REG - GlaxoSmithKline PLC - 1st Quarter Results
27/04/2022 07:00
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RNS Number : 4453J GlaxoSmithKline PLC 27 April 2022
Issued: Wednesday, 27 April 2022, London U.K.
GSK delivers strong Q1 2022 sales of £9.8 billion, +32% AER, +32% CER;
Total EPS 35.9p +67% AER, +66% CER and Adjusted EPS 32.8p +43% AER, +43% CER
Highlights
Strong sales growth across Biopharma and Consumer Healthcare
· Biopharma: £7.1 billion +40% AER, +40% CER;+14% AER, +15% CER excluding
COVID-19 solutions
- Specialty Medicines £3.1 billion +98% AER, +97% CER; HIV +15% AER, +14% CER;
Oncology +15% AER, +15% CER; Immuno-inflammation, respiratory and other +18%
AER, +18% CER; COVID-19 solutions (Xevudy) sales £1.3 billion
- Vaccines £1.7 billion +36% AER, +36% CER; Shingrix £698 million >100%
AER, >100% CER
- General Medicines £2.3 billion +2% AER, +3% CER
· Consumer Healthcare £2.6 billion +14% AER, +14% CER
· Sales growth also benefited from favourable comparison to Q1 2021
Continued R&D delivery and strengthening of pipeline
· US FDA regulatory approvals: Cabenuva treatment of virologically supressed
adolescents living with HIV; Triumeq dispersible single tablet regimen for
treatment of children with HIV
· US FDA regulatory submission acceptance of daprodustat for anaemia of chronic
kidney disease (PDUFA action date 1 February 2023)
· Benlysta approved in China for adults with active lupus nephritis
· EU regulatory submission acceptance for Sanofi-GSK COVID-19 vaccine
(Vidprevtyn) and Canadian regulatory approval for Medicago-GSK COVID-19
vaccine (Covifenz)
· Proposed acquisition of Sierra Oncology Inc. strengthens late-stage specialty
pipeline. Momelotinib has potential to address significant unmet medical need
of myelofibrosis patients with anaemia
· Multiple pipeline catalysts in next nine months, including phase III data read
outs for the RSV Older Adults and meningitis (MenABCWY) vaccine candidates,
Blenrep, Jemperli and otilimab, and phase IIb data for bepirovirsen
Cost discipline supports delivery of improved operating margin and Adjusted
EPS of 32.8p
· Total Group operating margin 28.6%. Total EPS 35.9p +67% AER, +66% CER
· Adjusted Group operating margin 26.7%. Adjusted EPS 32.8p +43% AER, +43% CER.
This included a contribution to growth from COVID-19 solutions of
approximately +15% AER, +15% CER for Q1 2022
· Q1 2022 cash generated from operations £2.8 billion. Q1 2022 free cash flow
£1.7 billion
On track to demerge and list Haleon, a new global leader in consumer
healthcare, in July 2022
· New growth outlooks set out in Q1 2022, for annual organic revenue growth of
4-6% and sustainable moderate expansion of adjusted operating margin over
medium term at CER
Reconfirming 2022 guidance
· GSK expected to deliver growth in 2022 sales of between 5% to 7% at CER and
growth in 2022 Adjusted operating profit of between 12% to 14% at CER
· 2022 guidance excludes any contribution from COVID-19 solutions
· Dividend of 14p declared for Q1 2022
Emma Walmsley, Chief Executive Officer, GSK:
"We have delivered strong first quarter results in this landmark year for GSK,
as we separate Consumer Healthcare and start a new period of sustained growth.
Our results reflect further good momentum across specialty medicines and
vaccines, including the return to strong sales growth for Shingrix and
continuing pipeline progress. We also continue to see very good momentum in
Consumer Healthcare, demonstrating strong potential of this business ahead of
its proposed demerger in July, to become Haleon."
The Total results are presented in summary on page 2 and under 'Financial
performance' on page 7 and Adjusted results reconciliations are presented on
page 15. Adjusted results are a non-IFRS measure that may be considered in
addition to, but not as a substitute for, or superior to, information
presented in accordance with IFRS. Adjusted results are defined on page 20 and
£% or AER% growth, CER% growth, free cash flow and other non-IFRS measures
are defined on page 42. GSK provides guidance on an Adjusted results basis
only, for the reasons set out on page 20. All expectations, guidance and
targets regarding future performance and dividend payments should be read
together with 'Guidance, assumptions and cautionary statements' on page 43.
Q1 2022 results
Q1 2022 Growth Growth
£m £% CER%
Turnover 9,780 32 32
Total operating profit 2,801 65 65
Total earnings per share 35.9p 67 66
Adjusted operating profit 2,613 39 39
Adjusted earnings per share 32.8p 43 43
Cash generated from operations 2,755 >100
Free cash flow 1,650 >100
2022 guidance
We reconfirm our guidance for new GSK in 2022, as set out below. This guidance
is provided at CER and excludes the commercial benefit of COVID-19 solutions.
In 2022, we expect to continue to deliver on our strategic priorities. We plan
to increase targeted investment in R&D, to build on and invest behind our
top-line momentum for key growth drivers and to deliver the demerger of our
Consumer Healthcare business in July 2022. Assuming global economies and
healthcare systems approach normality as the year progresses, we expect sales
of Specialty Medicines to grow approximately 10% CER and sales of General
Medicines to show a slight decrease, primarily reflecting increased
genericisation of established Respiratory medicines. Vaccines sales are
expected to grow at a low-teens percentage at CER for the year. However, as
noted at the time of announcing full-year 2021 results, we anticipated
governments' prioritisation of COVID-19 vaccination programmes and ongoing
measures to contain the pandemic would result in some continued disruption to
adult immunisations. In the first-quarter 2022 Shingrix demonstrated strong
demand recovery, particularly in the US, as well as channel inventory build
and the benefit of a favourable comparator to Q1 2021. Despite the potential
for short-term pandemic disruption, we continue to expect strong double-digit
growth and record annual sales for Shingrix in 2022 based on strong demand in
existing markets and continued geographical expansion.
Reflecting these factors and our first-quarter 2022 results, we reconfirm our
full-year 2022 guidance for new GSK of sales growth between 5% to 7% CER and
Adjusted operating profit growth between 12% to 14% CER compared to 2021. The
guidance includes the future benefit in royalty income from the settlement and
license agreement with Gilead Sciences, Inc. (Gilead) announced on 1 February
2022.
Medium term outlooks were provided for Consumer Healthcare at a Capital
Markets Day on 28 February 2022. Until such time as the formal criteria for
treating Consumer Healthcare as a 'Discontinued operation' have been satisfied
(currently expected in Q2 2022), GSK will continue to present the Consumer
Healthcare business within 'Continuing operations' and will consolidate the
business for reporting purposes until the demerger has completed.
