220
continuing operations
Profit after taxation from 3,049 (3,049)
discontinued operations and other
gains/(losses) from the demerger
Remeasurement of discontinued 7,651 (7,651)
operations distributed to
shareholders on demerger
Profit after taxation from 10,700 (10,700)
discontinued operations
Total profit after taxation 15,621 (10,700) 589 232 236 1,508 (1,266) 6,220
for the period
Profit attributable to non-controlling 460 135 595
interest from continuing operations
Profit attributable to shareholders 4,461 589 232 236 1,373 (1,266) 5,625
from continuing operations
Profit attributable to non-controlling 205 (205)
interest from discontinued
operations
Profit attributable to shareholders 10,495 (10,495)
from discontinued operations
15,621 (10,700) 589 232 236 1,508 (1,266) 6,220
Total profit attributable to 665 (205) 135 595
non-controlling interests
Total profit attributable to 14,956 (10,495) 589 232 236 1,373 (1,266) 5,625
shareholders
15,621 (10,700) 589 232 236 1,508 (1,266) 6,220
Earnings per share from continuing 110.8p 14.6p 5.8p 5.9p 34.1p (31.5)p 139.7p
operations
Earnings per share from 260.6p (260.6)p
discontinued operations
Total earnings per share 371.4p (260.6)p 14.6p 5.8p 5.9p 34.1p (31.5)p 139.7p
Weighted average number 4,026 4,026
of shares (millions)
Year ended 31 December 2021((a))
Total Profit from Intangible Intangible Major Trans- Divest- Adjusted
results discon- amort- impair- restruct- action- ments, results
£m tinued isation ment uring related significant £m
operations £m £m £m £m legal and
£m other
items
£m
Turnover 24,696 24,696
Cost of sales (8,163) 660 102 28 27 (7,346)
Gross profit 16,533 660 102 28 27 17,350
Selling, general and administration (7,070) 277 9 35 (6,749)
Research and development (5,019) 101 347 45 1 (4,525)
Royalty income 417 417
Other operating income/(expense) (504) 1,106 (602) -
Operating profit 4,357 761 347 424 1,143 (539) 6,493
Net finance cost (755) 2 1 (752)
Loss on disposal of interest (36) 36 -
in associates
Share of after tax losses and joint 33 33
of associates ventures
Profit before taxation 3,599 761 347 426 1,143 (502) 5,774
Taxation (83) (153) (81) (79) (179) (343) (918)
Tax rate % 2.3% 15.9%
Profit after taxation from 3,516 608 266 347 964 (845) 4,856
continuing operations
Profit after taxation from 1,580 (1,580)
discontinued operations and other
gains/(losses) from the demerger
Remeasurement of discontinued - -
operations distributed to
shareholders on demerger
Profit after taxation from 1,580 (1,580)
discontinued operations
Total profit after taxation 5,096 (1,580) 608 266 347 964 (845) 4,856
for the period
Profit attributable to non-controlling 200 241 441
interest from continuing operations
Profit attributable to shareholders 3,316 608 266 347 723 (845) 4,415
from continuing operations
Profit attributable to non-controlling 511 (511)
interest from discontinued
operations
Profit attributable to shareholders 1,069 (1,069)
from discontinued operations
5,096 (1,580) 608 266 347 964 (845) 4,856
Total profit attributable to 711 (511) 241 441
non-controlling interests
Total profit attributable to 4,385 (1,069) 608 266 347 723 (845) 4,415
shareholders
5,096 (1,580) 608 266 347 964 (845) 4,856
Earnings per share from continuing 82.9p 15.2p 6.6p 8.7p 18.1p (21.2)p 110.3p
operations
Earnings per share from 26.7p (26.7)p
discontinued operations
Total earnings per share 109.6p (26.7)p 15.2p 6.6p 8.7p 18.1p (21.2)p 110.3p
Weighted average number 4,003 4,003
of shares (millions)
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34) and the impact of Share Consolidation implemented on 18 July
2022 (see page 56).
Major restructuring and integration
Total Major restructuring charges from continuing operations incurred in 2022
were £321 million (2021: £424 million), analysed as follows:
2022 2021
Cash Non- Total Cash Non- Total
£m cash £m £m cash £m
£m £m
Separation Preparation restructuring 177 110 287 353 59 412
programme
Significant acquisitions 20 - 20 - - -
Legacy programmes 9 5 14 32 (20) 12
206 115 321 385 39 424
Cash charges of £177 million under the Separation Preparation programme
primarily arose from the restructuring of some administrative functions as
well as Global Supply Chain, R&D functions and commercial. The non-cash
charges of £110 million primarily reflected the write-down of assets in
administrative and manufacturing locations and impairment of IT assets.
Total cash payments made in 2022 were £388 million (2021: £551 million),
£332 million (2021: £428 million) relating to the Separation Preparation
restructuring programme, £17 million relating to significant acquisitions
(2021: £nil) and £39 million (2021: £123 million) relating to other legacy
programmes including the settlement of certain charges accrued in previous
quarters.
The analysis of Major restructuring charges by Income statement line was as
follows:
2022 2021
£m £m
Cost of sales 102 102
Selling, general and administration 180 277
Research and development 39 45
Total Major restructuring costs from continuing operations 321 424
The benefit in 2022 from restructuring programmes was £0.5 billion, primarily
relating to the Separation Preparation restructuring programme.
The Group initiated in Q1 2020 a Separation Preparation programme to prepare
for the separation of GSK into two companies. 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 GSK
· Further optimise the supply chain and product portfolio, including the
divestment of non-core assets
· Prepare Consumer Healthcare to operate as a standalone company
The programme has delivered £0.9 billion of annual savings by 2022 and
targets to deliver £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
divestments have largely covered the cash costs of the programme.
Materially all of the Separation Preparation restructuring programme has been
included as part of continuing operations. The legacy Consumer Healthcare
Joint Venture integration programme is included as part of discontinued
operations.
Transaction-related adjustments
Transaction-related adjustments from continuing operations resulted is a net
charge of £1,750 million (2021: £1,143 million). This included a net £1,726
million accounting charge for the remeasurement of contingent consideration
liabilities and the liabilities for the Pfizer put option and Pfizer and
Shionogi preferential dividends in ViiV Healthcare.
Charge/(credit) 2022 2021
£m £m
Contingent consideration on former Shionogi-ViiV Healthcare joint Venture 1,431 1,026
(including Shionogi preferential dividends)
ViiV Healthcare put options and Pfizer preferential dividends 85 48
Contingent consideration on former Novartis Vaccines business 193 27
Contingent consideration on acquisition of Affinivax 17 -
Other adjustments 24 42
Total transaction-related charges 1,750 1,143
The £1,431 million charge relating to the contingent consideration for the
former Shionogi-ViiV Healthcare joint venture represented an increase in the
valuation of the contingent consideration due to Shionogi, as a result of the
unwind of the discount for £410 million and a charge of £1,021 million
primarily from exchange rates as well as adjustments to sales forecasts. The
£85 million charge relating to the ViiV Healthcare put option and Pfizer
preferential dividends represented an increase in the valuation of the put
option primarily as a result of updated exchange rates as well as adjustments
to sales forecasts.
The ViiV Healthcare contingent consideration liability is fair valued under
IFRS. An explanation of the accounting for the non-controlling interests in
ViiV Healthcare is set out on page 40.
Divestments, significant legal charges, and other items
Divestments, significant legal charges and other items primarily included the
£922 million upfront settlement income received from Gilead, a fair value
gain on investments including £229 million on the retained stake in Haleon as
well as milestone income and gains from a number of asset disposals, partly
offset by certain other Adjusting items.
Discontinued operations
From Q2 2020, the Group started to report additional costs to prepare for
establishment of the Consumer Healthcare business as an independent entity
("Separation costs"). These are now presented as part of discontinued
operations. Total separation costs incurred in 2022 were £366 million (2021:
£314 million). This includes £103 million relating to transaction costs
incurred in connection with the demerger and preparatory admission costs
related to the listing of Haleon.
Total separation costs to date were £748 million including £141 million
relating to transaction costs.
Financial performance - Q4 2022
Total results
The Total results for the Group are set out below.
Q4 2022 Q4 2021((a)) Growth Growth
£m £m £% CER%
Continuing Operations
Turnover 7,376 7,076 4 (3)
Cost of sales (2,238) (2,785) (20) (21)
Gross profit 5,138 4,291 20 9
Selling, general and administration (2,438) (2,193) 11 4
Research and development (1,797) (1,376) 31 23
Royalty income 206 137 50 48
Other operating income/(expense) 759 (367)
Operating profit 1,868 492 >100 >100
Finance income 26 -
Finance expense (270) (187)
Share of after tax (losses)/profits of associates and 2 (2)
joint ventures
Profit before taxation 1,626 303 >100 >100
Taxation (1) 117
Tax rate % 0.1% (38.6%)
Profit after taxation from continuing operations 1,625 420 >100 >100
Profit after taxation from discontinued operations and (5) 510
other gains/(losses) from the demerger
Profit after taxation from discontinued operations (5) 510 >(100) >(100)
Profit after taxation for the period 1,620 930 74 53
Profit attributable to non-controlling interest from 125 (6)
continuing operations
Profit attributable to shareholders from continuing 1,500 426
operations
Profit attributable to non-controlling interest from - 187
discontinued operations
Profit attributable to shareholders from discontinued (5) 323
operations
1,620 930 74 53
Total profit attributable to non-controlling interest 125 181
Total profit attributable to shareholders 1,495 749
1,620 930 74 53
Earnings per share from continuing operations 37.2p 10.6p >100 >100
Earnings per share from discontinued operations (0.1)p 8.1p >(100) >(100)
Total earnings per share 37.1p 18.7p 98 75
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34) and the impact of Share Consolidation implemented on 18 July
2022 (see page 56).
Adjusted results
The Adjusted results for the Group are set out below. Adjusted results are
from continuing operations and exclude the Consumer Healthcare business (see
details on page 39). Reconciliations between Total results and Adjusted
results for Q4 2022 and Q4 2021 are set out on pages 31 and 32.
Q4 2022 % of Growth Growth
£m turnover £% CER%
Turnover 7,376 100 4 (3)
Cost of sales (2,030) (27.5) (22) (23)
Selling, general and administration (2,435) (33.0) 21 13
Research and development (1,522) (20.6) 18 11
Royalty income 206 2.7 50 48
Adjusted operating profit 1,595 21.6 21 5
Adjusted profit before tax 1,362 21 3
Adjusted profit after tax 1,190 13 (3)
Adjusted profit attributable to shareholders 1,041 10 (6)
Adjusted earnings per share 25.8p 10 (6)
Operating profit by segment
Q4 2022 % of Growth Growth
£m turnover £% CER%
Commercial Operations 3,219 43.6 19 8
Research and Development (1,512) 18 10
Segment profit 1,707 23.1 21 6
Corporate & other unallocated costs (112)
Adjusted operating profit 1,595 21.6 21 5
Turnover
Commercial Operations
Q4 2022
£m Growth Growth
£% CER%
HIV 1,678 33 21
Oncology 157 19 11
Immuno-inflammation, respiratory and other 721 33 22
2,556 32 21
Pandemic 125 (85) (85)
Specialty Medicines 2,681 (3) (11)
Meningitis 228 18 11
Influenza 276 13 2
Shingles 769 29 18
Established Vaccines 743 9 4
2,016 17 9
Pandemic Vaccines 58 (37) (37)
Vaccines 2,074 15 7
Respiratory 1,682 9 2
Other General Medicines 939 (2) (3)
General Medicines 2,621 5 -
Commercial Operations 7,376 4 (3)
US 3,624 3 (10)
Europe 1,655 9 7
International 2,097 3 3
Commercial Operations by region 7,376 4 (3)
Total turnover in the quarter was £7,376 million, up 4% at AER, down 3% at
CER reflecting strong sales of COVID-19 solutions in Q4 2021. Turnover grew
17% at AER, 9% at CER excluding sales of COVID-19 solutions. Specialty
Medicines saw double digit growth of all therapy areas (excluding COVID-19
solutions). Vaccines growth reflected strong Shingrix and Meningitis
performance, partially offset by an unfavourable comparison to pandemic
adjuvant sales in Q4 2021. General Medicines reflected strong performance of
Trelegy in all regions and continued recovery of the antibiotics market.
Specialty Medicines
Total Specialty Medicines sales in the quarter were £2,681 million down 3% at
AER, 11% at CER reflecting strong Xevudy sales in Q4 2021. Specialty Medicines
sales in the quarter excluding Xevudy were £2,556 million, up 32% at AER, 21%
at CER, driven by consistent growth in all therapy areas.
HIV
HIV sales were £1,678 million with growth up 33% at AER, 21% at CER in the
quarter. The performance benefited from strong patient demand for new HIV
products (Dovato, Cabenuva, Juluca, Rukobia and Apretude), which contributed
approximately half of the growth. US year-end inventory build contributed one
third of the growth with favourable US pricing and International tender
phasing delivering the remainder.
New HIV products delivered quarterly sales of £806 million up 87% at AER, 70%
at CER, representing 48% of the total HIV portfolio compared to 34% in the
same quarter last year. The growth was primarily driven by sales of Dovato and
Cabenuva. Dovato recorded sales of £438 million and growth of 72% AER, and
59% CER. Cabenuva, the first long acting injectable for the treatment of human
immunodeficiency virus type-1 (HIV-1) infection, recorded sales of £129
million. Apretude, the first long acting injectable for the prevention of
HIV-1, delivered sales of £21 million.
Oncology
Oncology sales in the quarter were £157 million, up 19% at AER, 11% at CER.
Zejula sales of £125 million, were up 16% at AER, 8% at CER, and Blenrep
sales of £27 million were up 23% at AER, 14% at CER, including impact of
withdrawal from the US market in Q4 2022.
Immuno-inflammation, Respiratory and Other
Immuno-inflammation, Respiratory and Other sales were £721 million up 33% at
AER, 22% at CER on strong performance of Benlysta and Nucala. Benlysta sales
were £326 million, up 34% at AER, 20% at CER including strong underlying
demand in US and worldwide. Nucala sales were £395 million, up 27% at AER,
18% at CER on continued strong demand in all regions.
Pandemic
Sales of Xevudy were £125 million, down 85% AER and CER versus Q4 2021. This
reflects strong sales at the end of 2021. In Q4 2022, the majority of sales
were contracted volumes in the International region.
Vaccines
Vaccine sales were £2,074 million, up 15% at AER, 7% at CER in total and up
17% at AER, 9% at CER excluding pandemic adjuvant sales. The performance
benefitted from post-pandemic rebound and strong commercial execution of
Shingrix.
Meningitis
Meningitis vaccines sales grew 18% at AER, 11% at CER to £228 million mainly
driven by Menveo up 60% at AER, 50% at CER to £77 million resulting from
higher public demand and post-pandemic vaccination catch-up in International.
Bexsero sales were up 18% AER, 13% CER to £150 million, mostly due to the
implementation of a Meningitis B national immunisation programme in France and
higher private market demand in International. In the US, Menveo and Bexsero
share gains were offset by unfavourable CDC purchase patterns.
Shingles
Shingrix sales grew 29% at AER, 18% at CER to £769 million reflecting
post-pandemic rebound, strong commercial execution and new launch uptake in
Europe and International. US sales grew 6% at AER but decreased 7% at CER to
£480 million mainly driven by expected wholesaler destocking after higher
than usual inventory levels in Q2 and Q3 2022, partly offset by non-retail
demand growth.
Influenza
Fluarix/FluLaval sales grew by 13% AER, 2% CER to £276 million, primarily due
to a favourable prior period RAR adjustment and lower expected returns in the
US, partly offset by lower post-pandemic demand and competitive pressures in
Europe.
Established Vaccines
Established vaccines grew by 9% AER, 4% at CER to £743 million mainly driven
by increased sales of divested vaccines partly offset by Synflorix lower
tender demand in International.
Pandemic Vaccines
Pandemic vaccines decreased by 37% AER and CER due to Q4 2021 pandemic
adjuvant contracted volumes to the Canadian government. In Q4 2022, pandemic
vaccines sales represent GSK's share of contracted European volumes related to
the COVID-19 booster vaccine developed through a collaboration with Sanofi.
General Medicines
General Medicines sales in the quarter were £2,621 million, up 5% at AER,
stable at CER, with the impact of generic competition in US and Europe offset
by Trelegy growth in respiratory and the post-pandemic rebound of the
antibiotic market in Other General Medicines. Overall, there was a 5
percentage point reduction in growth at AER and CER due to high prior period
RAR adjustments in the comparator.
Respiratory
Respiratory sales were £1,682 million, up 9% at AER, 2% at CER. The
performance was driven by Trelegy sales of £457 million, up 30% at AER, 19%
at CER with strong growth in all regions. Advair/Seretide sales of £330
million continued to be eroded by generic competition, decreasing by 1% at
AER, 6% at CER.
Other General Medicines
Other General Medicines sales were £939 million, down 2% at AER, 3% at CER.
Augmentin sales were £167 million, up 28% at AER, 30% at CER reflecting the
rebound of the antibiotic market post pandemic. This was offset by the ongoing
adverse impact of generic competition.
By Region
US
In the US, sales were £3,624 million, up 3% at AER, down 10% at CER. Sales
adjusted for COVID-19 solutions were up 23% at AER, 8% at CER. There were £10
million sales of Xevudy and none for vaccine pandemic adjuvant in the quarter,
but £586 million sales of Xevudy in Q4 2021 caused a drag on growth of 20
percentage point AER and 18 percentage points CER in the quarter.
In Specialty Medicines, HIV sales of £1,163 million were up 45% at AER, 28%
at CER. Performance benefited from strong patient demand for new products
(Dovato, Cabenuva, Juluca, Apretude and Rukobia), year-end inventory build and
favourable net price. New HIV medicines delivered sales of £581 million up
>100% at AER, 82% at CER.
Nucala and Benlysta both continued to grow double digits reflecting ongoing
strong demand. In Oncology, Zejula continues to be impacted by lower diagnosis
and treatment rates and Blenrep sales of £11 million in the quarter reflected
the impact of withdrawal from US market in Q4 2022.
Vaccine sales were £988 million, up 16% at AER, 2% at CER. Sales of flu
vaccines were strong, including the favourable impact of RAR movements and
delivery phasing from Q3, while Shingrix sales reflected expected wholesaler
inventory reductions and Established Vaccines sales reflected CDC phasing.
General Medicines sales were £873 million up 6% at AER, down 7% at CER, with
continuing Trelegy demand growth, and Flovent continuing to grow. Overall,
there was a 14 percentage point reduction in growth of US General Medicines
due to prior period RAR adjustments in the quarter.
Europe
In Europe, sales were £1,655 million, up 9% at AER, 7% at CER. Sales of
COVID-19 solutions in the quarter of £76 million compare with £68 million in
Q4 2021, so have minimal impact on total growth in the quarter.
In Specialty Medicines, HIV sales were £344 million up 8% at AER, 6% at CER.
The performance predominantly reflected strong patient demand for Dovato with
sales of £136 million during the period. Benlysta in immunology, Nucala in
respiratory, and the Oncology therapy area all delivered strong double-digit
growth in the quarter. Xevudy sales of £19 million in the quarter were down
on the corresponding quarter last year reducing total Europe Specialty sales
by 11 percentage points at AER and CER.
Vaccine sales were £579 million, up 28% at AER, 26% at CER. Shingrix sales of
£204 million, up 76% at AER, 72% at CER, drove the growth on strong
commercial execution and new launches uptake partly offset by influenza
vaccines lower post-pandemic demand and competitive pressures. Pandemic
adjuvant sales of £57 million in the quarter contributed 13 percentage points
of growth at AER and CER.
General Medicines sales were £552 million up 1% at AER, and down 1% at CER.
Strong demand for Anoro and Trelegy was offset by ongoing generic competitive
pressures and the impact of higher government clawback rates.
International
International sales were £2,097 million, up 3% at AER and CER. This included
a drag of 9 percentage points AER and 10 percentage points CER related to
sales of COVID-19 solutions at AER and CER in the corresponding quarter last
year.
In Specialty Medicines, HIV sales were £171 million up 23% at AER, 17% at CER
driven by Tivicay tender phasing, and strong Dovato growth. Combined Tivicay
and Triumeq sales were £125 million, up 16% at AER and 10% at CER. Nucala
sales of £68 million grew 24% at AER and 29% at CER reflecting strong market
growth and patient uptake. Benlysta sales of £32 million grew 39% at AER and
CER reflecting growth in biological market in Japan and inclusion on China's
National Reimbursement Drug List.
Vaccine sales were £507 million, flat at AER, down 3% at CER, as a result of
a 21 percentage point drag at AER and CER from COVID-19 vaccine adjuvant sales
in Q4 2021. Growth excluding COVID-19 solutions was driven by Shingrix
post-pandemic sales rebound, strong commercial execution and new launches
partly offset by Synflorix lower tender demand.
General Medicines sales were £1,196 million up 5% at AER and CER. Respiratory
sales of £530 million were up 14% at AER, 13% at CER including Trelegy sales
of £71 million up 42% at AER and CER reflecting strong demand and inclusion
on China's National Reimbursement Drug List. Other General Medicines sales of
£666 million, were down 1% at AER and flat at CER, reflecting generic
competition and price reductions in certain markets offset by strong growth of
Augmentin on rebound of the antibiotic market post the pandemic.
Operating performance
Cost of sales
Total cost of sales as a percentage of turnover was 30.3%, 9.0 percentage
points at AER and 7.4 percentage points in CER terms lower than Q4 2021.
Adjusted cost of sales as a percentage of turnover was 27.5%, down 9.1
percentage points AER and 7.6 percentage points at CER compared with Q4 2021.
This primarily reflected lower sales of lower margin COVID-19 solutions
(Xevudy) compared to Q4 2021, reducing cost of sales margin by 5.3 percentage
points at AER and CER and lower inventory adjustments and write offs in
Vaccines as well as a favourable mix. This was partly offset by increased
supply chain costs including the impact of increased commodity prices and
freight costs.
Selling, general and administration
Total SG&A costs as a percentage of turnover were 33.1%, 2.1 percentage
points higher at AER and 2.2 percentage points higher at CER than in Q4 2021
primarily reflected increased investment in the launch of innovative vaccines
and medicines partially offset by higher sales.
Adjusted SG&A costs as a percentage of turnover were 33.0%, 4.5 percentage
points higher at AER and 4.6 percentage points higher at CER. Adjusted
SG&A costs increased 21% at AER, 13% at CER to £2,435 million which
primarily reflected an increased level of launch investment in Specialty
Medicines particularly HIV and Vaccines including Shingrix to drive
post-pandemic recovery demand and support market expansion. The growth in
Adjusted SG&A also reflected increased freight and distribution costs.
This growth was partly offset by the continuing benefit of restructuring and
tight control of ongoing costs.
Research and development
Total R&D expenditure was £1,797 million up 31% at AER, 23% at CER. This
included amortisation and impairments.
Adjusted R&D expenditure increased in the quarter by 18% at AER and 11% at
CER, to £1,522 million. We continue to see increased investment in the
Vaccines clinical development portfolio, particularly in our mRNA technology
platforms, RSV older adult vaccine candidate and Men ABCWY, our Phase III
meningitis programme, as well as in relation to our recent acquisition of
Affinivax.
In the Specialty Medicines portfolio, there was increased investment in
Jemperli as we ramp up for new phase II/III trials in rectal and colon cancer
and in our early-stage immuno-oncology assets. In addition, there was
increased investment in our phase III respiratory programme for depemokimab, a
potential new medicine to treat severe asthma, and in bepirovirsen, our study
in chronic hepatitis B. This quarter also reflects the impact of our recent
decision to end our investment in Cell and Gene therapy. These increases in
investment were partly offset by decreases related to the completion of
several late-stage clinical development programmes and reduced R&D
investment in COVID-19 pandemic solutions versus Q4 2021.
Royalty income
Royalty income was £206 million (Q4 2021: £137 million), up 50% at AER, 48%
at CER, primarily reflecting royalty income from Gilead under the settlement
and licensing agreement with Gilead and higher sales of Gardasil.
Other operating income/(expense)
Net other operating income was £759 million (Q4 2021: £367 million expense)
primarily reflecting fair value gains in investments including £605 million
on the retained stake in Haleon and milestone income from disposals. In
addition, there was an accounting gain of £3 million (Q4 2021: £612 million
accounting charge) arising from the remeasurement of contingent consideration
liabilities and the liabilities for the Pfizer, Inc. (Pfizer) put option and
Pfizer and Shionogi & Co. Ltd. (Shionogi) preferential dividends in ViiV
Healthcare. This included a remeasurement charge of £8 million (Q4 2021:
£528 million accounting charge) for the contingent consideration liability
due to Shionogi, reflecting the unwinding of the discount for £110 million,
offset by a gain of £102 million primarily from exchange rates movement as
well as adjustments to sales forecasts.
Operating profit
Total operating profit from continuing operations was £1,868 million compared
with £492 million in Q4 2021. The increase primarily reflected fair value
gains on investments including £605 million on the retained stake in Haleon,
milestone income from disposals and lower remeasurement charges for contingent
consideration liabilities.
Adjusted operating profit was £1,595 million, up 21% at AER and 5% at CER on
a turnover decrease of 3% at CER. The Adjusted operating margin of 21.6% was
higher by 3.0 percentage points at AER and 1.5 percentage points at CER than
in Q4 2021. This reflected the impact from lower sales of COVID-19 solutions
which reduced Adjusted Operating profit growth by approximately 17% at AER,
15% at CER but did not materially impact the Adjusted operating margin. The
increase in Adjusted Operating margin reflected lower inventory adjustments
and write offs in Vaccines, a favourable mix and higher royalty income, partly
offset by increased launch investment in SG&A in Specialty Medicines
including HIV and Vaccines.
Contingent consideration cash payments made to Shionogi and other companies
reduce the balance sheet liability and hence are not recorded in the income
statement. Total contingent consideration cash payments in Q4 2022 amounted to
£273 million (Q4 2021: £225 million). These included cash payments made to
Shionogi of £257 million (Q4 2021: £211 million).
Adjusted operating profit by business
Commercial Operations adjusted operating profit was £3,219 million, up 19% at
AER and 8% at CER on a turnover decrease of 3% at CER. The operating margin of
43.6% was 5.5 percentage points higher at AER and 4.0 percentage points higher
at CER than in Q4 2021. This primarily reflected lower sales of COVID-19
solutions sales low margin Xevudy and pandemic adjuvant. This also reflected
lower inventory adjustments and write offs in Vaccines as well as a favourable
mix and higher royalty income. This was partly offset by increased launch
investment in SG&A in Specialty Medicines including HIV and Vaccines.
R&D segment operating expenses were £1,512 million, up 18% at AER and 10%
at CER, primarily reflecting increased investment in Vaccines including
priority investments for mRNA and late stage portfolio and Specialty Medicines
in early stage HIV and depemokimab, as well as the impact of our recent
decision to end our investment in Cell and Gene therapy. This was partly
offset by the completion of several late-stage clinical development
programmes, and reduced R&D investment in COVID-19 pandemic solutions
compared to Q4 2021.
Net finance costs
Total net finance costs were £244 million compared with £187 million in Q4
2021. Adjusted net finance costs were £235 million compared with £186
million in Q4 2021. The increase primarily reflected the net cost associated
with the Sterling Notes repurchase in Q4 2022 and higher interest on tax
offset by increased interest income due to higher interest rates and larger
cash balances as a result of the Consumer Healthcare demerger.
Taxation
The charge of £1 million represented an effective tax rate on Total results
of 0.1% (Q4 2021: (38.6%)) and reflected the different tax effects of the
various Adjusting items. Tax on Adjusted profit amounted to £172 million and
represented an effective Adjusted tax rate of 12.6% (Q4 2021: 6.8%).
Issues related to taxation are described in Note 14, 'Taxation' in the Annual
Report 2021. The Group continues to believe it has made adequate provision for
the liabilities likely to arise from periods that are open and not yet agreed
by relevant tax authorities. The ultimate liability for such matters may vary
from the amounts provided and is dependent upon the outcome of agreements with
relevant tax authorities.
Non-controlling interests
The allocation of Total profit from continuing operations to non-controlling
interests amounted to £125 million (Q4 2021: £6 million loss). The increase
was primarily due to an increased allocation of ViiV Healthcare profits of
£124 million (Q4 2021: £8 million loss) including reduced credits for
remeasurement of contingent consideration liabilities.
The allocation of Adjusted earnings to non-controlling interests amounted to
£149 million (Q4 2021: £109 million). The increase in allocation primarily
reflected an increased allocation of ViiV Healthcare profits of £148 million
(Q4 2021: £107 million).
Earnings per share from continuing operations
Total EPS from continuing operations was 37.2p compared with 10.6p in Q4 2021.
The increase primarily reflected higher fair value gains on investments
including £605 million on the retained stake in Haleon and lower
remeasurement charges for contingent consideration liabilities.
Adjusted EPS was 25.8p compared with 23.6p in Q4 2021, up 10% at AER, down 6%
at CER, on a 5% CER increase in Adjusted operating profit primarily reflecting
the impact from lower sales of COVID-19 solutions, higher interest costs and a
higher effective tax rate compared to Q4 2021.
Profit and earnings per share from discontinued operations
Discontinued operations include the Consumer Healthcare business and certain
Corporate costs directly attributable to the Consumer Healthcare business.
Loss after taxation from discontinued operations amounted to £5 million (Q4
2021: profit of £510 million).
Loss per share from discontinued operations was (0.1)p, compared with EPS of
8.1p in Q4 2021. For further details see page 55, discontinued operations.
Total earnings per share
Total EPS was 37.1p compared with 18.7p in Q4 2021. The increase primarily
reflected higher fair value gains on investments including on the retained
stake in Haleon and lower remeasurement charges for contingent consideration
liabilities.
Currency impact on Q4 2022 results
The results for Q4 2022 are based on average exchange rates, principally
£1/$1.19, £1/€1.15 and £1/Yen 165. Comparative exchange rates are given
on page 52. The period-end exchange rates were £1/$1.20, £1/€1.13 and
£1/Yen 159.
In Q4 2022, turnover was up 4% at AER and down 3% at CER. Total EPS from
continuing operations was 37.2p compared with 10.6p in Q4 2021. Adjusted EPS
was 25.8p compared with 23.6p in Q4 2021, up 10% at AER and down 6% at CER.
The favourable currency impact primarily reflected the weakening of Sterling
against the US Dollar and the euro, partly offset by the strengthening in the
Japanese Yen. Exchange gains or losses on the settlement of intercompany
transactions had a negligible impact on the sixteen percentage point
favourable currency impact on Adjusted EPS.
Adjusting items
The reconciliations between Total results and Adjusted results for Q4 2022 and
Q4 2021 are set out below.
Three months ended 31 December 2022
Total Profit from Intangible Intangible Major Trans- Divest- Adjusted
results discon- amort- impair- restruct- action- ments, results
£m tinued isation ment uring related significant £m
operations £m £m £m £m legal and
£m other
items
£m
Turnover 7,376 7,376
Cost of sales (2,238) 147 42 10 9 (2,030)
Gross profit 5,138 147 42 10 9 5,346
Selling, general and administration (2,438) - - 3 13 (13) (2,435)
Research and development (1,797) 16 240 19 (1,522)
Royalty income 206 206
Other operating income/(expense) 759 (1) (17) (741) -
Operating profit 1,868 163 240 63 6 (745) 1,595
Net finance cost (244) 1 8 (235)
Share of after tax losses and joint 2 2
of associates ventures
Profit before taxation 1,626 163 240 64 6 (737) 1,362
Taxation (1) (31) (54) (36) (5) (45) (172)
Tax rate % 0.1% 12.6%
Profit after taxation from 1,625 132 186 28 1 (782) 1,190
continuing operations
Profit after taxation from (5) 5 -
discontinued operations and other
gains/(losses) from the demerger
Profit after taxation from (5) 5 -
discontinued operations
Total profit after taxation 1,620 5 132 186 28 1 (782) 1,190
for the period
Profit attributable to non-controlling 125 24 149
interest from continuing operations
Profit attributable to shareholders 1,500 132 186 28 (23) (782) 1,041
from continuing operations
Profit attributable to non-controlling - -
interest from discontinued
operations
Profit attributable to shareholders (5) 5 -
from discontinued operations
1,620 5 132 186 28 1 (782) 1,190
Total profit attributable to 125 - 24 149
non-controlling interests
Total profit attributable to 1,495 5 132 186 28 (23) (782) 1,041
shareholders
1,620 5 132 186 28 1 (782) 1,190
Earnings per share from continuing 37.2p 3.3p 4.6p 0.7p (0.6)p (19.4)p 25.8p
operations
Earnings per share from (0.1)p 0.1p
discontinued operations
Total earnings per share 37.1p 0.1p 3.3p 4.6p 0.7p (0.6)p (19.4)p 25.8p
Weighted average number 4,034 4,034
of shares (millions)
Three months ended 31 December 2021((a))
Total Profit from Intangible Intangible Major Trans- Divest- Adjusted
results discon- amort- impair- restruct- action- ments, results
£m tinued isation ment uring related significant £m
operations £m £m £m £m legal and
£m other
items
£m
Turnover 7,076 7,076
Cost of sales (2,785) 169 18 6 (2,592)
Gross profit 4,291 169 18 6 4,484
Selling, general and administration (2,193) 138 9 28 (2,018)
Research and development (1,376) 25 64 3 (1) (1,285)
Royalty income 137 137
Other operating income/(expense) (367) 591 (224) -
Operating profit 492 194 64 159 606 (197) 1,318
Net finance cost (187) 1 (186)
Share of after tax losses and joint (2) (2)
of associates ventures
Profit before taxation 303 194 64 160 606 (197) 1,130
Taxation 117 (46) (13) (23) (78) (34) (77)
Tax rate % (38.6%) 6.8%
Profit after taxation from 420 148 51 137 528 (231) 1,053
continuing operations
Profit after taxation from 510 (510) -
discontinued operations and other
gains/(losses) from the demerger
Profit after taxation from 510 (510) -
discontinued operations
Total profit after taxation 930 (510) 148 51 137 528 (231) 1,053
for the period
Profit attributable to non-controlling (6) 115 109
interest from continuing operations
Profit attributable to shareholders 426 148 51 137 413 (231) 944
from continuing operations
Profit attributable to non-controlling 187 (187) -
interest from discontinued
operations
Profit attributable to shareholders 323 (323) -
from discontinued operations
930 (510) 148 51 137 528 (231) 1,053
Total profit attributable to 181 (187) 115 109
non-controlling interests
Total profit attributable to 749 (323) 148 51 137 413 (231) 944
shareholders
930 (510) 148 51 137 528 (231) 1,053
Earnings per share from continuing 10.6p 3.7p 1.3p 3.4p 10.4p (5.8)p 23.6p
operations
Earnings per share from 8.1p (8.1)p -
discontinued operations
Total earnings per share 18.7p (8.1)p 3.7p 1.3p 3.4p 10.4p (5.8)p 23.6p
Weighted average number 4,007 4,007
of shares (millions)
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34) and the impact of Share Consolidation implemented on 18 July
2022 (see page 56).