Dividend policies and expected pay-out ratios are unchanged for new GSK and
new Consumer Healthcare (subject to new Consumer Healthcare board approval).
The future dividend policies and guidance in relation to the expected dividend
pay-out in 2022 across both new GSK and new Consumer Healthcare are provided
on page 19.
2022 COVID-19 solutions expectations
In 2022, based on known binding agreements with governments, we expect that
COVID-19 solutions will contribute a similar sales level to 2021, but at a
substantially reduced profit contribution due to the increased proportion of
lower margin Xevudy sales. We expect this to reduce the new GSK Adjusted
Operating profit growth (including COVID-19 solutions in both years) by
between 5% to 7%. The overwhelming majority of expected COVID-19 solutions
sales were achieved in the first quarter this year. In April 2022, the US FDA
updated Xevudy's authorisation to reflect the increase in COVID-19 cases
caused by the Omicron BA.2 sub-variant and as a result, Xevudy is no longer
authorised to treat COVID-19 in any US region. However, we will continue to
discuss future opportunities to support governments, healthcare systems, and
patients whereby our COVID-19 solutions can address the emergence of any new
COVID-19 variant of concern.
All expectations, guidance and targets regarding future performance and
dividend payments should be read together with 'Guidance, assumptions and
cautionary statements' on page 43. If exchange rates were to hold at the
closing rates on 31 March 2022 ($1.31/£1, €1.18/£1 and Yen 160/£1) for
the rest of 2022, the estimated positive impact on 2022 Sterling turnover
growth for new GSK would be 2% and if exchange gains or losses were recognised
at the same level as in 2021, the estimated positive impact on 2022 Sterling
Adjusted Operating Profit growth for new GSK would be 3%.
Results presentation
A webcast of the quarterly results presentation hosted by Emma Walmsley, GSK
CEO, will be held at 12pm BST on 27 April 2022. Presentation materials will be
published on www.gsk.com prior to the webcast and a transcript of the webcast
will be published subsequently.
Information available on GSK's website does not form part of, and is not
incorporated by reference into, this Results Announcement.
Operating performance - Q1 2022
Turnover
Q1 2022 Growth Growth
£m £% CER%
Specialty Medicines 3,135 98 97
Vaccines 1,669 36 36
General Medicines 2,343 2 3
Commercial Operations 7,147 40 40
Consumer Healthcare 2,633 14 14
Group turnover 9,780 32 32
Total turnover in the quarter was £9,780 million, up 32% AER, 32% CER,
reflecting a strong performance in Commercial Operations in the three product
groups and Consumer Healthcare. Sales of Xevudy were £1,307 million and
contributed 25 percentage points of growth in the quarter to Commercial
Operations. Specialty Medicines included the positive impact of international
tender phasing, Vaccines benefited from Shingrix post-pandemic recovery and
retail buy-in in the US and General Medicines reflected growth from Trelegy
and recovery of the antibiotics market.
Specialty Medicines turnover was £3,135 million, up 98% AER, 97% CER, driven
by consistent growth in all therapy areas including sales of Xevudy. Sales
growth was up 16% AER, 15% CER excluding Xevudy.
Vaccines turnover grew 36% AER, 36% CER to £1,669 million, driven primarily
by Shingrix in the US and Europe reflecting strong performance and the benefit
of a favourable comparator in Q1 2021 when sales were impacted by COVID-19
related disruptions in several markets and lower Centre for Disease Control
(CDC) purchases.
General Medicines turnover was £2,343 million, up 2% AER, 3% CER, with growth
from Trelegy in all regions, recovery of the antibiotics market and the
benefit of a favourable prior period returns and rebates (RAR) adjustment,
offsetting the impact of generic competition in US, Europe and Japan.
Consumer Healthcare grew 14% AER, 14% CER to £2,633 million. Total sales grew
15% AER, 16% CER, excluding the impact of brands divested, with strong growth
across all categories.
Operating profit
Total operating profit was £2,801 million compared with £1,693 million in Q1
2021. This included £924 million upfront settlement income from Gilead,
increased profits on turnover growth of 32% at CER, partly offset by higher
remeasurement charges for contingent consideration liabilities and lower
profits on disposals. Adjusted operating profit was £2,613 million, 39%
higher than Q1 2021 at AER and at CER. The Adjusted operating margin of 26.7%
was 1.4 percentage points higher at AER and 1.3 percentage points higher on a
CER basis than in Q1 2021. The benefit from COVID-19 solutions sales (Xevudy)
contributed approximately 11% AER, 11% CER to Adjusted Operating profit
growth.
Earnings per share
Total EPS was 35.9p compared with 21.5p in Q1 2021. This primarily reflected
leverage from significant sales growth during the quarter, with the upfront
income of £924 million from the settlement with Gilead partly offset by an
increase in finance costs.
Adjusted EPS was 32.8p compared with 22.9p in Q1 2021, up 43% at AER, 43% CER,
on a 39% CER increase in Adjusted operating profit primarily reflecting sales
of Specialty Medicines and Vaccines, including COVID-19 solutions sales, tight
cost control and a lower effective tax rate. These were partly offset by
higher supply chain costs, increased R&D investment, favourable legal
settlements in Q1 2021 and higher interest costs. The contribution to growth
from COVID-19 solutions was approximately 15% at AER, 15% at CER.
Cash flow
The cash generated from operations for the quarter was £2,755 million (Q1
2021: £486 million). The increase primarily reflected a significant increase
in operating profit including the upfront income from the settlement with
Gilead, favourable timing of collections and profit share payments for Xevudy
sales and a lower seasonal increase in inventory.