Major restructuring and integration
Total Major restructuring charges from continuing operations incurred in Q4
2022 were £63 million (Q4 2021: £159 million), analysed as follows:
Q4 2022 Q4 2021
Cash Non- Total Cash Non- Total
£m cash £m £m cash £m
£m £m
Separation Preparation restructuring 100 (54) 46 105 41 146
programme
Significant acquisitions 10 - 10 - - -
Legacy programmes 6 1 7 10 3 13
116 (53) 63 115 44 159
Cash charges of £100 million under the Separation Preparation programme
primarily arose from the restructuring of some administrative functions as
well as some global Supply Chain and R&D functions and commercial. The
non-cash credit of £54 million primarily reflected the net profit on sale of
assets in an R&D site partly offset by write-downs of assets in
administrative locations.
Total cash payments made in Q4 2022 were £115 million (Q4 2021: £134
million), £92 million (Q4 2021: £109 million) relating to the Separation
Preparation restructuring programme, £12 million relating to significant
acquisitions (Q4 2021: £nil) and £11 million (Q4 2021: £25 million)
relating to other legacy programmes including the settlement of certain
charges accrued in previous quarters.
The analysis of Major restructuring charges by Income statement line is as
follows:
Q4 2022 Q4 2021
£m £m
Cost of sales 42 18
Selling, general and administration 3 138
Research and development 19 3
Other operating (expenses)/income (1) -
Total major restructuring costs from continuing operations 63 159
Materially all of the Separation Preparation restructuring programme has been
included as part of continuing operations. The legacy Consumer Healthcare
Joint Venture integration programme is now included as part of discontinued
operations.
Transaction-related adjustments
Transaction-related adjustments resulted in a net charge of £6 million (Q4
2021: £606 million). This included a net £3 million accounting gain for the
remeasurement of contingent consideration liabilities and the liabilities for
the Pfizer put option and Pfizer and Shionogi preferential dividends in ViiV
Healthcare.
Charge/(credit) Q4 2022 Q4 2021
£m £m
Contingent consideration on former Shionogi-ViiV Healthcare joint venture 8 528
(including Shionogi preferential dividends)
ViiV Healthcare put options and Pfizer preferential dividends (116) 101
Contingent consideration - former Novartis Vaccines business 93 (17)
Contingent consideration - Affinivax 12 -
Other adjustments 9 (6)
Total transaction-related charges 6 606
The £8 million charge relating to the contingent consideration for the former
Shionogi-ViiV Healthcare joint venture represented an increase in the
valuation of the contingent consideration due to Shionogi, as a result of the
unwind of the discount for £110 million offset by a credit of £102 million
primarily from a reduction due to exchange rates partly offset by adjustments
to sales forecasts. The £116 million gain relating to the ViiV Healthcare put
option and Pfizer preferential dividends represented a decrease in the
valuation of the put option primarily as a result of updated exchange rates as
well as adjustments to sales forecasts.
The ViiV Healthcare contingent consideration liability is fair valued under
IFRS. An explanation of the accounting for the non-controlling interests in
ViiV Healthcare is set out on page 40.
Divestments, significant legal charges, and other items
Divestments, significant legal charges and other items primarily include fair
value gains on investments including £605 million on the retained stake in
Haleon and milestone income on disposals and certain other Adjusting items.
There was no net charge for significant legal items in the quarter (Q4 2021:
£37 million).
Discontinued operations
GSK satisfied the criteria in IFRS 5 for treating Consumer Healthcare as a
'discontinued operation' effective from 30 June 2022, as it was then expected
that the carrying amount of the disposal group will be recovered principally
through disposal and a distribution, it was available for distribution in its
present condition (subject only to the steps to be completed that are usual
and customary for the demerger of a business) and it was considered highly
probable. The demerger was completed on 18 July 2022, resulting in Consumer
Healthcare being classified as a discontinued operation.
From Q2 2020, the Group started to report additional costs to prepare for
establishment of the Consumer Healthcare business as an independent entity
("Separation costs") and these have been presented as part of discontinued
operations. Total separation costs incurred in Q4 2022 were £5 million (Q4
2021: £130 million). This includes £1 million relating to transaction costs
incurred in connection with the demerger and preparatory admission costs
related to the listing of Haleon.
Cash generation
Cash flow
2022 2021 Q4 2022
£m £m £m
Cash generated from operations attributable to 7,944 7,249 2,101
continuing operations (£m)
Cash generated from operations attributable to 932 1,994 4
discontinued operations (£m)
Total cash generated from operations (£m) 8,876 9,243 2,105
Net cash inflow from operating activities from 6,634 6,277 1,901
continuing operations
Net cash inflow from operating activities from 769 1,675 4
discontinued operations
Total net cash generated from operating activities (£m) 7,403 7,952 1,905
Free cash inflow from continuing operations* (£m) 3,348 3,301 895
Free cash flow from continuing operations growth (%) 1% (10)% (62)%
Free cash flow conversion from continuing operations* (%) 75% 100% 60%
Total net debt** (£m) (17,197) (19,838) (17,197)
* Free cash flow from continuing operations and free cash flow conversion are
defined on page 67.
** Net debt is analysed on page 57.
2022
Cash generated from operations attributable to continuing operations for the
year was £7,944 million (2021: £7,249 million). The increase primarily
reflected a significant increase in operating profit including the upfront
income from the settlement with Gilead, favourable exchange impact and
favourable timing of collections, partly offset by unfavourable timing of
profit share payments for Xevudy sales, increased cash contribution to the UK
defined benefit pension scheme, increased contingent consideration payments
reflecting the Gilead settlement in February 2022 and a higher increase in
inventory.
Cash generated from operations attributable to discontinued operations for
2022 was £932 million (2021: £1,994 million).
Total cash payments to Shionogi in relation to the ViiV Healthcare contingent
consideration liability in 2022 were £1,100 million (2021: £826 million), of
which £1,031 million was recognised in cash flows from operating activities
and £69 million was recognised in contingent consideration paid within
investing cash flows. These payments are deductible for tax purposes.
Free cash inflow from continuing operations was £3,348 million for 2022
(2021: £3,301 million). The increase primarily reflected a significant
increase in operating profit including the upfront income from the settlement
with Gilead, favourable exchange, reduced purchases of intangible assets and
favourable timing of collections. This was partly offset by unfavourable
timing of profit share payments for Xevudy sales, increased cash contributions
to pensions, increased contingent consideration payments reflecting the Gilead
settlement in February 2022, higher tax payments, lower proceeds from
disposals, higher capital expenditure and a higher increase in inventory.
Q4 2022
Cash generated from operations attributable to continuing operations for the
quarter was £2,101 million (Q4 2021: £3,329 million). The decrease primarily
reflected unfavourable timing of profit share payments for Xevudy, increased
cash contributions to the UK defined benefit pension schemes and unfavourable
timing of returns and rebates partly offset by an increase in operating
profit, including beneficial exchange and favourable timing of collections.
Cash generated from operations attributable to discontinued operations for the
quarter was £4 million (Q4 2021: £872 million).
Total cash payments to Shionogi in relation to the ViiV Healthcare contingent
consideration liability in the quarter were £257 million (Q4 2021: £211
million), all of which was recognised in cash flows from operating activities.
These payments are deductible for tax purposes.
Free cash inflow from continued operations was £895 million for the quarter
(Q4 2021: £2,344 million). The reduction primarily reflected unfavourable
timing of profit share payments for Xevudy sales, increased cash contribution
to pensions, unfavourable timing of returns and rebates and reduced proceeds
from and increased purchases of intangible assets, partly offset by the
increase in operating profit including beneficial exchange, reduced tax
payments, and favourable timing of collections.
Total Net debt
At 31 December 2022, net debt was £17,197 million, compared with £19,838
million at 31 December 2021, comprising gross debt of £20,987 million and
cash and liquid investments of £3,790 million.
Net debt reduced by £2,641 million primarily due to £3,348 million free cash
flow from continuing operations, £238 million disposals of equity investments
and £7,177 million decrease from discontinued operations as a result of the
demerger primarily reflecting £7,112 million of pre-separation dividends
attributable to GSK funded by Consumer Healthcare debt. This was partly offset
by purchases of businesses of £3,108 million, net of cash acquired,
reflecting the acquisitions of Sierra Oncology and Affinivax, dividends paid
to shareholders of £3,467 million, net adverse exchange impacts of £1,386
million from the translation of non-Sterling denominated debt and exchange on
other financing items and £143 million purchases of equity investments.
At 31 December 2022, GSK had short-term borrowings (including overdrafts and
lease liabilities) repayable within 12 months of £3,952 million with loans of
£1,713 million repayable in the subsequent year.
Returns to shareholders
Quarterly dividends
The Board has declared a fourth dividend for 2022 of 13.75p per share (Q4
2021: 28.75p(1) per share retrospectively adjusted) for the Share
Consolidation.
On 23 June 2021, at the new GSK Investor Update, 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. The dividend policy, the total
expected cash distribution, and the respective dividend pay-out ratios for GSK
remain unchanged.
GSK has previously stated that it expected to declare a 27p per share dividend
for the first half of 2022, a 22p per share dividend for the second half of
2022 and a 45p per share dividend for 2023, (before the share consolidation)
but that these targeted dividends per share would increase in step with the
Share Consolidation to maintain the same aggregate dividend pay-out in
absolute Pound Sterling terms. Accordingly, using the consolidation ratio,
GSK's expected dividend for the fourth quarter of 2022 converts to 13.75p per
new ordinary share, this results in an expected total dividend for the second
half of 2022 of 27.5p per new ordinary share. The expected dividend for 2023
is 56.5p per new ordinary share, in line with the original expectation
converted for the Share Consolidation and rounded up.
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be calculated
based on the exchange rate on 11 April 2023. 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 23 February 2023, with a record date of 24 February 2023 and a
payment date of 13 April 2023.
Paid/ Pence per Pence per £m
Payable share/ share/
pre share post share
consolidation consolidation
2022
First interim 1 July 2022 14 17.50 704
Second interim 6 October 2022 13 16.25 654
Third interim 12 January 2023 11 13.75 555
Fourth interim 13 April 2023 11 13.75 555
49 61.25 2,468
Paid/ Pence per Pence per £m
Payable share/ share/
pre share post share
consolidation consolidation
2021
First interim 8 July 2021 19 23.75 951
Second interim 7 October 2021 19 23.75 951
Third interim 13 January 2022 19 23.75 952
Fourth interim 7 April 2022 23 28.75 1,157
80 100 4,011
The demerger of the Consumer Healthcare business was implemented by GSK
declaring an interim dividend in specie of Haleon plc shares. The fair value
of the distribution was £15.5 billion.
1 Adjusted for the Share Consolidation on 18 July 2022. For details of the Share
Consolidation see page 56.
Weighted average number of shares
2022 2021
millions millions((a))
Weighted average number of shares - basic 4,026 4,003
Dilutive effect of share options and share awards 58 49
Weighted average number of shares - diluted 4,084 4,052
Weighted average number of shares
Q4 2022 Q4 2021
millions millions((a))
Weighted average number of shares - basic 4,034 4,007
Dilutive effect of share options and share awards 57 50
Weighted average number of shares - diluted 4,091 4,057
(a) See page 56 for details of the Share Consolidation.
At 31 December 2022, 4,034 million shares (2021: 4,007 million) were in free
issue (excluding Treasury shares and shares held by the ESOP Trusts). GSK made
no share repurchases during the period. The company issued 1.7 million shares
under employee share schemes in the period for proceeds of £25 million (2021:
£21 million).
At 31 December 2022, the ESOP Trusts held 59.6 million GSK shares against the
future exercise of share options and share awards. The carrying value of £353
million has been deducted from other reserves. The market value of these
shares was £861 million.
At 31 December 2022, the company held 217.1 million Treasury shares at a cost
of £3,797 million which has been deducted from retained earnings.
Total and Adjusted results
Total reported results represent the Group's overall performance.
GSK also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS measures may
be considered in addition to, but not as a substitute for or superior to,
information presented in accordance with IFRS. Adjusted results are defined
below and other non-IFRS measures are defined on page 67.
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 profits from discontinued operations from the
Consumer Healthcare business (see details on page 34) and the following items
in relation to our continuing operations from Total results, together with the
tax effects of all of these items:
· amortisation of intangible assets (excluding computer software and capitalised
development costs)
· impairment of intangible assets (excluding computer software) and goodwill
· major restructuring costs, which include impairments of tangible assets and
computer software, (under specific Board approved programmes that are
structural, of a significant scale and where the costs of individual or
related projects exceed £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 settlement income; significant legal charges (net of insurance
recoveries) and expenses on the settlement of litigation and government
investigations; other operating income other than royalty income, and other
items
Costs for all other ordinary course smaller scale restructuring and legal
charges and expenses from continuing operations are retained within both Total
and Adjusted results.
As Adjusted results include the benefits of Major restructuring programmes but
exclude significant costs (such as significant legal, major restructuring and
transaction items) they should not be regarded as a complete picture of the
Group's financial performance, which is presented in Total results. The
exclusion of other Adjusting items may result in Adjusted earnings being
materially higher or lower than Total earnings. In particular, when
significant impairments, restructuring charges and legal costs are excluded,
Adjusted earnings will be higher than Total earnings.
GSK has undertaken a number of Major restructuring programmes in response to
significant changes in the Group's trading environment or overall strategy or
following material acquisitions. Within the Pharmaceuticals sector, the highly
regulated manufacturing operations and supply chains and long lifecycle of the
business mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites are likely to
take several years to complete. Costs, both cash and non-cash, of these
programmes are provided for as individual elements are approved and meet the
accounting recognition criteria. As a result, charges may be incurred over a
number of years following the initiation of a Major restructuring programme.
Significant legal charges and expenses are those arising from the settlement
of litigation or government investigations that are not in the normal course
and materially larger than more regularly occurring individual matters. They
also include certain major legacy matters.
Reconciliations between Total and Adjusted results, providing further
information on the key Adjusting items, are set out on pages 18, 19, 31 and
32.
GSK provides earnings guidance to the investor community on the basis of
Adjusted results. This is in line with peer companies and expectations of the
investor community, supporting easier comparison of the Group's performance
with its peers. GSK is not able to give guidance for Total results as it
cannot reliably forecast certain material elements of the Total results,
particularly the future fair value movements on contingent consideration and
put options that can and have given rise to significant adjustments driven by
external factors such as currency and other movements in capital markets.
ViiV Healthcare
ViiV Healthcare is a subsidiary of the Group and 100% of its operating results
(turnover, operating profit, profit after tax) are included within the Group
income statement.
Earnings are allocated to the three shareholders of ViiV Healthcare on the
basis of their respective equity shareholdings (GSK 78.3%, Pfizer 11.7% and
Shionogi 10%) and their entitlement to preferential dividends, which are
determined by the performance of certain products that each shareholder
contributed. As the relative performance of these products changes over time,
the proportion of the overall earnings allocated to each shareholder also
changes. In particular, the increasing proportion of sales of dolutegravir and
cabotegravir-containing products has a favourable impact on the proportion of
the preferential dividends that is allocated to GSK. Adjusting items are
allocated to shareholders based on their equity interests. GSK was entitled to
approximately 83% of the Total earnings and 82% of the Adjusted earnings of
ViiV Healthcare for 2022.
As consideration for the acquisition of Shionogi's interest in the former
Shionogi-ViiV Healthcare joint venture in 2012, Shionogi received the 10%
equity stake in ViiV Healthcare and ViiV Healthcare also agreed to pay
additional future cash consideration to Shionogi, contingent on the future
sales performance of the products being developed by that joint venture,
dolutegravir and cabotegravir. Under IFRS 3 'Business combinations', GSK was
required to provide for the estimated fair value of this contingent
consideration at the time of acquisition and is required to update the
liability to the latest estimate of fair value at each subsequent period end.
The liability for the contingent consideration recognised in the balance sheet
at the date of acquisition was £659 million. Subsequent remeasurements are
reflected within other operating income/(expense) and within Adjusting items
in the income statement in each period.
On 1 February 2022, ViiV Healthcare reached agreement with Gilead to settle
the global patent infringement litigation relating to the commercialisation of
Gilead's Biktarvy. Under the terms of the global settlement and licensing
agreement, Gilead made an upfront payment of $1.25 billion to ViiV Healthcare
in February 2022. In addition, Gilead will also pay a 3% royalty on all future
US sales of Biktarvy and in respect of the bictegravir component of any other
future bictegravir-containing products sold in the US. These royalties will be
payable by Gilead to ViiV Healthcare from 1 February 2022 until the expiry of
ViiV Healthcare's US Patent No. 8,129,385 on 5 October 2027. Gilead's
obligation to pay royalties does not extend into any period of regulatory
paediatric exclusivity, if awarded.
Cash payments to settle the contingent consideration are made to Shionogi by
ViiV Healthcare each quarter, based on the actual sales performance and other
income of the relevant products in the previous quarter. These payments reduce
the balance sheet liability and hence are not recorded in the income
statement. The cash payments made to Shionogi by ViiV Healthcare in 2022 were
£1,100 million.
As the liability is required to be recorded at the fair value of estimated
future payments, there is a significant timing difference between the charges
that are recorded in the Total income statement to reflect movements in the
fair value of the liability and the actual cash payments made to settle the
liability.
Further explanation of the acquisition-related arrangements with ViiV
Healthcare are set out on pages 57 and 58 of the Annual Report 2021.
Financial information
Income statements
2022 2021((a)) Q4 2022 Q4 2021((a))
£m £m £m £m
TURNOVER 29,324 24,696 7,376 7,076
Cost of sales (9,554) (8,163) (2,238) (2,785)
Gross profit 19,770 16,533 5,138 4,291
Selling, general and administration (8,372) (7,070) (2,438) (2,193)
Research and development (5,488) (5,019) (1,797) (1,376)
Royalty income 758 417 206 137
Other operating (expense)/income (235) (504) 759 (367)
OPERATING PROFIT 6,433 4,357 1,868 492
Finance income 76 14 26 1
Finance expense (879) (769) (270) (188)
Loss on disposal of interests in associates - (36) - -
Share of after tax (losses)/profits of associates (2) 33 2 (2)
and joint ventures
PROFIT BEFORE TAXATION 5,628 3,599 1,626 303
Taxation (707) (83) (1) 117
Tax rate % 12.6% 2.3% 0.1% (38.6%)
PROFIT AFTER TAXATION FROM CONTINUING 4,921 3,516 1,625 420
OPERATIONS
Profit after taxation from discontinued operations 3,049 1,580 (5) 510
and other gains from the demerger
Remeasurement of discontinued operations 7,651 - - -
distributed to shareholders on demerger
PROFIT AFTER TAXATION FROM 10,700 1,580 (5) 510
DISCONTINUED OPERATIONS((b))
PROFIT AFTER TAXATION FOR THE PERIOD 15,621 5,096 1,620 930
Profit attributable to non-controlling interests 460 200 125 (6)
from continuing operations
Profit attributable to shareholders from 4,461 3,316 1,500 426
continuing operations
Profit attributable to non-controlling interests 205 511 - 187
from discontinued operations
Profit attributable to shareholders from 10,495 1,069 (5) 323
discontinued operations
15,621 5,096 1,620 930
Profit attributable to non-controlling interests 665 711 125 181
Profit attributable to shareholders 14,956 4,385 1,495 749
15,621 5,096 1,620 930
EARNINGS PER SHARE FROM CONTINUING 110.8p 82.9p 37.2p 10.6p
OPERATIONS
EARNINGS PER SHARE FROM DISCONTINUED 260.6p 26.7p (0.1)p 8.1p
OPERATIONS
TOTAL EARNINGS PER SHARE 371.4p 109.6p 37.1p 18.7p
Diluted earnings per share from continuing 109.2p 81.8p 36.6p 10.5p
operations
Diluted earnings per share from discontinued 257.0p 26.4p (0.1)p 8.0p
operations
Total diluted earnings per share 366.2p 108.2p 36.5p 18.5p
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34) and the impact of Share Consolidation implemented on 18 July
2022 (see page 56).
(b) See page 56 for further details on profit after tax from discontinued
operations.
Statement of comprehensive income
2022 2021((a)) Q4 2022 Q4 2021((a))
£m £m £m £m
Total profit for the year 15,621 5,096 1,620 930
Items that may be reclassified subsequently to continuing operations income
statement:
Exchange movements on overseas net assets 113 (339) 218 (130)
and net investment hedges
Reclassification of exchange movements on 2 (25) (8) (15)
liquidation or disposal of overseas subsidiaries
and associates
Fair value movements on cash flow hedges (18) 5 (31) 9
Reclassification of cash flow hedges to income 14 12 2 1
statement
Deferred tax on fair value movements on cash 9 (8) (8) (7)
flow hedges
120 (355) 173 (142)
Items that will not be reclassified to continuing operations income statement:
Exchange movements on overseas net assets (28) (20) (23) (19)
of non-controlling interests
Fair value movements on equity investments (754) (911) (106) (616)
Tax on fair value movements on equity 56 131 (5) 33
investments
Remeasurement (losses)/gains on defined benefit plans (786) 940 (104) 606
Tax on remeasurement losses/(gains) on defined 211 (223) 34 (158)
benefit plans
Fair value movements on cash flow hedges (6) - (6) -
(1,307) (83) (210) (154)
Other comprehensive expense for the (1,187) (438) (37) (296)
period from continuing operations
Other comprehensive income for the 356 101 23 1
period from discontinued operations
Total comprehensive income for the period 14,790 4,759 1,606 635
Total comprehensive income for the year attributable to:
Shareholders 14,153 4,068 1,504 473
Non-controlling interests 637 691 102 162
14,790 4,759 1,606 635
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34).
Specialty Medicines turnover - year ended 31 December 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
HIV 5,749 20 12 3,756 30 17 1,310 10 10 683 - (3)
Dolutegravir products 5,191 14 6 3,311 19 8 1,239 8 8 641 - (3)
Tivicay 1,381 - (7) 823 8 (3) 273 (5) (4) 285 (14) (19)
Triumeq 1,799 (4) (11) 1,217 2 (8) 361 (20) (19) 221 (8) (9)
Juluca 636 23 14 494 26 13 127 14 15 15 15 8
Dovato 1,375 75 65 777 82 64 478 58 59 120 >100 >100
Rukobia 82 82 64 79 84 65 3 50 50 - - -
Cabenuva 340 >100 >100 294 >100 >100 40 >100 >100 6 >100 >100
Apretude 41 - - 41 - - - - - - - -
Other 95 (25) (29) 31 (37) (45) 28 (22) (22) 36 (14) (17)
Oncology 602 23 17 313 14 3 253 30 31 36 80 75
Zejula 463 17 12 235 11 - 194 19 20 34 70 75
Blenrep 118 33 25 66 8 (3) 52 86 86 - - -
Jemperli 21 >100 >100 13 >100 >100 8 >100 >100 - - -
Other - - - (1) - - (1) - - 2 - -
Immuno- 2,609 29 20 1,830 29 16 366 13 13 413 45 47
inflammation,
respiratory and other
Benlysta 1,146 31 20 949 31 18 83 22 22 114 44 43
Nucala 1,423 25 18 881 28 15 300 17 17 242 24 28
Other 40 >100 >100 - - - (17) - - 57 >100 >100
Specialty Medicines 8,960 23 15 5,899 29 16 1,929 13 13 1,132 14 13
excluding pandemic
Pandemic 2,309 >100 >100 828 38 24 456 >100 >100 1,025 >100 >100
Xevudy 2,309 >100 >100 828 38 24 456 >100 >100 1,025 >100 >100
Specialty Medicines 11,269 37 29 6,727 30 17 2,385 34 35 2,157 69 70
Specialty Medicines turnover - three months ended 31 December 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
HIV 1,678 33 21 1,163 45 28 344 8 6 171 23 17
Dolutegravir products 1,482 24 13 998 31 16 320 5 3 164 26 21
Tivicay 373 16 5 235 17 3 69 (3) (6) 69 38 28
Triumeq 479 1 (8) 340 10 (3) 83 (25) (26) 56 (3) (5)
Juluca 192 34 22 155 41 25 32 7 7 5 67 33
Dovato 438 72 59 268 89 68 136 46 43 34 79 79
Rukobia 26 73 47 25 79 57 1 - - - - -
Cabenuva 129 >100 >100 112 >100 >100 15 >100 >100 2 100 >100
Apretude 21 - - 21 - - - - - - - -
Other 20 (35) (35) 7 (42) (42) 8 (27) (18) 5 (38) (50)
Oncology 157 19 11 78 15 - 67 29 27 12 - 8
Zejula 125 16 8 63 24 6 52 16 11 10 (17) 8
Blenrep 27 23 14 11 (35) (47) 16 >100 >100 - - -
Jemperli 5 >100 >100 5 >100 >100 - (100) (100) - - -
Other - - - (1) - - (1) - - 2 - -
Immuno- 721 33 22 512 31 16 94 11 9 115 77 78
inflammation,
respiratory and other
Benlysta 326 34 20 271 33 18 23 28 22 32 39 39
Nucala 395 27 18 242 28 13 85 27 22 68 24 29
Other - >100 >100 (1) - - (14) - - 15 >100 >100
Specialty Medicines 2,556 32 21 1,753 39 23 505 11 9 298 38 35
excluding pandemic
Pandemic 125 (85) (85) 10 (98) (99) 19 (72) (74) 96 (45) (41)
Xevudy 125 (85) (85) 10 (98) (99) 19 (72) (74) 96 (45) (41)
Specialty Medicines 2,681 (3) (11) 1,763 (5) (16) 524 - (2) 394 1 1
Vaccines turnover - year ended 31 December 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Meningitis 1,116 16 11 573 26 14 362 2 3 181 18 20
Bexsero 753 16 12 333 32 19 337 3 4 83 20 23
Menveo 345 27 18 240 20 8 20 (5) (10) 85 67 71
Other 18 (54) (54) - - - 5 - - 13 (62) (62)
Influenza 714 5 (4) 549 20 9 57 (44) (44) 108 (11) (16)
Fluarix, FluLaval 714 5 (4) 549 20 9 57 (44) (44) 108 (11) (16)
Shingles 2,958 72 60 1,964 46 32 688 >100 >100 306 >100 >100
Shingrix 2,958 72 60 1,964 46 32 688 >100 >100 306 >100 >100
Established 3,085 4 - 1,157 18 7 720 3 4 1,208 (7) (8)
Vaccines
Infanrix, Pediarix 594 9 3 327 8 (3) 131 13 13 136 10 6
Boostrix 594 14 7 360 33 20 138 (1) (1) 96 (14) (15)
Hepatitis 571 24 16 343 28 15 142 30 31 86 5 (1)
Rotarix 527 (3) (3) 95 (14) (23) 122 3 5 310 (1) 1
Synflorix 305 (15) (15) - - - 34 (24) (22) 271 (13) (14)
Priorix, Priorix 188 (28) (29) 10 - - 97 (22) (22) 81 (40) (43)
Tetra, Varilrix
Cervarix 117 (15) (20) - - - 22 (12) (8) 95 (16) (22)
Other 189 26 26 22 (8) (17) 34 55 45 133 28 32
Vaccines excluding 7,873 24 17 4,243 31 18 1,827 27 28 1,803 8 6
pandemic
Pandemic vaccines 64 (86) (86) - (100) (100) 57 - - 7 (97) (97)
Pandemic adjuvant 64 (86) (86) - (100) (100) 57 - - 7 (97) (97)
Vaccines 7,937 17 11 4,243 22 10 1,884 31 32 1,810 (3) (5)
Vaccines turnover - three months ended 31 December 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Meningitis 228 18 11 73 16 (2) 101 17 15 54 20 22
Bexsero 150 18 13 36 3 (14) 92 19 18 22 47 47
Menveo 77 60 50 37 32 14 8 - (13) 32 >100 >100
Other 1 (95) (95) - - - 1 - - - (100) (100)
Influenza 276 13 2 217 67 48 29 (63) (64) 30 (17) (22)
Fluarix, FluLaval 276 13 2 217 67 48 29 (63) (64) 30 (17) (22)
Shingles 769 29 18 480 6 (7) 204 76 72 85 >100 >100
Shingrix 769 29 18 480 6 (7) 204 76 72 85 >100 >100
Established 743 9 4 218 7 (6) 188 9 7 337 10 8
Vaccines
Infanrix, Pediarix 111 (3) (10) 48 (17) (31) 30 20 16 33 3 6
Boostrix 131 15 5 73 33 15 31 (3) (3) 27 - (4)
Hepatitis 126 12 2 64 3 (10) 36 9 3 26 44 39
Rotarix 147 4 1 21 (22) (30) 32 - - 94 13 11
Synflorix 68 (26) (28) - - - 10 (23) (23) 58 (27) (29)
Priorix, Priorix 50 (7) (13) 9 - - 24 (14) (18) 17 (35) (38)
Tetra, Varilrix
Cervarix 26 13 9 - - - 7 >100 >100 19 (5) (15)
Other 84 >100 >100 3 >100 >100 18 >100 >100 63 >100 >100
Vaccines excluding 2,016 17 9 988 17 2 522 15 13 506 21 18
pandemic
Pandemic vaccines 58 (37) (37) - (100) (100) 57 - - 1 (99) (100)
Pandemic adjuvant 58 (37) (37) - (100) (100) 57 - - 1 (99) (100)
Vaccines 2,074 15 7 988 16 2 579 28 26 507 - (3)
General Medicines turnover - year ended 31 December 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Respiratory 6,548 8 3 3,209 10 (1) 1,384 3 3 1,955 10 9
Arnuity Ellipta 56 19 9 48 20 10 - - - 8 14 -
Anoro Ellipta 483 (4) (9) 233 (16) (24) 165 11 11 85 10 10
Avamys/Veramyst 321 8 6 - - - 65 - 2 256 10 8
Flixotide/Flovent 545 23 15 353 28 16 74 7 7 118 18 16
Incruse Ellipta 196 (4) (10) 104 (5) (14) 64 (9) (7) 28 8 -
Relvar/Breo Ellipta 1,145 2 (2) 498 2 (8) 347 4 4 300 - 2
Seretide/Advair 1,159 (15) (17) 308 (37) (43) 287 (11) (11) 564 3 1
Trelegy Ellipta 1,729 42 32 1,253 47 32 236 18 19 240 47 48
Ventolin 771 7 2 411 5 (5) 116 7 8 244 11 10
Other Respiratory 143 4 6 1 - - 30 11 7 112 2 5
Other General Medicines 3,570 (1) (2) 363 10 (1) 695 (14) (13) 2,512 1 2
Dermatology 376 (6) (5) (1) - - 107 (18) (18) 270 - 1
Augmentin 576 35 38 - - - 151 22 23 425 41 44
Avodart 330 (1) (3) - - - 107 (9) (8) 223 5 -
Lamictal 511 7 1 265 14 3 109 (3) (3) 137 2 -
Other 1,777 (10) (10) 99 - (9) 221 (31) (31) 1,457 (7) (6)
General Medicines 10,118 5 1 3,572 10 (1) 2,079 (3) (3) 4,467 5 5
General Medicines turnover - three months ended 31 December 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Respiratory 1,682 9 2 778 5 (7) 374 7 5 530 14 13
Arnuity Ellipta 11 (15) (23) 9 (25) (33) - - - 2 100 100
Anoro Ellipta 138 12 5 68 8 (5) 47 21 18 23 10 10
Avamys/Veramyst 82 15 11 - - - 14 (7) - 68 21 14
Flixotide/Flovent 134 25 15 75 34 18 22 - (5) 37 28 24
Incruse Ellipta 39 (20) (27) 16 (41) (48) 16 - - 7 17 -
Relvar/Breo Ellipta 249 (11) (15) 72 (38) (47) 94 9 6 83 8 10
Seretide/Advair 330 (1) (6) 105 (13) (23) 75 (4) (5) 150 9 7
Trelegy Ellipta 457 30 19 321 29 14 65 20 20 71 42 42
Ventolin 206 12 4 111 16 1 33 6 3 62 9 11
Other Respiratory 36 - - 1 - - 8 14 - 27 (10) (3)
Other General Medicines 939 (2) (3) 95 8 (5) 178 (10) (11) 666 (1) -
Dermatology 99 (2) (2) (1) - - 28 (10) (13) 72 1 3
Augmentin 167 28 30 - - - 44 16 13 123 34 37
Avodart 82 4 (1) - - - 26 (10) (10) 56 12 4
Lamictal 132 8 - 71 15 2 29 7 4 32 (3) (6)
Other 459 (12) (12) 25 (7) (19) 51 (29) (29) 383 (10) (9)
General Medicines 2,621 5 - 873 6 (7) 552 1 (1) 1,196 5 5
Commercial Operations turnover
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Year ended 29,324 19 13 14,542 22 10 6,348 18 19 8,434 14 14
31 December 2022
Three months ended 7,376 4 (3) 3,624 3 (10) 1,655 9 7 2,097 3 3
31 December 2022
Balance sheet
31 December 2022 31 December 2021
£m £m
ASSETS
Non-current assets
Property, plant and equipment 8,933 9,932
Right of use assets 687 740
Goodwill 7,046 10,552
Other intangible assets 14,318 30,079
Investments in associates and joint ventures 74 88
Other investments 1,467 2,126
Deferred tax assets 5,658 5,218
Derivative financial instruments - 18
Other non-current assets 1,194 1,676
Total non-current assets 39,377 60,429
Current assets
Inventories 5,146 5,783
Current tax recoverable 405 486
Trade and other receivables 7,053 7,860
Derivative financial instruments 190 188
Current equity investments 4,087 -
Liquid investments 67 61
Cash and cash equivalents 3,723 4,274
Assets held for sale 98 22
Total current assets 20,769 18,674
TOTAL ASSETS 60,146 79,103
LIABILITIES
Current liabilities
Short-term borrowings (3,952) (3,601)
Contingent consideration liabilities (1,289) (958)
Trade and other payables (16,263) (17,554)
Derivative financial instruments (183) (227)
Current tax payable (471) (489)
Short-term provisions (652) (841)
Total current liabilities (22,810) (23,670)
Non-current liabilities
Long-term borrowings (17,035) (20,572)
Corporation tax payable (127) (180)
Deferred tax liabilities (289) (3,556)
Pensions and other post-employment benefits (2,579) (3,113)
Other provisions (532) (630)
Derivative financial instruments - (1)
Contingent consideration liabilities (5,779) (5,118)
Other non-current liabilities (899) (921)
Total non-current liabilities (27,240) (34,091)
TOTAL LIABILITIES (50,050) (57,761)
NET ASSETS 10,096 21,342
EQUITY
Share capital 1,347 1,347
Share premium account 3,440 3,301
Retained earnings 4,363 7,944
Other reserves 1,448 2,463
Shareholders' equity 10,598 15,055
Non-controlling interests (502) 6,287
TOTAL EQUITY 10,096 21,342
Statement of changes in equity
Share Share Retained Other Share- Non- Total
capital premium earnings reserves holder's controlling equity
£m £m £m £m equity interests £m
£m £m
At 1 January 2022 1,347 3,301 7,944 2,463 15,055 6,287 21,342
Profit for the year 14,956 14,956 665 15,621
Other comprehensive (89) (714) (803) (28) (831)
income/(expense) for the year
Total comprehensive income/(expense) 14,867 (714) 14,153 637 14,790
for the year
Distributions to non-controlling interests (1,409) (1,409)
Non-cash distribution to non-controlling (2,960) (2,960)
interest
Contributions from non-controlling 8 8
interests
Changes to non-controlling interest (20) (20)
Deconsolidation of former subsidiaries (3,045) (3,045)
Dividends to shareholders (3,467) (3,467) (3,467)
Non-cash dividend to shareholder (15,526) (15,526) (15,526)
Realised after tax losses on disposal 14 (14) -
or liquidation of equity investments
Share of associates and joint ventures 7 (7) -
realised profits on disposal of equity
investments
Shares issued - 25 25 25
Write-down on shares held by ESOP (911) 911 -
Trusts
Shares acquired by ESOP Trusts 114 1,086 (1,200) -
Share-based incentive plans 357 357 357
Tax on share-based incentive plans (8) (8) (8)
Hedging gain/loss after taxation transferred to non-financial assets 9 9 9
At 31 December 2022 1,347 3,440 4,363 1,448 10,598 (502) 10,096
At 1 January 2021 1,346 3,281 6,755 3,205 14,587 6,221 20,808
Profit for the year 4,385 4,385 711 5,096
Other comprehensive (expense)/ 454 (771) (317) (20) (337)