Q1 2022 pipeline highlights (since 9 February 2022)
Medicine/vaccine Trial (indication, presentation) Event
Regulatory approvals or other regulatory action Cabenuva FLAIR (HIV, optional oral lead-in) Regulatory approval (US)
Cabenuva MOCHA (HIV, adolescent) Regulatory approval (US)
Triumeq HIV, paediatric, dispersible tablet Regulatory approval (US)
Benlysta BLISS-LN (lupus nephritis, intravenous) Regulatory approval (China)
Nucala Severe eosinophilic asthma, 40 mg prefilled syringe for Positive CHMP opinion (EU)
6-11 year olds
Covifenz (Medicago) COVID-19 Regulatory approval (CA)
Regulatory submissions or acceptances daprodustat ASCEND (anaemia of chronic kidney disease) Regulatory filing acceptance (US, EU)
COVID-19 vaccine candidate (Sanofi) COVID-19 Regulatory submission (EU)
Phase III data readouts or other significant events RSV maternal vaccine candidate GRACE (RSV, maternal) Stopped enrolment and vaccination
COVID-19 vaccine candidate (Sanofi) COVID-19 Positive phase III data
Anticipated news flow
Timing Medicine/vaccine Trial (indication, presentation) Event
H1 2022 bepirovirsen B-Clear (Hepatitis B virus) Phase IIb data readout
RSV older adults vaccine candidate RSV, older adults Phase III data readout
COVID-19 vaccine candidate (Sanofi) COVID-19 Regulatory submission (US)
COVID-19 vaccine candidate (SK Bioscience) COVID-19 Phase III data readout
COVID-19 vaccine candidate (SK Bioscience) COVID-19 Regulatory submission (EU)
H2 2022 otilimab contRAst programme (rheumatoid arthritis) Phase III data readout
Blenrep DREAMM-3 (3L+ multiple myeloma) Phase III data readout
Blenrep DREAMM-3 (3L+ MM) Regulatory submission (US, EU)
Jemperli RUBY (1L endometrial cancer) Phase III data readout (interim analysis)
gepotidacin EAGLE (uncomplicated urinary tract infection) Phase III data readout (interim analysis)
MenABCWY (gen 1) vaccine candidate MenABCWY Phase III data readout
RSV older adults vaccine candidate RSV, older adults Regulatory submission (US)
Priorix Measles-mumps-rubella Regulatory decision (US)
Menveo Invasive meningococcal disease, liquid formulation Regulatory decision (US)
Rotarix Rotavirus, liquid formulation Regulatory decision (US)
COVID-19 vaccine candidate (SK Bioscience) COVID-19 Regulatory decision (EU)
COVID-19 vaccine candidate (Sanofi) COVID-19 Regulatory decision (US)
Covifenz (Medicago) COVID-19 Regulatory submission (US)
2023 otilimab contRAst programme (rheumatoid arthritis) Regulatory submission (US, EU)
daprodustat ASCEND (anaemia of chronic kidney disease) Regulatory decision (US, EU)
linerixibat GLISTEN (cholestatic pruritus in primary biliary cholangitis) Phase III data readout
Blenrep DREAMM-3 (3L+ MM) Regulatory decision (US, EU)
Blenrep DREAMM-8 (2L+ MM) Phase III data readout
Blenrep DREAMM-8 (2L+ MM) Regulatory submission (US, EU)
Blenrep DREAMM-7 (2L+ MM) Phase III data readout
Blenrep DREAMM-7 (2L+ MM) Regulatory submission (US, EU)
Jemperli RUBY (1L endometrial cancer) Regulatory submission (US, EU)
letetresgene-autoleucel IGNYTE-ESO (2L+ synovial sarcoma) Phase II data readout
RSV older adults vaccine candidate RSV, older adults Regulatory decision (US)
MenABCWY (gen 1) vaccine candidate MenABCWY Regulatory submission (US)
Malaria (fractional dose) vaccine Malaria Phase II data readout
Covifenz (Medicago) COVID-19 Regulatory decision (US)
Refer to pages 34 to 41 for further details on several key medicines and
vaccines in development by therapy area.
Contents Page
Q1 2022 R&D pipeline highlights 4
Financial performance 7
Commercial Operations turnover - three months ended 31 March 2022 8
Consumer Healthcare turnover - three months ended 31 March 2022 11
Cash generation 18
Returns to shareholders 19
Total and Adjusted results 20
Income statement - three months ended 31 March 2022 22
Statement of comprehensive income 23
Balance sheet 26
Statement of changes in equity 27
Cash flow statement - three months ended 31 March 2022 28
Segment information 29
Legal matters 30
Additional information 31
Reconciliation of cash flow to movements in net debt 33
Net debt analysis 33
Free cash flow reconciliation 33
R&D commentary 34
Reporting definitions 42
Guidance, assumptions and cautionary statements 43
Independent review report 44
Contacts
GSK is a science-led global healthcare company. For further information please
visit www.gsk.com/aboutus.
GSK enquiries:
Media enquiries: Tim Foley +44 (0) 20 8047 5502 (London)
Kathleen Quinn +1 202 603 5003 (Washington)
Analyst/Investor enquiries: Nick Stone +44 (0) 7717 618834 (London)
James Dodwell +44 (0) 7881 269066 (London)
Mick Readey +44 (0) 7990 339653 (London)
Joshua Williams +44 (0) 7385 415719 (London)
Jeff McLaughlin +1 215 589 3774 (Philadelphia)
Frances De Franco +1 570 236 4850 (Philadelphia)
Sonya Ghobrial +44 (0) 7392 784784 (Consumer)
Emma White +44 (0) 7823 523562 (Consumer)
Rakesh Patel +44 (0) 7552 484646 (Consumer)
Registered in England & Wales:
No. 3888792
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
Financial performance - Q1 2022
Total results
The Total results for the Group are set out below.
Q1 2022 Q1 2021 Growth Growth
£m £m £% CER%
Turnover 9,780 7,418 32 32
Cost of sales (3,690) (2,480) 49 49
Gross profit 6,090 4,938 23 24
Selling, general and administration (2,844) (2,427) 17 18
Research and development (1,167) (1,118) 4 4
Royalty income 139 91 53 53
Other operating income 583 209
Operating profit 2,801 1,693 65 65
Finance income 10 10
Finance expense (212) (201)
Share of after tax (losses)/profits of associates (1) 16
and joint ventures
Profit before taxation 2,598 1,518 71 71
Taxation (431) (258)