income for the year
Total comprehensive income for the 4,839 (771) 4,068 691 4,759
year
Distributions to non-controlling interests (642) (642)
Contributions from non-controlling 7 7
interests
Dividends to shareholders (3,999) (3,999) (3,999)
Shares issued 1 20 21 21
Realised after tax profits on disposal 132 (132) -
of equity investments
Share of associates and joint ventures 7 (7) -
realised profits on disposal of equity
investments
Write-down on shares held by ESOP (168) 168 -
Trusts
Share-based incentive plans 367 367 367
Transaction with non-controlling interests 10 10
Tax on share-based incentive plans 11 11 11
At 31 December 2021 1,347 3,301 7,944 2,463 15,055 6,287 21,342
Cash flow statement - year ended 31 December 2022
(amounts presented are from continuing operations unless otherwise specified)
2022 2021((a))
£m £m
Profit after tax from continuing operations 4,921 3,516
Tax on profits 707 83
Share of after tax losses/(profits) of associates and joint ventures 2 (33)
Loss on disposal of interests in associates - 36
Net finance expense 803 755
Depreciation, amortisation and other adjusting items 2,298 2,247
Decrease/(Increase) in working capital 67 (500)
Contingent consideration paid (1,058) (742)
Increase in other net liabilities (excluding contingent consideration paid) 204 1,887
Cash generated from operations attributable to continuing operations 7,944 7,249
Taxation paid (1,310) (972)
Net cash inflow from continuing operating activities 6,634 6,277
Cash generated from operations attributable to discontinued operations 932 1,994
Taxation paid from discontinued operations (163) (319)
Net operating cash flows attributable to discontinued operations 769 1,675
Total net cash inflows from operating activities 7,403 7,952
Cash flow from investing activities
Purchase of property, plant and equipment (1,143) (950)
Proceeds from sale of property, plant and equipment 146 132
Purchase of intangible assets (1,115) (1,704)
Proceeds from sale of intangible assets 196 641
Purchase of equity investments (143) (162)
Purchase of business net of cash acquired (3,108) -
Proceeds from sale of equity investments 238 202
Contingent consideration paid (79) (114)
Disposal of businesses (43) (17)
Investment in associates and joint ventures (1) (1)
Proceeds from disposal of associates and joint ventures - 277
Interest received 64 14
Decrease in liquid investments 1 18
Dividends from associates and joint ventures 6 9
6 9
Net cash outflow from continuing investing activities (4,981) (1,655)
Net investing cash flows attributable to discontinued operations (3,791) (122)
Total net cash outflow from investing activities (8,772) (1,777)
Cash flow from financing activities
Issue of share capital 25 20
Decrease in long-term loans (569) -
Net repayment of short-term loans (4,053) (2,003)
Repayment of lease liabilities (202) (181)
Interest paid (848) (772)
Dividends paid to shareholders (3,467) (3,999)
Distributions to non-controlling interests (521) (239)
Contributions from non-controlling interests 8 7
Other financing items 376 41
Net cash outflow from continuing financing activities (9,251) (7,126)
Net financing cash flows attributable to discontinued operations 10,074 (463)
Total net cash inflow/(outflow) from financing activities 823 (7,589)
Increase/(decrease) in cash and bank overdrafts in the year (546) (1,414)
Cash and bank overdrafts at beginning of the year 3,819 5,262
Exchange adjustments 152 (30)
Increase/(decrease) in cash and bank overdrafts (546) (1,414)
Cash and bank overdrafts at end of the year 3,425 3,818
Cash and bank overdrafts at end of the year comprise:
Cash and cash equivalents 3,723 4,274
3,723 4,274
Overdrafts (298) (456)
3,425 3,818
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34).
Segment information
Operating segments are reported based on the financial information provided to
the Chief Executive Officer and the responsibilities of the GSK Leadership
Team (GLT). GSK has revised its operating segments from Q1 2022 and from Q2
2022. Previously, GSK reported results under four segments: Pharmaceuticals;
Pharmaceuticals R&D; Vaccines and Consumer Healthcare. For the first
quarter 2022, GSK reported results under three segments: Commercial
Operations; Total R&D and Consumer Healthcare. From Q2 2022, GSK reports
results under two segments from continuing operations as the demerger of the
Consumer Healthcare segment was completed on 18 July 2022. Members of the GLT
are responsible for each segment. Comparative information in this announcement
has been retrospectively restated on a consistent basis. The Consumer
Healthcare segment is presented entirely as discontinued operations and
therefore no segment information is presented.
R&D investment is essential for the sustainability of the business.
However, for segment reporting the Commercial operating profits exclude
allocations of globally funded R&D.
The Total R&D segment is the responsibility of the Chief Scientific
Officer and is reported as a separate segment. The operating costs of this
segment includes R&D activities across Specialty Medicines, including HIV
and Vaccines. It include R&D and some SG&A costs relating to
regulatory and other functions.
The Group's management reporting process allocates intra-Group profit on a
product sale to the market in which that sale is recorded, and the profit
analyses below have been presented on that basis.
Turnover by segment
2022 2021 Growth Growth
£m £m £% CER%
Commercial Operations (total turnover) 29,324 24,696 19 13
Operating profit by segment
2022 2021((a)) Growth Growth
£m £m £% CER%
Commercial Operations 13,590 11,467 19 10
Research and Development (5,060) (4,567) 11 5
Segment profit 8,530 6,900 24 13
Corporate and other unallocated costs (379) (407)
Adjusted operating profit 8,151 6,493 26 14
Adjusting items (1,718) (2,136)
Total operating profit 6,433 4,357 48 31
Finance income 76 14
Finance costs (879) (769)
Loss on disposal of interests in associates - (36)
Share of after tax (losses)/profits of (2) 33
associates and joint ventures
Profit before taxation from continuing operations 5,628 3,599 56 37
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34).
Adjusting items reconciling segment profit and operating profit comprise items
not specifically allocated to segment profit. These include impairment and
amortisation of intangible assets, major restructuring costs, which include
impairments of tangible assets and computer software, transaction-related
adjustments related to significant acquisitions, proceeds and costs of
disposals of associates, products and businesses, significant legal charges
and expenses on the settlement of litigation and government investigations,
other operating income other than royalty income and other items.
Turnover by segment
Q4 2022 Q4 2021 Growth Growth
£m £m £% CER%
Commercial Operations (total turnover) 7,376 7,076 4 (3)
Operating profit by segment
Q4 2022 Q4 2021((a)) Growth Growth
£m £m £% CER%
Commercial Operations 3,219 2,697 19 8
Research and Development (1,512) (1,281) 18 10
Segment profit 1,707 1,416 21 6
Corporate and other unallocated costs (112) (98)
Adjusted operating profit 1,595 1,318 21 5
Adjusting items 273 (826)
Total operating profit 1,868 492 >100 >100
Finance income 26 1
Finance costs (270) (188)
Share of after tax (losses)/profits of 2 (2)
associates and joint ventures
Profit before taxation from continuing operations 1,626 303 >100 >100
(a) The 2021 comparative results have been restated on a consistent basis from
those previously published to reflect the demerger of the Consumer Healthcare
business
(see page 34).
Legal matters
The Group is involved in significant legal and administrative proceedings,
principally product liability, intellectual property, tax, anti-trust,
consumer fraud and governmental investigations, which are more fully described
in the 'Legal Proceedings' note in the Annual Report 2021. At 31 December
2022, the Group's aggregate provision for legal and other disputes (not
including tax matters described on page 16 was £0.2 billion (31 December
2021: £0.2 billion).
The Group may become involved in significant legal proceedings in respect of
which it is not possible to meaningfully assess whether the outcome will
result in a probable outflow, or to quantify or reliably estimate the
liability, if any, that could result from ultimate resolution of the
proceedings. In these cases, the Group would provide appropriate disclosures
about such cases, but no provision would be made.
The ultimate liability for legal claims may vary from the amounts provided and
is dependent upon the outcome of litigation proceedings, investigations and
possible settlement negotiations. The Group's position could change over time,
and, therefore, there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material amount the
amount of the provisions reported in the Group's financial accounts.
Significant legal developments since the date of the Q3 2022 results:
Zantac
On 6 December 2022, the court presiding over the federal Multi-District
Litigation (MDL) proceeding granted Defendants' Daubert motions, finding that
Plaintiffs' experts' causation opinions regarding whether Zantac can cause the
five cancers at issue in the MDL (liver, bladder, pancreatic, esophageal, and
stomach) are unreliable and thus inadmissible. Without expert causation
opinions, the MDL Court granted summary judgment to GSK and the other brand
defendants. The MDL Court found that "there is no scientist outside this
litigation who concluded ranitidine causes cancer, and the plaintiffs'
scientists within this litigation systemically utilized unreliable
methodologies," and failed to use "consistent, objective, science-based
standards for the even-handed evaluation of data." This ruling effectively
dismissed approximately 2,200 filed cases in the MDL and is binding on the
46,697 claimants in the registry (32,970 mapped to GSK).
A 13th additional epidemiologic study (Joung et al. 2022) was recently
released. When comparing ranitidine users to other H2 receptor antagonist
(H2RA) users, Joung found no association with overall cancer or any individual
cancer studied (esophageal, gastric, colorectal, liver, pancreatic, lung,
kidney, bladder, and thyroid) and no evidence of dose-response.
GSK will continue to defend itself vigorously against all claims brought at
the state level.
In the California Zantac litigation Cases JCCP 5150 (JCCP), the Court will
hold a Sargon hearing on 16 February 2023 regarding the admissibility of
expert witness testimony, including the testimony of general causation expert
witnesses, for the first bellwether trial. The first bellwether trial is
expected to start on 27 February 2023 in the California JCCP.
Given the complex ownership and marketing of Zantac prescription and
over-the-counter (OTC) medicine over many years, numerous claims involve
several defendants. As a result, some defendants have served one another,
including GSK, with notice of potential indemnification claims about possible
liabilities connected particularly with Zantac OTC. Given the early stage of
the proceedings, GSK cannot meaningfully assess what liability, if any, it may
have, nor can it meaningfully assess the liability of other parties under
relevant indemnification provisions.
Further information regarding the litigation can be found in GSK's 11 August
2022, 16 August 2022, and 7 December 2022 statements. These are available on
www.gsk.com/en-gb/.
Zofran
On 1 June 2021, the Court overseeing the Zofran Multidistrict Litigation (MDL)
in the District of Massachusetts granted GSK's motion for summary judgment on
federal pre-emption grounds. At that time, the District Court granted judgment
for GSK in all cases pending in the MDL (approximately 431 cases) and closed
the MDL proceeding. Plaintiffs appealed this decision and, on 9 January 2023,
the United States Court of Appeals for the First Circuit affirmed the district
court's decision in favour of GSK. There remains one state court case and four
proposed class actions in Canada.
Additional information
Disposal group and discontinued operations accounting policy
Disposal groups are classified as held for distribution if their carrying
amount will be recovered principally through a distribution to shareholders
rather than through continuing use, they are available for distribution in
their present condition and the distribution is considered highly probable.
They are measured at the lower of their carrying amount and fair value less
costs to distribute.
Non-current assets included as part of a disposal group are not depreciated or
amortised while they are classified as held for distribution. The assets and
liabilities of a disposal group classified as held for distribution are
presented separately from the other assets and liabilities in the balance
sheet.
A discontinued operation is a component of the entity that has been disposed
of or distributed or is classified as held for distribution and that
represents a separate major line of business. The results of discontinued
operations are presented separately in the statement of profit or loss and
comparatives are restated on a consistent basis.
Accounting policies and basis of preparation
This unaudited Results Announcement contains condensed financial information
for the year-end and three months ended 31 December 2022 and should be read in
conjunction with the Annual Report 2021, which was prepared in accordance with
United Kingdom adopted International Financial Reporting Standards. This
Results Announcement has been prepared applying consistent accounting policies
to those applied by the Group in the Annual Report 2021.
The Group has not identified any changes to its key sources of accounting
judgements or estimations of uncertainty compared with those disclosed in the
Annual Report 2021.
This Results Announcement does not constitute statutory accounts of the Group
within the meaning of sections 434(3) and 435(3) of the Companies Act 2006.
The full Group accounts for 2021 were published in the Annual Report 2021,
which has been delivered to the Registrar of Companies and on which the report
of the independent auditor was unqualified and did not contain a statement
under section 498 of the Companies Act 2006.
COVID-19 pandemic
The potential impact of the COVID-19 pandemic on GSK's trading performance and
all its principal risks is continually assessed, with appropriate mitigation
plans put in place on an as-needed basis. In 2022, GSK was encouraged by the
uptake of its vaccines and medicines. The company remains confident in the
underlying demand for its vaccines and medicines, especially given the
significant number of COVID-19 vaccinations and boosters administered
worldwide. However, the pandemic remains a significant ongoing risk, with the
World Health Organization continuing to monitor the emergence of new variants.
The current rate of infection is predominantly driven by the circulation of
the BA.5 subvariant and its descendent lineages, which are still the dominant
subvariants of Omicron globally. While COVID-19 vaccines are being updated
with Omicron variants to provide broader immunity against circulating and
emerging variants, these subvariants and potential future variants of concern
could potentially impact GSK's trading results, clinical trials, supply
continuity and its employees materially.
Exchange rates
GSK operates in many countries and earns revenues and incurs costs in many
currencies. The results of the Group, as reported in Sterling, are affected by
movements in exchange rates between Sterling and other currencies. Average
exchange rates, as modified by specific transaction rates for large
transactions, prevailing during the period, are used to translate the results
and cash flows of overseas subsidiaries, associates and joint ventures into
Sterling. Period-end rates are used to translate the net assets of those
entities. The currencies which most influenced these translations and the
relevant exchange rates were:
2022 2021 Q4 2022 Q4 2021
Average rates:
US$/£ 1.24 1.38 1.19 1.36
Euro/£ 1.17 1.16 1.15 1.18
Yen/£ 161 151 165 154
Period-end rates:
US$/£ 1.20 1.35 1.20 1.35
Euro/£ 1.13 1.19 1.13 1.19
Yen/£ 159 155 159 155
Net assets
The book value of net assets decreased by £11,246 million from £21,342
million at 31 December 2021 to £10,096 million at 31 December 2022. This
primarily reflected the demerger of the Consumer Healthcare business and
dividends paid to shareholders partially offset by Total comprehensive income
for the period.
The retained stake in Haleon of £4,087 million is recognised as a current
equity investment.
The carrying value of investments in associates and joint ventures at 31
December 2022 was £74 million (31 December 2021: £88 million), with a market
value of £74 million (31 December 2021: £88 million).
At 31 December 2022, the net deficit on the Group's pension plans was £1,355
million compared with £1,129 million at 31 December 2021. This increase in
the net deficit is primarily related to lower asset values, an increase in the
US cash balance credit rate from 2.0% to 3.9%, Eurozone inflation rates from
2.1% to 2.4% and an actuarial experience adjustment for higher inflation than
expected in pension increases of approximately £800 million. These are
partially offset by increases in the long term UK discount rate from 2.0% to
4.8%, Eurozone discount rates from 1.3% to 3.7%, the US discount rate from
2.7% to 5.3%, lower UK inflation rate from 3.2% to 3.1% and cash contributions
of approximately £700 million made to the UK pension schemes.
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 £1,093 million (31 December 2021: £1,008 million).
Contingent consideration amounted to £7,068 million at 31 December 2022 (31
December 2021: £6,076 million), of which £5,890 million (31 December 2021:
£5,559 million) represented the estimated present value of amounts payable to
Shionogi relating to ViiV Healthcare, £673 million (31 December 2021: £479
million) represented the estimated present value of contingent consideration
payable to Novartis related to the Vaccines acquisition and £501 million (31
December 2021: £nil) represented the estimated present value of contingent
consideration payable to Affinivax.
Of the contingent consideration payable (on a post-tax basis) to Shionogi at
31 December 2022, £940 million (31 December 2021: £937 million) is expected
to be paid within one year.
Movements in contingent consideration are as follows:
2022 ViiV Group
Healthcare £m
£m
Contingent consideration at beginning of the period 5,559 6,076
Remeasurement through income statement and other movements 1,431 2,129
Cash payments: operating cash flows (1,031) (1,058)
Cash payments: investing activities (69) (79)
Contingent consideration at end of the period 5,890 7,068
2021 ViiV Group
Healthcare £m
£m
Contingent consideration at beginning of the period 5,359 5,869
Remeasurement through income statement and other movements 1,026 1,063
Cash payments: operating cash flows (721) (742)
Cash payments: investing activities (105) (114)
Contingent consideration at end of the period 5,559 6,076
The liabilities for the Pfizer put option and the contingent consideration at
31 December 2022 have been calculated based on the period-end exchange rates,
primarily US$1.20/£1 and €1.13/£1. Sensitivity analyses for the Pfizer put
option and each of the largest contingent consideration liabilities are set
out below for the following scenarios:
Increase/(decrease) in liability Shionogi- Novartis Affinivax
ViiV ViiV Healthcare Vaccines contingent
Healthcare contingent contingent consideration
put option consideration consideration £m
£m £m £m
10% increase in sales forecasts* 100 556 103 n/a
10% decrease in sales forecasts* (99) (555) (103) n/a
10% increase in probability milestone success n/a n/a 20 82
10% decrease in probability milestone success n/a n/a (10) (82)
1% (100 basis points) increase in discount rate (32) (200) (55) (7)
1% (100 basis points) decrease in discount rate 35 215 65 7
10 cent appreciation of US Dollar 66 411 22 45
10 cent depreciation of US Dollar (56) (347) (19) (38)
10 cent appreciation of Euro 29 109 23 n/a
10 cent depreciation of Euro (24) (91) (19) n/a
* The sales forecast is for ViiV Healthcare sales only in respect of the ViiV
Healthcare put option and the Shionogi-ViiV Healthcare contingent
consideration.
Contingent liabilities
There were contingent liabilities at 31 December 2022 in respect of guarantees
and indemnities entered into as part of the ordinary course of the Group's
business. No material losses are expected to arise from such contingent
liabilities. Provision is made for the outcome of legal and tax disputes where
it is both probable that the Group will suffer an outflow of funds and it is
possible to make a reliable estimate of that outflow. Descriptions of the
significant legal disputes to which the Group is a party are set out on page
51 and on pages 248 and 249 of the Annual Report 2021.
Business acquisitions
On 1 July 2022, GSK completed the acquisition of 100% of Sierra Oncology, Inc.
a California-based, late-stage biopharmaceutical company focused on targeted
therapies for the treatment of rare forms of cancer, for $1.9 billion (£1.6
billion). The main asset is momelotinib which targets the medical needs of
myelofibrosis patients with anaemia.
On 15 August 2022, GSK completed the acquisition of 100% of Affinivax, Inc.
(Affinivax), a clinical-stage biopharmaceutical company based in Cambridge,
Boston, Massachusetts focused on pneumococcal vaccine candidates. The
consideration for the acquisition comprised an upfront payment of $2.2 billion
(£1.8 billion) as adjusted for working capital acquired paid upon closing and
two potential milestone payments of $0.6 billion (£0.5 billion) each to be
paid upon the achievement of certain paediatric clinical development
milestones. The estimated fair value of the contingent consideration payable
was £482 million. The values are provisional and are subject to change.
Since acquisition no sales arising from the Sierra Oncology or Affinivax
businesses have been included in Group turnover and no revenue is expected
until regulatory approval is received on the acquired assets. GSK continues to
support the ongoing development of the acquired assets and consequently these
assets will be loss making until regulatory approval on the assets is
received. The development of these assets has been integrated into the Groups'
existing R&D activities, so it is impracticable to quantify the
development costs for the period.
The fair values of the net assets acquired, including goodwill, are as
follows:
Sierra Oncology Affinivax
£m £m
Net assets acquired:
Intangible assets 1,497 1,467
Inventory 60 -
Other net assets/(liabilities) 137 76
Deferred tax liabilities (259) (236)
1,435 1,307
Goodwill 162 965
Total consideration 1,597 2,272
Discontinued operations
Consumer Healthcare has been presented as a discontinued operation from Q2
2022. The demerger of Haleon was completed on 18 July 2022. Financial
information relating to the operations of Consumer Healthcare for the period
until demerger on 18 July 2022 is set out below. The Group Income Statement
and Group Cash Flow Statement distinguish discontinued operations from
continuing operations. Comparative figures have been restated on a consistent
basis.
This financial information differs both in purpose and basis of preparation
from the Historical Financial Information and the Interim Financial
Information included in the Haleon prospectus and from that which will be
published by Haleon on 2 March 2023. As a result, whilst the two sets of
financial information are similar, they are not the same because of certain
differences in accounting and disclosure under IFRS.
Total Results 2022 2021 Q4 2022 Q4 2021
£m £m £m £m
Turnover 5,581 9,418 - 2,451
Other income/(expenses) (4,730) (7,575) (5) (2,048)
Profit before tax 851 1,843 (5) 403
Taxation (235) (263) - 107
Tax rate% 27.6% 14.3% - (26.6%)
(Loss)/profit after taxation from discontinued 616 1,580 (5) 510
operations: Consumer Healthcare
Other gains/(losses) from the demerger 2,433 - - -
Remeasurement of discontinued operations 7,651 - - -
distributed to shareholders on demerger
Profit after taxation from discontinued operations 10,700 1,580 (5) 510
Non-controlling interest in discontinued operations 205 511 - 187
Earnings attributable to shareholders from 10,495 1,069 (5) 323
discontinued operations
Earnings per share from discontinued operations 260.6p 26.7p (0.1)p 8.1p
The profit after taxation from discontinued operations for Consumer Healthcare
of £616 million in full-year 2022 includes separation and transaction costs
of £366 million.
Divestments
On 18 July 2022, GSK plc separated its Consumer Healthcare business from the
GSK Group to form Haleon, an independent listed company. The separation was
effected by way of a demerger of 80.1% of GSK's 68% holding in the Consumer
Healthcare business to GSK shareholders. Following the demerger, 54.5% of
Haleon was held in aggregate by GSK Shareholders, 6.0% remains held by GSK
(including shares received by GSK's consolidated ESOP trusts) and 7.5% remains
held by certain Scottish limited partnerships (SLPs) set up to provide
collateral for a funding mechanism pursuant to which GSK will provide
additional funding for GSK's UK defined benefit Pension Schemes. The aggregate
ownership by GSK (including ownership by the ESOP trusts and SLPs) after the
demerger of 13.5% is measured at fair value with changes through profit or
loss. Pfizer held 32% of Haleon after the demerger.
Under IFRIC 17 'Distributions of Non-cash Assets to Owners' a liability and an
equity distribution are measured at the fair value of the assets to be
distributed when the dividend is appropriately authorised and it is no longer
at the entity's discretion. The liability and equity movement, and associated
gain on distribution was recognised in Q3 2022 when the demerger distribution
was authorised and occurred.
The asset distributed was the 54.5% ownership of the Consumer Healthcare
business. The net carrying value of the Consumer Healthcare business in the
consolidated financial statements, including the retained 13.5% and net of the
amount attributable to the non-controlling interest, was approximately £11.5
billion at the end of June. GSK's £6.3 billion share of the shareholder loans
made in Q1 2022 in advance of the pre-separation dividends was eliminated in
the consolidated financial statements. The assets distributed were reduced by
Consumer Healthcare transactions up to 18 July that principally included
pre-separation dividends declared and settled after the end of Q2 2022 and
before 18 July 2022. Those dividends included: £10.4 billion (£7.1 billion
attributable to GSK) of dividends funded by Consumer Healthcare debt that was
partially on-lent during Q1 2022 and dividends of £0.6 billion (£0.4 billion
attributable to GSK) from available cash balances.
The fair value of the 54.5% ownership of the Consumer Healthcare business
distributed was £15.5 billion. This was measured by reference to the quoted
average Haleon share price over the first five days of trading, this being a
fair value measured with observable inputs which is considered to be
representative of the fair value at the distribution date. A gain on
distribution of this fair value less book value of the attributable net assets
of the Consumer Healthcare business of £7.7 billion was recorded in the
Income Statement in the full-year 2022. There was an additional gain of £2.4
billion to remeasure the retained 13.5% from its book value to fair value of
£3.9 billion using the same fair value methodology as used for the
distributed shares in the full-year 2022. The gain on distribution and on
remeasurement of the retained stake upon demerger is presented as part of
discontinued operations. In addition, there was a reclassification of the
Group's share of cumulative exchange differences arising on translation of the
foreign currency net assets of the divested subsidiaries and offsetting net
investment hedges from reserves into the Income Statement of £0.6 billion.
The total gain on the demerger of Consumer Healthcare was £10.1 billion in
the full-year 2022.
Following finalisation of the demerger accounting, an adjustment of £0.5
billion to increase the gain on the demerger of Consumer Healthcare as
disclosed in Q3 2022 from £9.6 billion to £10.1 billion for the full-year
has been recorded. This gain relates to an adjustment for deferred profit in
inventory. These transactions are presented in profit from discontinued
operations (adjusting items) in the full-year 2022 results. The adjustment has
been recorded retrospectively within the Q3 2022 results and will be reflected
in the comparator for disclosure in the Q3 2023 results. These transactions
are presented in profit from discontinued operations (adjusting items) in the
full-year 2022.
Any future gains or losses on the retained stake of 13.5% in Haleon will be
recognised in adjusting items in continuing operations.
2022
£bn
Fair value of the Consumer Healthcare business distributed (54.5%) 15.5
Fair value of the retained ownership in Haleon (13.5%) 3.9
Total fair value 19.4
Carrying amount of the net assets and liabilities distributed/derecognised (12.9)
Carrying amount of the non-controlling interest de-recognised 3.0
Gain on demerger before exchange movements and transaction costs 9.5
Reclassification of exchange movements on disposal of overseas subsidiaries 0.6
Total gain on the demerger of Consumer Healthcare 10.1
Total transaction costs incurred in Q4 2022 were £1 million and £103 million
in the year ended 2022. These transaction costs were incurred in connection
with the demerger and preparatory admission costs related to the listing of
Haleon and are reported as part of the profit from discontinued operations in
the Total to Adjusted presentation on page 18.
Share Consolidation
Following completion of the Consumer Healthcare business demerger on 18 July
2022, GSK plc Ordinary shares were consolidated to maintain share price
comparability before and after demerger. The consolidation was approved by GSK
shareholders at a General Meeting held on 6 July 2022. Shareholders received 4
new Ordinary shares with a nominal value of 31¼ pence each for every 5
existing Ordinary share which had a nominal value of 25 pence each. Earnings
per share, diluted earnings per share, adjusted earnings per share and
dividends per share were retrospectively adjusted to reflect the Share
Consolidation in all the periods presented.
Related party transactions
Details of GSK's related party transactions are disclosed on page 221 of our
2021 Account Report and Accounts.
Reconciliation of cash flow to movements in net debt
2022 2021
£m £m
Total Net debt at beginning of the period (19,838) (20,780)
Decrease in cash and bank overdrafts (7,598) (2,504)
Decrease in liquid investments (1) (18)
Net decrease in short-term loans 4,053 2,003
Net decrease in long-term loans 569 -
Repayment of lease liabilities 202 181
Debt of subsidiary undertaking acquired (24) -
Exchange adjustments (1,530) 314
Other non-cash movements (207) (134)
Decrease/(increase) in net debt from continuing operations (4,536) (158)
Decrease/(increase) in net debt from discontinued operations 7,177 1,100
Total Net debt at end of the period (17,197) (19,838)
Net debt analysis
2022 2021
£m £m
Liquid investments 67 61
Cash and cash equivalents 3,723 4,274
Short-term borrowings (3,952) (3,601)
Long-term borrowings (17,035) (20,572)
Total Net debt at the end of the period (17,197) (19,838)
Free cash flow reconciliation from continuing operations
2022 2021 Q4 2022
£m £m £m
Net cash inflow from continuing operating activities 6,634 6,277 1,901
Purchase of property, plant and equipment (1,143) (950) (438)
Proceeds from sale of property, plant and equipment 146 132 133
Purchase of intangible assets (1,115) (1,704) (313)
Proceeds from disposals of intangible assets 196 641 70
Net finance costs (784) (758) (329)
Dividends from joint ventures and associates 6 9 6
Contingent consideration paid (reported in investing (79) (114) (4)
activities)
Distributions to non-controlling interests (521) (239) (131)
Contributions from non-controlling interests 8 7 -
Free cash inflow from continuing operations 3,348 3,301 895
R&D commentary
Pipeline overview
Medicines and vaccines in phase III development (including major lifecycle 18 Infectious Diseases (8)
innovation or under regulatory review)
· Bexsero infants vaccine (US)
· SKYCovione (SK) COVID-19
· MenABCWY (1st gen) vaccine candidate
· RSV older adult vaccine candidate
· bepirovirsen (HBV ASO) hepatitis B virus
· gepotidacin (bacterial topoisomerase inhibitor) uncomplicated urinary tract
infection and urogenital gonorrhoea
· tebipenem pivoxil (antibacterial carbapenem) complicated urinary tract
infection
· Xevudy (sotrovimab/VIR-7831) COVID-19
Oncology (5)
· Blenrep (anti-BCMA ADC) multiple myeloma
· cobolimab (anti-TIM-3) non-small cell lung cancer
· Jemperli (anti-PD-1) 1L endometrial cancer
· momelotinib (JAK1, JAK2 and ACVR1 inhibitor) myelofibrosis with anaemia
· Zejula (PARP inhibitor) 1L ovarian, lung and breast cancer
Immunology (3)
· depemokimab (long acting anti-IL5) severe eosinophilic asthma, eosinophilic
granulomatosis with polyangiitis, chronic rhinosinusitis with nasal polyps,
hyper-eosinophilic syndrome
· latozinemab (AL001, anti-sortilin) frontotemporal dementia
· Nucala chronic obstructive pulmonary disease
Opportunity driven (2)
· daprodustat (HIF-PHI) anaemia of chronic kidney disease
· linerixibat (IBATi) cholestatic pruritus in primary biliary cholangitis
Total vaccines and medicines in all phases of clinical development 69
Total projects in clinical development (inclusive of all phases and 89
indications)
Our key growth assets by therapy area
The following outlines several key vaccines and medicines by therapy area that
will help drive growth for GSK to meet its outlooks and ambition for 2021-2026
and beyond.
Infectious Diseases
bepirovirsen (HBV ASO)
Bepirovirsen is a potential new treatment option for people with chronic
hepatitis B as either a monotherapy or combination therapy with both existing
and novel treatments. Two randomised, double-blind, placebo-controlled phase
III trials (B-Well 1 and B-Well 2) evaluating the safety and efficacy of
bepirovirsen have started and are actively recruiting patients.