Tax rate % 16.6% 17.0%
Profit after taxation 2,167 1,260 72 72
Profit attributable to non-controlling interests 365 187
Profit attributable to shareholders 1,802 1,073 68 67
2,167 1,260 72 72
Earnings per share 35.9p 21.5p 67 66
Adjusted results
The Adjusted results for the Group are set out below. Reconciliations between
Total results and Adjusted results for Q1 2022 and Q1 2021 are set out on page
15. Definition of the Adjusted results are set out on page 20.
Q1 2022 % of Growth Growth
£m turnover £% CER%
Turnover 9,780 100 32 32
Cost of sales (3,471) (35.5) 55 55
Selling, general and administration (2,681) (27.4) 16 17
Research and development (1,154) (11.8) 7 7
Royalty income 139 1.4 53 53
Adjusted operating profit 2,613 26.7 39 39
Adjusted profit before tax 2,410 41 41
Adjusted profit after tax 1,979 42 43
Adjusted profit attributable to shareholders 1,646 44 44
Adjusted earnings per share 32.8p 43 43
Operating profit by segment
Q1 2022 % of Growth Growth
£m turnover £% CER%
Commercial Operations 3,121 43.7 27 27
Research and Development (1,095) 6 6
Consumer Healthcare 650 24.7 21 26
Segment profit 2,676 27.4 37 38
Corporate & other unallocated costs (63)
Adjusted operating profit 2,613 26.7 39 39
Turnover
Commercial Operations
Q1 2022
£m Growth Growth
£% CER%
HIV 1,181 15 14
Oncology 127 15 15
Immuno-inflammation, respiratory and other 520 18 18
Pandemic 1,307 - -
Specialty Medicines 3,135 98 97
Meningitis 212 12 12
Influenza 18 - -
Shingles 698 >100 >100
Established Vaccines 741 8 8
Pandemic Vaccines - - -
Vaccines 1,669 36 36
Respiratory 1,535 3 3
Other General Medicines 808 - 3
General Medicines 2,343 2 3
Commercial Operations 7,147 40 40
US 3,586 62 57
Europe 1,660 32 36
International 1,901 17 20
Commercial Operations by region 7,147 40 40
Total turnover in the quarter was £7,147 million, up 40% AER, 40% CER,
reflecting strong performance in all three product groups. Specialty Medicines
included the positive impact of international tender phasing, sales of Xevudy
were £1,307 million and contributed 25 percentage points of growth in the
quarter. Vaccines benefited from Shingrix post pandemic recovery and retail
buy-in in the US. General Medicines reflects recovery of the antibiotics
market as well as the benefit of a favourable prior period RAR adjustment.
Specialty Medicines
Specialty Medicines sales in the quarter were £3,135 million, up 98% AER, 97%
CER, driven by consistent growth in all therapy areas including sales of
Xevudy. Sales growth was up 16% AER, 15% CER excluding Xevudy.
HIV
HIV sales were £1,181 million with growth of 15% AER, 14% CER in the quarter.
Growth was driven by new HIV products Dovato, Cabenuva, Rukobia, Juluca and
Apretude and phasing. Phasing contributed approximately two thirds of the
growth, driven by Tivicay International tenders, US customer ordering patterns
and US channel inventory movement.
New HIV products delivered sales of £446 million up 70% AER, 69% CER,
representing 38% of the total HIV portfolio. Sales of the oral two drug
regimens Dovato and Juluca were £257 million and £133 million respectively
with combined growth of 54% AER, 53% CER. Cabenuva, the first long acting
injectable, recorded quarterly sales of £38 million. Apretude delivered sales
of £2 million.
Oncology
Oncology sales in the quarter were £127 million, up 15% AER, 15% CER. Zejula
sales of £98 million, up 11% AER, 11% CER, continue to be adversely impacted
by diagnosis rates, particularly in the US. Sales of Blenrep, grew 19% AER,
19% CER to £25 million in the quarter.
Immuno-inflammation, Respiratory and Other
Immuno-inflammation, Respiratory and Other sales were £520 million up 18%
AER, 18% CER. Benlysta sales were £215 million, up 21% AER, 18% CER with
growth in all regions, including International sales of £26 million up 53%
AER, 53% CER. Nucala sales were £295 million, up 16% AER, 16% CER including
US sales of £177 million up 18% AER, 15% CER on continued strong demand and
additional indications approval and launch. International Nucala sales were
£53 million up 26% AER, 31% CER.
Pandemic
Sales of Xevudy were £1,307 million, with no sales in Q1 last year given
launch in Q2 2021. Sales were delivered in all regions, comprising US £770
million, Europe £311 million and International £226 million.
Vaccines
Vaccines turnover grew 36% AER, 36% CER to £1,669 million, driven primarily
by Shingrix in the US and Europe reflecting strong performance and the benefit
of a favourable comparator to Q1 2021 when sales were impacted by COVID-19
related disruptions in several markets and lower CDC purchases.
Meningitis
Meningitis vaccines sales grew 12% AER, 12% CER% to £212 million mainly
driven by Bexsero (22% AER, 23% CER to £163 million) reflecting higher CDC
purchasing in the US.
Shingles
Shingrix grew >100% AER, >100 CER% to £698 million, primarily due to
channel inventory build-up and demand recovery in the US and higher demand in
Germany. Launch markets also contributed to increased sales reflecting
continued geographic expansion.
Established Vaccines
Established Vaccines grew 8% AER, 8% CER to £741 million mainly as a result
of higher CDC purchases of Infanrix/Pediarix and Hepatitis vaccines, US demand
and share growth for Boostrix, partially offset by lower Synflorix, Cervarix
and MMRV sales in International.
General Medicines
General Medicines sales in the quarter were £2,343 million, up 2% AER, 3%
CER, with growth from Trelegy in all regions and the benefit of a favourable
prior period RAR adjustment, offsetting the impact of generic competition in
US, Europe and Japan.
Respiratory
Respiratory sales were £1,535 million, up 3% AER, 3% CER. Trelegy sales were
£340 million, up 37% AER, 35% CER with strong growth in all regions.
Advair/Seretide sales of £302 million were down 14% AER, 14% CER on US and
Europe generic competition, partially offset by growth in International on
targeted promotion.
Other General Medicines
Other General Medicines sales were £808 million, flat at AER, up 3% CER.
Augmentin sales were £129 million, up 42% AER, 51% CER reflecting rebound of
the antibiotic market post pandemic in the International and Europe regions
and in the US, a favourable prior period RAR adjustment was reflected. This
offsets ongoing impact of generic competition and approximately two percentage
points impact from the divestment of GSK's cephalosporin products in Q4 2021.
By Region
US
In the US, sales were £3,586 million, up 62% AER, 57% CER, including Xevudy
sales of £770 million contributing 34 percentage points of growth. HIV sales
of £697 million up 17% AER, 13% CER were driven by growth of new HIV
products, customer ordering patterns and lower channel inventory burn. New HIV
products delivered sales of £285 million up 72% AER, 66% CER, driven by
Dovato and Cabenuva. Nucala and Benlysta both continued to grow double-digits
despite some year-end wholesaler destocking, while Oncology growth continued
to be impacted by diagnosis rates.
Vaccine sales were £892 million, up 77% AER, 71% CER. Growth was driven by
Shingrix reflecting demand recovery and retail buy-in ahead of a price
increase. Meningitis, Hepatitis, Infanrix/Pediarix and Boostrix sales all grew
in the quarter reflecting CDC purchasing patterns and demand recovery. General
Medicines sales were £811 million up 7% AER, 4% CER, benefiting from a
favourable prior period RAR adjustment. Trelegy sales continued strong
performance on growth of the single inhaler triple therapy market and demand.
Europe
In Europe, sales were £1,660 million, up 32% AER, 36% CER, including Xevudy
sales of £311 million contributing 25 percentage points of growth. HIV sales
were £299 million up 4% AER, 8% CER driven by Dovato. Strong double-digit
growth continued in the quarter on Benlysta, Nucala and Oncology assets.