In June 2022, GSK announced promising interim results from the B-Clear phase
IIb trial showing that bepirovirsen reduced levels of hepatitis B surface
antigen (HBsAg) and hepatitis B virus (HBV) DNA, which together are key
measures of efficacy, after 24 weeks treatment in people with chronic
hepatitis B (CHB). These data were presented in an oral late-breaker session
at the European Association for the Study of the Liver's International Liver
Congress (ILC) in June 2022 in London, UK. The final, B-Clear end of study
results showed that treatment with bepirovirsen resulted in sustained
seroclearance of hepatitis B surface antigen (HBsAg) and hepatitis B virus
(HBV) DNA both in patients on concurrent NA therapy and patients not-on-NA
therapy. The final results were presented at the American Association for the
Study of Liver Diseases (AASLD) Liver Meeting in November 2022, and
simultaneously published in the New England Journal of Medicine.
In December 2022, GSK entered into an exclusive license agreement with
biopharma company Zhimeng for CB06-036, a TLR8 agonist. Subject to successful
completion of phase I, the agreement will allow GSK to develop, manufacture
and commercialise CB06-036. If successful, CB06-036 could be used in
combination, or as a sequential treatment with bepirovirsen, to potentially
achieve functional cure in more patients.
Key trials for bepirovirsen:
Trial name (population) Phase Design Timeline Status
B-Well 1 bepirovirsen in nucleos(t)ide treated patients (chronic hepatitis B) III A multi-centre, randomised, double-blind, placebo-controlled study to confirm Trial Start: Recruiting
the efficacy and safety of treatment with bepirovirsen in participants with
chronic hepatitis B virus Q1 2023
NCT05630807
B-Well 2 bepirovirsen in nucleos(t)ide treated patients (chronic hepatitis B) III A multi-centre, randomised, double-blind, placebo-controlled study to confirm Trial Start: Recruiting
the efficacy and safety of treatment with bepirovirsen in participants with
chronic hepatitis B virus Q1 2023
NCT05630820
B-Clear bepirovirsen monotherapy (chronic hepatitis B) IIb A multi-centre, randomised, partial-blind parallel cohort trial to assess the Trial start: Complete;
efficacy and safety of treatment with bepirovirsen in participants with
chronic hepatitis B virus Q3 2020 full data presented
NCT04449029
B-Together bepirovirsen sequential combination therapy with Peg-interferon II A multi-centre, randomised, open label trial to assess the efficacy and safety Trial start: Active, not recruiting
phase II (chronic hepatitis B) of sequential treatment with bepirovirsen followed by Pegylated Interferon
Alpha 2a in participants with chronic hepatitis B virus Q1 2021
NCT04676724
bepirovirsen sequential combination therapy with targeted immunotherapy II A trial on the safety, efficacy and immune response following sequential Trial start: Recruiting
treatment with an anti-sense oligonucleotide against chronic hepatitis B (CHB)
(chronic hepatitis B) and chronic hepatitis B targeted immunotherapy (CHB-TI) in CHB patients Q2 2022
receiving nucleos(t)ide analogue (NA) therapy
NCT05276297
gepotidacin (bacterial topoisomerase inhibitor)
In November 2022, GSK announced that the pivotal phase III EAGLE-2 and EAGLE-3
trials evaluating gepotidacin, an investigational treatment for uncomplicated
urinary tract infection (uUTI) in female adults and adolescents, would stop
enrolment early for efficacy following a recommendation by the Independent
Data Monitoring Committee (IDMC). This decision was based on a pre-specified
interim analysis of efficacy and safety data in over 3000 patients across the
trials. The full phase III results will also be submitted for presentation at
a scientific congress and for publication in a peer-reviewed journal in 2023.
GSK is working with regulatory authorities to commence regulatory filings for
gepotidacin in H1 2023.
Key phase III trials for gepotidacin:
Trial name (population) Phase Design Timeline Status
EAGLE-1 (uncomplicated urogenital gonorrhoea) III A randomised, multi-centre, open-label trial in adolescent and adult Trial start: Recruiting
participants comparing the efficacy and safety of gepotidacin to ceftriaxone
plus azithromycin in the treatment of uncomplicated urogenital gonorrhoea Q4 2019
caused by Neisseria gonorrhoeae
NCT04010539
EAGLE-2 (females with uUTI / acute cystitis) III A randomised, multi-centre, parallel-group, double-blind, double-dummy trial Trial start: Complete; primary endpoint met
in adolescent and adult female participants comparing the efficacy and safety
of gepotidacin to nitrofurantoin in the treatment of uncomplicated urinary Q4 2019
tract infection (acute cystitis)
NCT04020341
EAGLE-3 (females with uUTI / acute cystitis) III A randomised, multi-centre, parallel-group, double-blind, double-dummy trial Trial start: Complete; primary endpoint met
in adolescent and adult female participants comparing the efficacy and safety
of gepotidacin to nitrofurantoin in the treatment of uncomplicated urinary Q2 2020
tract infection (acute cystitis)
NCT04187144
MenABCWY vaccine candidate
GSK is developing two MenABCWY pentavalent (5-in-1) vaccines. The first
generation is in late-stage development and the second generation is in phase
II clinical development. The goal is to prevent disease caused by
meningococcal bacteria serogroups A, B, C, W, and Y. Testing for the phase III
trial of our first generation MenABCWY candidate vaccine is being finalised,
with the read out anticipated for H1 2023 and US Food and Drug Administration
(FDA) filing expected later in the year.
Key trials for MenABCWY vaccine candidate:
Trial name (population) Phase Design Timeline Status
MenABCWY - 019 IIIb A randomised, controlled, observer-blind trial to evaluate safety and Trial start: Active, not recruiting
immunogenicity of GSK's meningococcal ABCWY vaccine when administered in
healthy adolescents and adults, previously primed with meningococcal ACWY Q1 2021
vaccine
NCT04707391
MenABCWY - V72 72 III A randomised, controlled, observer-blind trial to demonstrate effectiveness, Trial start: Complete
immunogenicity, and safety of GSK's meningococcal Group B and combined ABCWY
vaccines when administered to healthy adolescents and young adults Q3 2020
NCT04502693
RSV vaccine candidates
In November 2022, GSK submitted a New Drug Submission (NDS) to Health Canada
for its respiratory syncytial virus (RSV) older adult vaccine candidate. GSK's
RSV older adult vaccine candidate is also under regulatory review by the US
FDA, the European Medicines Agency (EMA) and the Japanese Ministry of Health,
Labour and Welfare (MHLW) with decisions anticipated throughout 2023.
In Q4 2022, GSK began a phase III trial to assess the RSV older adult vaccine
candidate in adults 50-59 years of age, including adults at increased risk of
RSV lower respiratory tract disease, compared to older adults ≥60 years of
age. GSK also began two new trials to evaluate the vaccine candidate when
co-administered with adjuvanted and high dose influenza vaccines in adults
aged 65 years and above.
Key phase III trials for RSV older adult and maternal vaccine candidates:
Trial name (population) Phase Design Timeline Status
RSV OA=ADJ-004 III A randomised, open-label, multi-country trial to evaluate the immunogenicity, Trial start: Active, not recruiting; primary endpoint met
safety, reactogenicity and persistence of a single dose of the RSVPreF3 OA
(Adults ≥ 60 years old) investigational vaccine and different revaccination schedules in adults aged Q1 2021
60 years and above
NCT04732871
RSV OA=ADJ-006 III A randomised, placebo-controlled, observer-blind, multi-country trial to Trial start: Active, not recruiting; primary endpoint met
demonstrate the efficacy of a single dose of GSK's RSVPreF3 OA investigational
(ARESVI-006; Adults ≥ 60 years old) vaccine in adults aged 60 years and above Q2 2021
NCT04886596
RSV OA=ADJ-007 III An open-label, randomised, controlled, multi-country trial to evaluate the Trial start: Complete; primary endpoint met
immune response, safety and reactogenicity of RSVPreF3 OA investigational
(Adults ≥ 60 years old) vaccine when co-administered with FLU-QIV vaccine in adults aged 60 years and Q2 2021
above
NCT04841577
RSV OA=ADJ-008 III A phase III, open-label, randomised, controlled, multi country study to Trial start: Active, not recruiting
evaluate the immune response, safety and reactogenicity of RSVPreF3 OA
investigational vaccine when co-administered with FLU HD vaccine in adults Q4 2022
aged 65 years and above
(Adults ≥ 65 years old)
NCT05559476
RSV OA=ADJ-009 III A randomised, double-blind, multi-country trial to evaluate consistency, Trial start: Complete; primary endpoint met
safety, and reactogenicity of 3 lots of RSVPreF3 OA investigational vaccine
(Adults ≥ 60 years old) administrated as a single dose in adults aged 60 years and above Q4 2021
NCT05059301
RSV OA=ADJ-017 III A phase III, open-label, randomised, controlled, multi-country study to Trial start: Active, not recruiting
evaluate the immune response, safety and reactogenicity of an RSVPreF3 OA
(Adults ≥ 65 years old) investigational vaccine when co-administered with FLU aQIV (inactivated Q4 2022
influenza vaccine - adjuvanted) in adults aged 65 years and above
NCT05568797
RSV OA=ADJ-018 III A phase III, observer-blind, randomised, placebo controlled study to evaluate Trial start: Recruiting
the non inferiority of the immune response and safety of the RSVPreF3 OA
(Adults 50-59 years) investigational vaccine in adults 50 59 years of age, including adults at Q4 2022
increased risk of respiratory syncytial virus lower respiratory tract disease,
compared to older adults ≥60 years of age.
NCT05590403
GRACE (pregnant women aged 18-49 years old) III A randomised, double-blind, placebo-controlled multi-country trial to Trial start: Stopped enrolment and vaccination
demonstrate efficacy of a single dose of unadjuvanted RSV maternal vaccine,
administered IM to pregnant women 18 to 49 years of age, for prevention of RSV Q4 2020
associated LRTIs in their infants up to 6 months of age
NCT04605159
Trial stopped enrolment and vaccination:
Q1 2022
HIV
cabotegravir
ViiV Healthcare presented 12-month findings from the CARISEL study
(Cabotegravir And Rilpivirine Implementation Study in European Locations), at
the 30th HIV Glasgow Conference in Glasgow, Scotland from 23-26 October, which
evaluated the perspectives of people living with HIV and healthcare teams
through surveys and interviews in addition to evaluating clinical
effectiveness. The study demonstrated that ViiV Healthcare's Vocabria
(cabotegravir injection) and Janssen Pharmaceutical Companies of Johnson and
Johnson's Rekambys (rilpivirine long-acting injectable suspension) were
successfully implemented across a range of European healthcare settings. The
study also reported that 81% of people living with HIV found the complete
long-acting regimen less stigmatising than daily oral treatment reinforcing
the importance of continued research in HIV long-acting regimens.
Key phase III trials for cabotegravir:
Trial name (population) Phase Design Timeline Status
HPTN 083 IIb/III A double-blind safety and efficacy trial of injectable cabotegravir compared Trial start: Active; not recruiting; primary endpoint met (superiority)
to daily oral tenofovir disoproxil fumarate/emtricitabine (TDF/FTC), for
(HIV uninfected cisgender men and transgender women who have sex with men) Pre-Exposure Prophylaxis in HIV-uninfected cisgender men and transgender women Q4 2016
who have sex with men
NCT02720094
HPTN 084 III A double-blind safety and efficacy trial of long-acting injectable Trial start: Active; not recruiting; primary endpoint met (superiority)
cabotegravir compared to daily oral TDF/FTC for Pre-Exposure Prophylaxis in
(HIV uninfected women who are at high risk of acquiring HIV) HIV-Uninfected women Q4 2017
NCT03164564
ATLAS III A randomised, multi-centre, parallel-group, non-inferiority, open-label trial Trial start: Active; not recruiting; primary endpoint met (non-inferiority)
evaluating the efficacy, safety, and tolerability of switching to long-acting
cabotegravir plus long-acting rilpivirine from current INI- NNRTI-, or Q4 2016
PI-based antiretroviral regimen in HIV-1-infected adults who are virologically
NCT02951052 suppressed
ATLAS-2M IIIb A randomised, multi-centre, parallel-group, non-inferiority, open-label trial Trial start: Active; not recruiting; primary endpoint met (non-inferiority)
evaluating the efficacy, safety, and tolerability of long-acting cabotegravir
plus long-acting rilpivirine administered every 8 weeks or every 4 weeks in Q4 2017
HIV-1-infected adults who are virologically suppressed
NCT03299049
FLAIR III A randomised, multi-centre, parallel-group, open-label trial evaluating the Trial start: Active; not recruiting; primary endpoint met (non-inferiority)
efficacy, safety, and tolerability of long-acting intramuscular cabotegravir
and rilpivirine for maintenance of virologic suppression following switch from Q4 2016
an integrase inhibitor single tablet regimen in HIV-1 infected antiretroviral
NCT02938520 therapy naïve adult participants
Oncology
Blenrep (belantamab mafodotin)
In November 2022, GSK announced it has initiated the process for withdrawal of
the US marketing authorisation for Blenrep following the request of the US
FDA. This request was based on the outcome of the DREAMM-3 phase III
confirmatory trial, which did not meet the requirements of the US FDA
Accelerated Approval regulations. Additional studies within the DREAMM
(DRiving Excellence in Approaches to Multiple Myeloma) clinical trial
programme are ongoing, evaluating belantamab mafodotin in earlier lines of
therapy and in combination. We anticipate data from DREAMM-7 and DREAMM-8 in
the second-line setting in the second half of 2023.
In December, data presented at the American Society of Hematology (ASH) Annual
Meeting and Exposition featured new findings from clinical trials of
belantamab mafodotin in relapsed/refractory and newly diagnosed multiple
myeloma, focusing on the potential of combination approaches for belantamab
mafodotin through our investigator-sponsored studies and supported
collaborative studies. Updated results from ALGONQUIN evaluating the
combination of belantamab mafodotin with pomalidomide and dexamethasone in
relapsed/refractory patients who received two or more prior lines of treatment
demonstrated a significantly longer progression-free survival compared with a
historical control cohort. Additionally, results from BelaRd, a dose and
schedule evaluation study to investigate the safety and clinical activity of
belantamab mafodotin in combination with lenalidomide and dexamethasone in
patients with transplant-ineligible newly diagnosed multiple myeloma, showed a
strong efficacy and a manageable safety profile.
In addition, a presentation of the final analysis of the long-term safety and
efficacy data for the DREAMM-2 trial showed deep and durable response of
belantamab mafodotin for the treatment of patients with relapsed or refractory
multiple myeloma who have received at least three prior therapies including an
anti-CD38 monoclonal antibody, a proteasome inhibitor, and an immunomodulatory
agent.
Key phase III trials for Blenrep:
Trial name (population) Phase Design Timeline Status
DREAMM-3 (3L/4L+ MM pts who have failed Len + PI) III An open-label, randomised trial to evaluate the efficacy and safety of Trial start: Active, not recruiting; primary endpoint not met
single-agent belantamab mafodotin compared to pomalidomide plus low dose
dexamethasone (pom/dex) in participants with relapsed/refractory multiple Q2 2020
myeloma
NCT04162210
DREAMM-7 (2L+ MM pts) III A multi-centre, open-label, randomised trial to evaluate the efficacy and Trial start: Active, not recruiting
safety of the combination of belantamab mafodotin, bortezomib, and
dexamethasone (B-Vd) compared with the combination of daratumumab, bortezomib Q2 2020
and dexamethasone (D-Vd) in participants with relapsed/refractory multiple
NCT04246047 myeloma
DREAMM-8 (2L+ MM pts) III A multi-centre, open-label, randomised trial to evaluate the efficacy and Trial start: Enrolment complete
safety of belantamab mafodotin in combination with pomalidomide and
dexamethasone (B-Pd) versus pomalidomide plus bortezomib and dexamethasone Q4 2020
(P-Vd) in participants with relapsed/refractory multiple myeloma
NCT04484623
Jemperli (dostarlimab)
In December, GSK announced positive headline results from the planned interim
analysis of Part 1 of the RUBY/ENGOT-EN6/GOG3031/NSGO phase III trial
investigating Jemperli (dostarlimab) plus standard-of-care chemotherapy
(carboplatin-paclitaxel) followed by Jemperli compared to chemotherapy plus
placebo followed by placebo in adult patients with primary advanced or
recurrent endometrial cancer. The trial met its primary endpoint of
investigator-assessed progression-free survival (PFS) and showed a
statistically significant and clinically meaningful benefit in the
prespecified mismatch repair deficient (dMMR)/microsatellite instability-high
(MSI-H) patient subgroup and in the overall population. The safety and
tolerability profile of dostarlimab in the RUBY phase III trial was consistent
with clinical trials of similar regimens.
While the overall survival (OS) data were immature at the time of this
analysis, a favourable trend was observed in the overall population, including
both the dMMR/MSI-H and MMRp/MSS subgroups. Full results from the trial will
be published in a medical journal and presented at an upcoming scientific
meeting.
GSK also announced full results of the PERLA phase II trial at the European
Society for Medical Oncology (ESMO) Immuno-Oncology Congress 2022 in Geneva,
Switzerland. The trial evaluated dostarlimab in combination with chemotherapy
versus pembrolizumab in combination with chemotherapy in first-line patients
with metastatic non-squamous non-small cell lung cancer (NSCLC).