Vaccine sales were £409 million, up 33% AER, 38% CER. Growth was driven by
Shingrix sales of £160 million, up >100% AER, >100% CER on strong
demand in Germany post pandemic and channel re-stocking. General Medicines
sales were £503 million down 7% AER, 4% CER, with ongoing generic competitive
pressures on Seretide, partly offset by strong demand for Trelegy and growth
of Augmentin on rebound of the antibiotic market post the pandemic.
International
International sales were £1,901 million, up 17% AER, 20% CER, including
Xevudy sales of £226 million contributing 14 percentage points of growth. HIV
sales were £185 million up 26% AER, 30% CER primarily driven by tender
phasing. Combined Tivicay and Triumeq sales were £148 million with growth of
21% AER and 25% CER. Nucala and Benlysta both continued to grow strongly, due
to Japan's biologicals market growth and China's National Reimbursement Drug
List approval, respectively.
Vaccine sales were £368 million, down 11% AER, 9% CER primarily reflecting
phasing of public tenders. General Medicines sales were £1,029 million up 2%
AER, 6% CER. Respiratory sales of £480 million were up 1% AER, 4% CER. Strong
growth of Trelegy in Japan, China and Canada, and growth of Seretide on
targeted promotion, offset impact of generic competition and lower allergy
season in Japan. Other General Medicines sales of £549 million, up 4% AER, 8%
CER reflect growth of Augmentin on rebound of the antibiotic market post the
pandemic.
Consumer Healthcare turnover
Q1 2022
£m Growth Growth
£% CER%
Oral health 740 6 9
Pain relief 639 17 17
Vitamins, minerals and supplements 407 17 15
Respiratory health 370 51 53
Digestive health and other 477 - (1)
Consumer Healthcare 2,633 14 14
US 857 20 17
Europe 627 4 8
International 1,149 15 17
Consumer Healthcare by region 2,633 14 14
In Q1 2022, Consumer Healthcare turnover grew 14% AER, 14% CER to £2,633
million. Sales grew 15% AER, 16% CER, excluding the impact of brands divested,
which were entirely in the Digestive health and other category.
Overall, the business delivered strong growth across all categories. Sales
benefited from favourable prior year comparators especially in Respiratory
health which saw a strong rebound following the historically low cold and flu
season in Q1 2021, with cold and flu sales contributing approximately five
percentage points to total growth. In addition, advance retailer and
wholesaler stock-in, and initial distributor sell-in due to the systems
cutover and distribution business model change ahead of the demerger
contributed approximately two percentage points to total growth. Strong sales
growth in Pain relief benefited from increased demand during the Omicron wave
and an improved capacity in Vitamins, minerals and supplements.
Oral health
Oral health sales grew 6% AER, 9% CER to £740 million. Sensodyne delivered
high-single digit growth reflecting underlying brand strength, continued
innovation and strong growth across key markets including the US, India,
Japan, Middle East and Africa. Paradontax delivered low double-digit growth.
Denture care grew low-teens percent following the decrease of sales during the
pandemic.
Pain relief
Pain relief sales increased 17% AER, 17% CER to £639 million. Panadol grew
mid thirties percent due to a successful campaign aimed at post vaccination
use and increased demand during the Omicron wave. Advil grew low thirties
percent benefitting from retail stocking patterns in the US versus a decrease
in Q1 2021. Excedrin grew high-single digits and Voltaren was stable with
growth in China offset by a decrease in Germany.
Vitamins, minerals and supplements
Vitamins, minerals and supplements sales increased 17% AER, 15% CER to £407
million. Centrum grew high-teens percent, with particularly strong growth in
China due to consumer focus on immunity as a result of the pandemic. Emergen-C
grew high thirties percent versus a high twenties percent decrease in Q1 2021.
Caltrate decreased low single digits, high single digit growth in China was
insufficient to offset a decline in the US and South East Asia.
Respiratory health
Respiratory health sales increased 51% AER, 53% CER to £370 million. The
category rebounded strongly from the historically low demand for cold and flu
products in Q1 2021. Cold and flu product sales growth doubled in the US and
was strong in Europe, Middle East and Africa and Latin America, with sales
ahead of pre-pandemic levels in 2019.
Digestive health and other
Digestive health and other brands were flat AER, down 1% CER to £477 million.
Sales grew 5% AER, 4% CER excluding the impact of brands divested. Digestive
health increased high-single digits with strong growth in Tums and Eno
partially offset by a low-single digit decrease in Nexium. Smokers health also
grew high-single digits and Skin health grew low single-digits.
By Region
International and US sales grew high-teens percent on a CER basis with broad
growth across categories. European growth was driven by a particularly strong
rebound of cold and flu product sales ahead of pre-pandemic sales in 2019.
Operating performance
Cost of sales
Total cost of sales as a percentage of turnover was 37.7%, 4.3 percentage
points higher at AER and 4.2 percentage points higher in CER terms than Q1
2021. This included lower write-downs on sites from major restructuring
programmes compared to 2021.
Excluding these and other Adjusting items, Adjusted cost of sales as a
percentage of turnover was 35.5%, 5.3 percentage points higher at AER and at
CER compared with Q1 2021. This primarily reflected higher pandemic sales
(Xevudy) increasing cost of sales margin by seven percentage points as well as
the impact of increased commodity prices and freight costs particularly in
Consumer Healthcare. This was partially offset by a favourable mix primarily
from increased sales of Shingrix in the US and Europe as well as a one-time
benefit from inventory adjustments in the quarter.
Selling, general and administration
Total SG&A costs as a percentage of turnover were 29.1%, 3.6 percentage
points lower at AER and 3.5 percentage points lower at CER than in Q1 2021 as
the growth in sales outweighed SG&A expenditure growth.
Adjusted SG&A costs as a percentage of turnover were 27.4%, 3.8 percentage
points lower at AER than in Q1 2021 and 3.6 percentage points lower at CER.
Adjusted SG&A costs increased 16% AER, 17% CER which primarily reflected
an increased level of launch investment in Specialty Medicines particularly
HIV, Vaccines and increased Consumer Healthcare brand investment to a more
normal level compared to challenging conditions in Q1 2021. The growth in
Adjusted SG&A also reflected an unfavourable comparison to a beneficial
legal settlement in 2021, exchange losses on collaboration profit share and
impairment provisions relating to Russia and Ukraine. This growth, however was
partly offset by the continuing benefit of restructuring and tight control of
ongoing costs.
Research and development
Group R&D expenditure was £1,167 million (11.9% of turnover), up 4% at
both AER and CER. Adjusted R&D expenditure was £1,154 million (11.8% of
turnover), 7% higher than Q1 2021 at both AER and CER.
Adjusted R&D expenditure excluding Consumer Healthcare was £1,088 million
(15.2% of turnover), 6% higher at AER, 6% higher at CER, primarily driven by
increases in the Vaccines portfolio. Specialty Medicines investment decreased
with reductions in the late-stage Specialty Medicines portfolio partly offset
by increased research investment.
In the Vaccines portfolio there has been increased investment in RSV for older
adults and meningitis due to the ongoing phase III trials which commenced in
2021 and in Shingrix due to the combination trial exploring the
co-administration of Shingrix/Flu/COVID-19 as well as further market
expansion. There has also been a significant increase in the level of mRNA
investment.
In Specialty Medicines investment continues in Blenrep, Zejula and otilimab
but decreased primarily following termination of the Oncology assets
bintrafusp alpha and feladilimab in 2021 and following the regulatory
submission of daprodustat during Q1 2022. GSK continues to see increased
investment in Specialty Medicines due to several early-stage assets
progressing to phase I.
Consumer Healthcare adjusted R&D spend was £66 million in the quarter.
Royalty income
Royalty income was £139 million (Q1 2021: £91 million), up 53% AER, 53% CER,
primarily reflecting higher sales of Gardasil and royalty income from Gilead
under the settlement and licensing agreement with Gilead announced on 1
February 2022 (see page 21).
Other operating income/(expense)
Net other operating income was £583 million (Q1 2021: £209 million)
including £924 million upfront income received from the settlement with
Gilead. This was partly offset by accounting charges of £335 million (Q1
2021: £107 million) arising from the re-measurement of contingent
consideration liabilities and the liabilities for the Pfizer put option and
Pfizer and Shionogi preferential dividends in ViiV Healthcare. This included a
re-measurement charge of £256 million (Q1 2021: £134 million) for the
contingent consideration liability due to Shionogi & Co. Limited
(Shionogi), including the unwinding of the discount for £101 million and a
charge for £155 million primarily from changes to exchange rates as well as
adjustments to sales forecasts.
Operating profit
Total operating profit was £2,801 million compared with £1,693 million in Q1
2021. This included the £924 million upfront settlement income from Gilead as
well as increased profits on turnover growth of 32% at CER, partly offset by
higher remeasurement charges for contingent consideration liabilities and
lower profits on disposals.
Adjusted operating profit was £2,613 million, 39% higher than Q1 2021 at AER
and at CER on a turnover increase of 32% CER. The Adjusted operating margin of
26.7% was 1.4 percentage points higher at AER and 1.3 percentage points higher
at CER than in Q1 2021. This primarily reflected sales growth of 32% CER which
was significantly higher than growth in SG&A and R&D with continued
tight cost control and restructuring benefits. The benefit from COVID-19
solutions sales (Xevudy) contributed approximately 11% AER, 11% CER to
Adjusted Operating profit growth.
Excluding Consumer Healthcare, Adjusted operating profit was £1,963 million,
46% higher than Q1 2021 at AER and 44% at CER and the Adjusted operating
margin was 27.5% which was 1.1 percentage points higher at AER and 0.8
percentage points higher at CER than in Q1 2021. This primarily reflected the
benefit from COVID-19 solutions sales (Xevudy), which contributed
approximately 16% AER, 15% CER to Adjusted operating profit growth and reduced
the Adjusted operating margin by approximately 2.6 percentage points at AER
and 2.5 percentage points at CER. Adjusted operating profit growth also
includes leverage from strong sales growth with margin improvement from sales
mix, primarily Shingrix.
Contingent consideration cash payments made to Shionogi and other companies
reduce the balance sheet liability and hence are not recorded in the income
statement. Total contingent consideration cash payments in Q1 2022 amounted to
£211 million (Q1 2021: £221 million). These included cash payments made to
Shionogi of £208 million (Q1 2021: £216 million).
Adjusted operating profit by business
Commercial Operations operating profit was £3,121 million, up 27% AER and CER
on a turnover increase of 40% CER. The operating margin of 43.7% was 4.3
percentage points lower at both AER and CER than in Q1 2021. This primarily
reflected strong sales of lower margin Xevudy in the quarter, increased
investment behind launches in Specialty Medicines including HIV and Vaccines
plus higher commodity, freight and distribution costs as well as an adverse
comparison to a favourable legal settlement in Q1 2021. This was partly offset
by continued tight control of ongoing costs, benefits from continued
restructuring and increased royalty income from Gardasil sales and, following
the settlement with Gilead in February 2022, Biktarvy sales.
R&D segment operating expenses were £1,095 million, up 6% AER, 6% CER,
primarily driven by increased investment in Vaccines including priority
investments for RSV Older Adult, MenABCWY and mRNA.
Consumer Healthcare operating profit was £650 million, up 21% AER, 26% CER on
a turnover increase of 14% CER. The operating margin of 24.7% was 1.5
percentage points higher at AER and 2.3 percentage points higher on a CER
basis than in Q1 2021. This reflected strong leverage from volume growth and
price increases, supply chain efficiencies and incremental synergy benefits
from the Pfizer Joint Venture partially offset by increased brand investment,
increased commodity and freight costs as well as new costs in 2022 associated
with starting to run Consumer Healthcare as a standalone company.
Net finance costs
Total net finance costs were £202 million compared with £191 million in Q1
2021. Adjusted net finance costs were £202 million compared with £190
million in Q1 2021. The increase primarily reflected higher interest expense
on debt due to adverse movements in exchange rates and the newly issued
Consumer Healthcare bond debt.
Share of after tax profits of associates and joint ventures
The share of after tax loss of associates and joint ventures was £1 million
(Q1 2021: £16 million profit).
Taxation
The charge of £431 million represented an effective tax rate on Total results
of 16.6% (Q1 2021: 17.0%) and reflected the different tax effects of the
various Adjusting items. Tax on Adjusted profit amounted to £431 million and
represented an effective Adjusted tax rate of 17.9% (Q1 2021: 18.6%).
Issues related to taxation are described in Note 14, 'Taxation' in the Annual
Report 2021. The Group continues to believe it has made adequate provision for
the liabilities likely to arise from periods that are open and not yet agreed
by relevant tax authorities. The ultimate liability for such matters may vary
from the amounts provided and is dependent upon the outcome of agreements with
relevant tax authorities.
Non-controlling interests
The allocation of Total earnings to non-controlling interests amounted to
£365 million (Q1 2021: £187 million). The increase was primarily due to an
increased allocation of ViiV Healthcare profits of £227 million (Q1 2021:
£76 million), including the Gilead upfront settlement income partly offset by
increased credits for re-measurement of contingent consideration liabilities.