The PERLA phase II trial is a randomised, double-blind trial of 243 patients
and is the largest global head-to-head trial of PD-1 inhibitors in this
population. The confirmed objective response rate was 46% in patients treated
with investigational dostarlimab combination versus 37% in the pembrolizumab
combination. The key secondary endpoint of median progression-free survival
was 8.8 months in the dostarlimab treatment arm versus 6.7 months in the
pembrolizumab treatment arm.
Key trials for Jemperli:
Trial name (population) Phase Design Timeline Status
RUBY III A randomised, double-blind, multi-centre trial of dostarlimab (TSR-042) plus Trial start: Active, not recruiting
carboplatin-paclitaxel with and without niraparib maintenance versus placebo
ENGOT-EN6 plus carboplatin-paclitaxel in patients with recurrent or primary advanced Q3 2019
endometrial cancer
GOG-3031 (1L Stage III or IV endometrial cancer)
NCT03981796
PERLA (1L metastatic non-small cell lung cancer) II A randomised, double-blind study to evaluate the efficacy of dostarlimab plus Trial start: Active, not recruiting; primary endpoint met
chemotherapy versus pembrolizumab plus chemotherapy in metastatic non-squamous
non-small cell lung cancer Q4 2020
NCT04581824
GARNET I/II A multi-center, open-label, first-in-human study evaluating dostarlimab Trial start: Active, recruiting
(TSR-042) in participants with advanced solid tumors who have limited
available treatment options Q1 2016
momelotinib (JAK1/2 and ACVR1/ALK2 inhibitor)
In January 2023, 24-week data from the MOMENTUM phase III trial, that
evaluated momelotinib in patients with myelofibrosis who were symptomatic and
anaemic and had been previously treated with an FDA-approved JAK inhibitor,
were published in The Lancet. Treatment with momelotinib, compared with
danazol, resulted in clinically significant improvements in
myelofibrosis-associated symptoms, anaemia measures, and spleen response, with
favourable safety. These findings support the potential use of momelotinib as
an effective treatment in patients with myelofibrosis, especially in those
with anaemia.
At ASH 2022, GSK presented 7 abstracts for momelotinib including the 48-week
data from the MOMENTUM trial. In this updated analysis, momelotinib maintained
24-week symptom, transfusion independence and spleen responses with continued
favourable safety. Momelotinib is the only agent to demonstrate this outcome
in a key pivotal trial.
GSK also announced that the EMA validated the marketing authorisation
application (MAA) for momelotinib, a potential new oral treatment for
myelofibrosis. A Committee for Medicinal Products for Human Use (CHMP)
regulatory action is anticipated by year-end 2023, and a New Drug Application
for momelotinib is currently under regulatory review with the US FDA.
Key phase III trial for momelotinib:
Trial name (population) Phase Design Timeline Status
MOMENTUM (myelofibrosis) III A randomised, double-blind, active control phase III trial intended to confirm Trial start: Active, not recruiting; primary endpoint met
the differentiated clinical benefits of the investigational drug momelotinib
(MMB) versus danazol (DAN) in symptomatic and anaemic subjects who have Q1 2020
previously received an approved Janus kinase inhibitor (JAKi) therapy for
NCT04173494 myelofibrosis (MF)
Zejula (niraparib)
In November, GSK provided an update that at the request of the US FDA it will
restrict the second-line maintenance indication for Zejula (niraparib) to only
the patient population with deleterious or suspected deleterious germline BRCA
mutations (gBRCAmut). The US first-line indication of Zejula remains unchanged
for the maintenance treatment of adult patients with advanced epithelial
ovarian, fallopian tube, or primary peritoneal cancer who have a complete or
partial response to platinum-based chemotherapy.
GSK received a favourable opinion from the CHMP of the EMA supporting the
existing indication for Zejula in the relapsed ovarian cancer maintenance
setting, based on a review of all available clinical data. Zejula continues to
be an important maintenance treatment option for appropriate patients in the
second-line or later setting and for patients who are in complete or partial
response to first-line platinum-based chemotherapy.
Key phase III trials for Zejula:
Trial name (population) Phase Design Timeline Status
ZEAL-1L (maintenance for 1L advanced NSCLC) III A randomised, double-blind, placebo-controlled, multi-centre trial comparing Trial start: Active, not recruiting
niraparib plus pembrolizumab versus placebo plus pembrolizumab as maintenance
therapy in participants whose disease has remained stable or responded to Q4 2020
first-line platinum-based chemotherapy with pembrolizumab for Stage IIIB/IIIC
NCT04475939 or IV non-small cell lung cancer
ZEST (Her2- with BRCA-mutation, or TNBC) III A randomised double-blinded trial comparing the efficacy and safety of Trial start: Recruiting
niraparib to placebo in participants with either HER2-negative BRCA-mutated or
triple-negative breast cancer with molecular disease based on presence of Q2 2021
circulating tumour DNA after definitive therapy
NCT04915755
FIRST (1L ovarian cancer maintenance) III A randomised, double-blind, comparison of platinum-based therapy with Trial start: Active, not recruiting
dostarlimab (TSR-042) and niraparib versus standard of care platinum-based
therapy as first-line treatment of stage III or IV non-mucinous epithelial Q4 2018
ovarian cancer
NCT03602859
Immunology
depemokimab (ultra-long-acting anti-IL5)
The phase III programme for our ultra-long-acting IL5 inhibitor, depemokimab
continues to make progress across a range of eosinophil-driven diseases. Phase
III trials of depemokimab began this year in eosinophilic granulomatosis with
polyangiitis (EGPA), chronic rhinosinusitis with nasal polyps (CRSwNP) and
hypereosinophilic syndrome (HES). Trials of depemokimab in severe eosinophilic
asthma which started in 2021 continued throughout 2022 with the open label
extension of these studies starting recruitment in Q1 of 2022. Depemokimab is
a unique and distinct monoclonal antibody developed specifically for its
affinity for IL-5 and long duration of inhibition.
Key phase III trials for depemokimab:
Trial name (population) Phase Design Timeline Status
SWIFT-1 (severe eosinophilic asthma; SEA) III A 52-week, randomised, double-blind, placebo-controlled, parallel-group, Trial start: Recruiting
multi-centre trial of the efficacy and safety of depemokimab adjunctive
therapy in adult and adolescent participants with severe uncontrolled asthma Q1 2021
with an eosinophilic phenotype
NCT04719832
SWIFT-2 (SEA) III A 52-week, randomised, double-blind, placebo-controlled, parallel-group, Trial start: Recruiting
multi-centre trial of the efficacy and safety of depemokimab adjunctive
therapy in adult and adolescent participants with severe uncontrolled asthma Q1 2021
with an eosinophilic phenotype
NCT04718103
AGILE (SEA) III (extension) A 52-week, open label extension phase of SWIFT-1 and SWIFT-2 to assess the Trial start: Q1 2022 Recruiting
long-term safety and efficacy of depemokimab adjunctive therapy in adult and
adolescent participants with severe uncontrolled asthma with an eosinophilic
phenotype
NCT05243680
NIMBLE (SEA) III A 52-week, randomised, double-blind, double-dummy, parallel group, Trial start: Recruiting
multi-centre, non-inferiority trial assessing exacerbation rate, additional
measures of asthma control and safety in adult and adolescent severe asthmatic Q1 2021
participants with an eosinophilic phenotype treated with depemokimab compared
NCT04718389 with mepolizumab or benralizumab
ANCHOR-1 (CRSwNP) III Efficacy and safety of depemokimab in participants with CRSwNP Trial start: Recruiting
Q2 2022
NCT05274750
ANCHOR-2 (CRSwNP) III Efficacy and safety of depemokimab in participants with CRSwNP Trial start: Recruiting
Q2 2022
NCT05281523
OCEAN (EGPA) III Efficacy and safety of depemokimab compared with mepolizumab in adults with Trial start: Recruiting
relapsing or refractory EGPA
Q3 2022
NCT05263934
DESTINY (HES) III A 52-week, randomised, placebo-controlled, double-blind, parallel group, Trial start: Recruiting
multicentre trial of depemokimab in adults with uncontrolled HES receiving
standard of care (SoC) therapy Q4 2022
NCT05334368
Opportunity driven
daprodustat (oral hypoxia-inducible factor prolyl hydroxylase inhibitor)
Daprodustat is currently under regulatory review with the US FDA and EMA.
Regulatory decisions are anticipated in the first half of 2023.
When left untreated or undertreated, anaemia of CKD is associated with poor
clinical outcomes and leads to a substantial burden on patients and healthcare
systems. There remains an unmet need for convenient treatment options with
efficacy and safety comparable to current treatments.
Key phase III trials for daprodustat:
Trial name (population) Phase Design Timeline Status
ASCEND-D (Dialysis subjects with anaemia of CKD) III A randomised, open-label (sponsor-blind), active-controlled, parallel-group, Reported Complete; primary endpoint met
multi-centre, event driven trial in dialysis subjects with anaemia associated
with chronic kidney disease to evaluate the safety and efficacy of daprodustat
compared to recombinant human erythropoietin, following a switch from
NCT02879305 erythropoietin-stimulating agents
ASCEND-ID (Incident Dialysis subjects with anaemia of CKD) III A 52-week open-label (sponsor-blind), randomised, active-controlled, Reported Complete; primary endpoint met
parallel-group, multi-centre trial to evaluate the efficacy and safety of
daprodustat compared to recombinant human erythropoietin in subjects with
anaemia of chronic kidney disease who are initiating dialysis
NCT03029208
ASCEND-TD (Dialysis subjects with anaemia of CKD) III A randomised, double-blind, active-controlled, parallel-group, multi-centre Reported Complete; primary endpoint met
trial in haemodialysis participants with anaemia of chronic kidney disease to
evaluate the efficacy, safety, and pharmacokinetics of three-times weekly
dosing of daprodustat compared to recombinant human erythropoietin, following
NCT03400033 a switch from recombinant human erythropoietin or its analogues
ASCEND-ND (Non-dialysis subjects with anaemia of CKD) III A randomised, open-label (sponsor-blind), active-controlled, parallel-group, Reported Complete; primary endpoint met
multi-centre, event driven trial in non-dialysis subjects with anaemia of
chronic kidney disease to evaluate the safety and efficacy of daprodustat
compared to darbepoetin alfa
NCT02876835
ASCEND-NHQ (Non-dialysis subjects with anaemia of CKD) III A 28-week, randomised, double-blind, placebo-controlled, parallel-group, Reported Complete; primary endpoint met
multi-centre, trial in recombinant human erythropoietin (rhEPO) naïve
non-dialysis participants with anaemia of chronic kidney disease to evaluate
the efficacy, safety, and effects on quality of life of daprodustat compared
NCT03409107 to placebo
Reporting definitions
Total, Continuing and Adjusted results
Total reported results represent the Group's overall performance including
discontinued operations. Continuing results represents performance excluding
discontinued operations.
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 39 and other non-IFRS measures are defined below and are based on
continuing operations.
Free cash flow from continuing operations
Free cash flow is defined as the net cash inflow/outflow from continuing
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, contributions from
non-controlling interests plus proceeds from the sale of property, plant and
equipment and intangible assets, and dividends received from joint ventures
and associates (all attributable to continuing operations). 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 continuing operations to free cash flow from continuing operations is set
out on page 57.
Free cash flow conversion
Free cash flow conversion is free cash flow from continuing operations as a
percentage of profit attributable to shareholders from continuing operations.
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.
Total Net debt
Net debt is defined as total borrowings less cash, cash equivalents, liquid
investments, and short-term loans to third parties that are subject to an
insignificant risk of change in value.
Share Consolidation
Shareholders received 4 new Ordinary shares with a nominal value of 31¼ pence
each for every 5 existing Ordinary share which had a nominal value of 25 pence
each. Earnings per share, diluted earnings per share, adjusted earnings per
share and dividends per share were retrospectively adjusted to reflect the
Share Consolidation in all the periods presented.
Earnings per share
Earnings per share has been retrospectively adjusted for the Share
Consolidation on 18 July 2022, applying a ratio of 4 new Ordinary shares for
every 5 existing Ordinary shares.
Total Earnings per share
Unless otherwise stated, Total earnings per share refers to Total basic
earnings per share.
Total Operating Margin
Total Operating margin is operating profit divided by turnover.
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.
General Medicines
General Medicines are usually prescribed in the primary care or community
settings by general healthcare practitioners. For GSK, this includes medicines
in inhaled respiratory, dermatology, antibiotics and other diseases.
Specialty Medicines
Specialty Medicines are typically prescription medicines used to treat complex
or rare chronic conditions. For GSK, this comprises medicines in infectious
diseases, HIV, oncology, immunology and respiratory.
Brand names and partner acknowledgements
Brand names appearing in italics throughout this document are trademarks of
GSK or associated companies or used under licence by the Group.
Guidance, assumptions and cautionary statements
2023 guidance
GSK expects 2023 turnover to increase between 6 to 8 per cent, Adjusted
operating profit to increase between 10 to 12 per cent and Adjusted earnings
per share to increase between 12 to 15 per cent. This guidance is provided at
CER and excludes any contributions from COVID-19 solutions.
Assumptions related to 2023 guidance
In outlining the guidance for 2023, the Group has made certain assumptions
about the healthcare sector, the different markets in which the Group operates
and the delivery of revenues and financial benefits from its current
portfolio, pipeline and restructuring programmes. Due to the phasing of
quarterly results in 2022 and the resulting comparators, GSK expects turnover
and Adjusted operating profit growth to be slightly lower in the first half of
2023 including a challenging comparator in Q1 2022 and somewhat higher in the
second half, relative to full-year expectations. Despite the recovery of
healthcare systems, uncertain economic conditions prevail across many markets
in which GSK operates and we continue to expect to see variability in
performance between quarters.
We expect sales of Specialty Medicines to increase mid to high single-digit
per cent, sales of Vaccines to increase mid-teens per cent and sales of
General Medicines to decrease slightly.
These planning assumptions as well as operating profit guidance and dividend
expectations assume no material interruptions to supply of the Group's
products, no material mergers, acquisitions or disposals, no material
litigation or investigation costs for the Company (save for those that are
already recognised or for which provisions have been made) and no change in
the Group's shareholdings in ViiV Healthcare. The assumptions also assume no
material changes in the healthcare environment or unexpected significant
changes in pricing as a result of government or competitor action. The 2023
guidance factors in all divestments and product exits announced to date.
The Group's guidance assumes successful delivery of the Group's integration
and restructuring plans. Material costs for investment in new product launches
and R&D have been factored into the expectations given. Given the
potential development options in the Group's pipeline, the outlook may be
affected by additional data-driven R&D investment decisions. The guidance
is given on a constant currency basis.
Assumptions and cautionary statement regarding forward-looking statements
The Group's management believes that the assumptions outlined above are
reasonable, and that the guidance, outlooks, ambitions and expectations
described in this report are achievable based on those assumptions. However,
given the forward-looking nature of these guidance, outlooks, ambitions and
expectations, they are subject to greater uncertainty, including potential
material impacts if the above assumptions are not realised, and other material
impacts related to foreign exchange fluctuations, macro-economic activity, the
impact of outbreaks, epidemics or pandemics, such as the COVID-19 pandemic and
ongoing challenges and uncertainties posed by the COVID-19 pandemic for
businesses and governments around the world, changes in legislation,
regulation, government actions or intellectual property protection, product
development and approvals, actions by our competitors, and other risks
inherent to the industries in which we operate.
This document contains statements that are, or may be deemed to be,
"forward-looking statements".
Forward-looking statements give the Group's current expectations or forecasts
of future events. An investor can identify these statements by the fact that
they do not relate strictly to historical or current facts. They use words
such as 'anticipate', 'estimate', 'expect', 'intend', 'will', 'project',
'plan', 'believe', 'target' and other words and terms of similar meaning in
connection with any discussion of future operating or financial performance.
In particular, these include statements relating to future actions,
prospective products or product approvals, future performance or results of
current and anticipated products, sales efforts, expenses, the outcome of
contingencies such as legal proceedings, dividend payments and financial
results. Other than in accordance with its legal or regulatory obligations
(including under the Market Abuse Regulation, the UK Listing Rules and the
Disclosure and Transparency Rules of the Financial Conduct Authority), the
Group undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise. The reader
should, however, consult any additional disclosures that the Group may make in
any documents which it publishes and/or files with the SEC. All readers,
wherever located, should take note of these disclosures. Accordingly, no
assurance can be given that any particular expectation will be met and
investors are cautioned not to place undue reliance on the forward-looking
statements.
All outlooks, ambitions and expectations should be read together with pages
5-7 of the Stock Exchange announcement relating to an update to investors
dated 23 June 2021, paragraph 19 of Part 7 of the Circular to shareholders
relating to the demerger of Haleon dated 1 June 2022 and the Guidance,
assumptions and cautionary statements in this Q4 2022 earnings release.
Forward-looking statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the Group's
control or precise estimate. The Group cautions investors that a number of
important factors, including those in this document, could cause actual
results to differ materially from those expressed or implied in any
forward-looking statement. Such factors include, but are not limited to, those
discussed under Item 3.D 'Risk Factors' in the Group's Annual Report on Form
20-F for 2021 and any impacts of the COVID-19 pandemic. Any forward looking
statements made by or on behalf of the Group speak only as of the date they
are made and are based upon the knowledge and information available to the
Directors on the date of this report.
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