The allocation of Adjusted earnings to non-controlling interests amounted to
£333 million (Q1 2021: £246 million). The increase in allocation primarily
reflected an increase in allocation of Consumer Healthcare Joint Venture
profits of £154 million (Q1 2021: £114 million) and an increase allocation
of ViiV Healthcare profits of £113 million (Q1 2021: £108 million), as well
as higher net profits in some of the Group's other entities with
non-controlling interests.
Earnings per share
Total EPS was 35.9p compared with 21.5p in Q1 2021. This primarily reflected
leverage from significant sales growth during the quarter and income of £924
million from the settlement with Gilead partly offset by an increase in
finance costs.
Adjusted EPS was 32.8p compared with 22.9p in Q1 2021, up 43% AER 43% CER, on
a 39% CER increase in Adjusted operating profit primarily reflecting increased
sales of Specialty Medicines and Vaccines including COVID-19 solutions sales,
tight cost control and a lower effective tax rate. These were partly offset by
higher supply chain costs, increased R&D investment, favourable legal
settlements in Q1 2021 and higher interest costs. The contribution to growth
from COVID-19 solutions was approximately 15% AER, 15% CER.
Currency impact on Q1 2022 results
The results for Q1 2022 are based on average exchange rates, principally
£1/$1.34, £1/€1.19 and £1/Yen 156. Comparative exchange rates are given
on page 31. The period-end exchange rates were £1/$1.31, £1/€1.18 and
£1/Yen 160.
In Q1 2022, turnover was up 32% AER and CER. Total EPS was 35.9p compared with
21.5p in Q1 2021. Adjusted EPS was 32.8p compared with 22.9p in Q1 2021, up
43% at both AER and CER. The currency impact was largely neutral reflecting
the strengthening in Sterling against the Euro and Japanese Yen offset by the
weakening of Sterling against the US Dollar. Exchange gains or losses on the
settlement of intercompany transactions had a one percent favourable impact on
the neutral currency impact on Adjusted EPS.
Adjusting items
The reconciliations between Total results and Adjusted results for Q1 2022 and
Q1 2021 are set out below.
Three months ended 31 March 2022
Total Intangible Intangible Major Trans- Divest- Sepa- Adjusted
results amort- impair- restruct- action- ments, ration results
£m isation ment uring related significant costs £m
£m £m £m £m legal and £m
other
items
£m
Turnover 9,780 9,780
Cost of sales (3,690) 174 17 16 12 (3,471)
Gross profit 6,090 174 17 16 12 6,309
Selling, general and administration (2,844) 37 9 117 (2,681)
Research and development (1,167) 23 (16) 6 (1,154)
Royalty income 139 139
Other operating income/(expense) 583 335 (940) 22 -
Operating profit 2,801 197 1 59 347 (931) 139 2,613
Net finance cost (202) (202)
Share of after tax losses of (1) (1)
associates and joint ventures
Profit before taxation 2,598 197 1 59 347 (931) 139 2,410
Taxation (431) (40) 1 (14) (53) 132 (26) (431)
Tax rate % 16.6% 17.9%
Profit after taxation 2,167 157 2 45 294 (799) 113 1,979
Profit attributable to non-controlling 365 (32) 333
interests
Profit attributable to shareholders 1,802 157 2 45 326 (799) 113 1,646
Earnings per share 35.9p 3.1p - 0.9p 6.5p (15.9)p 2.3p 32.8p
Weighted average number of shares 5,020 5,020
(millions)
Three months ended 31 March 2021
Total Intangible Intangible Major Trans- Divest- Sepa- Adjusted
results amort- impair- restruct- action- ments, ration results
£m isation ment uring related significant costs £m
£m £m £m £m legal and £m
other
items
£m
Turnover 7,418 7,418
Cost of sales (2,480) 175 1 34 7 27 (2,236)
Gross profit 4,938 175 1 34 7 27 5,182
Selling, general and administration (2,427) 75 2 35 (2,315)
Research and development (1,118) 26 13 2 (1,077)
Royalty income 91 91
Other operating income/(expense) 209 (1) 109 (317) -
Operating profit 1,693 201 14 110 116 (288) 35 1,881
Net finance cost (191) 1 (190)
Share of after tax profits of 16 16
associates and joint ventures
Profit before taxation 1,518 201 14 111 116 (288) 35 1,707
Taxation (258) (39) (3) (24) (31) 44 (7) (318)
Tax rate % 17.0% 18.6%
Profit after taxation 1,260 162 11 87 85 (244) 28 1,389
Profit attributable to non-controlling 187 59 246
interests
Profit attributable to shareholders 1,073 162 11 87 26 (244) 28 1,143
Earnings per share 21.5p 3.2p 0.2p 1.7p 0.5p (4.8)p 0.6p 22.9p
Weighted average number of shares 4,993 4,993
(millions)
Major restructuring and integration
Total Major restructuring charges incurred in Q1 2022 were £59 million (Q1
2021: £110 million), analysed as follows:
Q1 2022 Q1 2021
Cash Non- Total Cash Non- Total
£m cash £m £m cash £m
£m £m
Separation Preparation restructuring 13 38 51 79 9 88
programme
Consumer Healthcare Joint Venture 2 4 6 40 4 44
integration programme
Legacy programmes 1 1 2 7 (29) (22)
16 43 59 126 (16) 110
Cash charges of £13 million under the Separation Preparation programme
primarily arose from the restructuring of some administrative functions as
well as commercial pharmaceuticals and R&D functions. The non-cash charges
of £38 million primarily reflected the write-down of assets in administrative
locations and R&D sites.
Total cash payments made in Q1 2022 were £171 million (Q1 2021: £211
million), £120 million (Q1 2021: £100 million) relating to the Separation
Preparation restructuring programme, a further £31 million (Q1 2021: £60
million) relating to the Consumer Healthcare Joint Venture integration
programme and £20 million (Q1 2021: £51 million) relating to other legacy
programmes including the settlement of certain charges accrued in previous
quarters.
The analysis of Major restructuring charges by Income statement line was as
follows:
Q1 2022 Q1 2021
£m £m
Cost of sales 16 34
Selling, general and administration 37 75
Research and development 6 2
Other operating income - (1)
Total Major restructuring costs 59 110
The benefit in the quarter from restructuring programmes was £0.1 billion,
primarily relating to the Separation Preparation restructuring programme.
The Group initiated in Q1 2020 a two-year Separation Preparation programme to
prepare for the separation of GSK into two companies: new GSK, a biopharma
company with an R&D approach focused on science related to the immune
system, the use of human genetics and new technologies, and a new leader in
Consumer Healthcare. The programme aims to:
· Drive a common approach to R&D with improved capital allocation
· Align and improve the capabilities and efficiency of global support functions
to support new GSK
· Further optimise the supply chain and product portfolio, including the
divestment of non-core assets
· Prepare Consumer Healthcare to operate as a standalone company
The programme continues to target delivery of £0.8 billion of annual savings
by 2022 and £1.0 billion by 2023, with total costs estimated at £2.4
billion, of which £1.6 billion is expected to be cash costs. The proceeds of
divestments have largely covered the cash costs of the programme.
The completion of the Consumer Healthcare Joint Venture with Pfizer has
realised substantial cost synergies and largely delivered the expected total
annual cost savings of £0.5 billion by 2021. In February 2022, at the Haleon
Capital Markets Day, the projected savings from this programme were announced
as increased by £0.1 billion to £0.6 billion by 2022. The cash costs are
expected to be £0.7 billion and non-cash charges are expected to be £0.1
billion, plus an additional capital expenditure of £0.2 billion. Up to 25% of
the cost savings are intended to be reinvested in the business to support
innovation and other growth opportunities.
Transaction-related adjustments
Transaction-related adjustments resulted in a net charge of £347 million (Q1
2021: £116 million). This included a net £332 million accounting charge for
the re-measurement of contingent consideration liabilities and the liabilities
for the Pfizer put option and Pfizer and Shionogi preferential dividends in
ViiV Healthcare.
Charge/(credit) Q1 2022 Q1 2021
£m £m
Contingent consideration on former Shionogi-ViiV Healthcare joint Venture 256 134
(including Shionogi preferential dividends)
ViiV Healthcare put options and Pfizer preferential dividends 32 (53)
Contingent consideration on former Novartis Vaccines business 44 26
Other adjustments 15 9
Total transaction-related charges 347 116
The £256 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 £101 million and a charge of £155 million
primarily from exchange rates as well as adjustments to sales forecasts. The
£32 million charge relating to the ViiV Healthcare put option and Pfizer
preferential dividends represented an increase in the valuation of the put
option primarily as a result of updated exchange rates and adjustments to
sales forecasts.
The ViiV Healthcare contingent consideration liability is fair valued under
IFRS. An explanation of the accounting for the non-controlling interests in
ViiV Healthcare is set out on page 21.
Divestments, significant legal charges, and other items
Divestments, significant legal charges and other items primarily included the
£924 million upfront settlement income received from Gilead, as well as gains
from a number of asset disposals, fair value gains on investments and certain
other Adjusting items.
Separation costs
From Q2 2020, the Group started to report additional costs to prepare for
establishment of the Consumer Healthcare business as an independent entity
("Separation costs"). Total separation costs incurred in Q1 2022 were £139
million (Q1 2021: £35 million). This includes £22 million relating to
transaction costs incurred in connection with the demerger and preparatory
admission costs related to the listing of Consumer Healthcare.
Total separation costs are estimated to be £600-700 million, excluding
transaction costs.
Cash generation
Cash flow
Q1 2022 Q1 2021
Cash generated from operations (£m) 2,755 486
Net cash inflow from operating activities (£m) 2,542 331
Free cash flow* (£m) 1,650 (3)
Free cash flow growth (%) >100% >(100)%
Free cash flow conversion* (%) 92% <-%
Net debt** (£m) 19,351 21,402
* Free cash flow and free cash flow conversion are defined on page 42.
** Net debt is analysed on page 33.
Q1 2022
Cash generated from operating activities for the quarter was £2,755 million
(Q1 2021: £486 million). The increase primarily reflected a significant
increase in operating profit including the upfront income from the settlement
with Gilead, favourable timing of collections and profit share payments for
Xevudy sales and a lower seasonal increase in inventory.
Total cash payments to Shionogi in relation to the ViiV Healthcare contingent
consideration liability in the quarter were £208 million (Q1 2021: £216
million), of which £183 million was recognised in cash flows from operating
activities and £25 million was recognised in contingent consideration paid
within investing cash flows. These payments are deductible for tax purposes.
Free cash inflow was £1,650 million for the quarter (Q1 2021: £3 million
outflow). The increase primarily reflected the significant increase in
operating profit including the upfront income from the settlement with Gilead,
favourable timing of collections and profit share payments for Xevudy sales
and lower seasonal increase in inventory. This was partially offset by lower
proceeds from disposals and higher purchases of intangible asset, as well as
higher tax payments and capital expenditure.
Net debt
At 31 March 2022, net debt was £19.4 billion, compared with £19.8 billion at
31 December 2021, comprising gross debt of £33.3 billion which increased
primarily due to the debt issuance for Consumer Healthcare, cash and liquid
investments of £11.0 billion and cash advances and a short-term loan to a
subsidiary of Pfizer Inc. of £2.9 billion, reflecting an on-lend of a portion
of the cash received from the proceeds of the Consumer Healthcare bond
issuance in line with Pfizer's shareholding of the Consumer Healthcare Joint
Venture. Net debt reduced due to £1.7 billion free cash flow partly offset by
the dividends paid to shareholders of £1.0 billion, £0.2 billion of net
adverse exchange impacts from the translation of non-Sterling denominated debt
and exchange on other financing items and additional investments of £0.1
billion.
At 31 March 2022, GSK had short-term borrowings (including overdrafts and
lease liabilities) repayable within 12 months of £4.1 billion with loans of
£3.9 billion repayable in the subsequent year.
Returns to shareholders
Quarterly dividends
The Board has declared a first interim dividend for 2022 of 14 pence per share
(Q1 2021: 19 pence per share).
As set out at the new GSK Investor Update in June 2021, from 2022 GSK will
adopt a progressive dividend policy targeting a dividend pay-out ratio
equivalent to 40 to 60% over the investment cycle. The dividend policy, the
total expected cash distribution, and the respective dividend pay-out ratios
for new GSK and new Consumer Healthcare remain unchanged.
GSK expects to declare a 27p per share dividend payable by the current group
for the first half. This comprises 22p per share for new GSK and 5p per share
representing Consumer Healthcare during the first half whilst part of the
group. For the second half of 2022, new GSK continues to expect to declare a
22p per share dividend. As previously communicated, new GSK would expect to
declare a dividend of 45p per share for 2023.
Following separation, the dividend policy for the new Consumer Healthcare
company will be the responsibility of its Board of Directors and is expected
to be guided by a 30 to 50 per cent pay-out ratio. We expect a second-half
dividend from the new Consumer Healthcare company equivalent to a pay-out of
around 3p per share, subject to its Board's decisions on the intra-year
phasing of dividend payments.
In aggregate, this would represent on the full year 2022 basis the equivalent
of a Group dividend of around 52p per share. Dividends payable by Consumer
Healthcare will only be receivable by shareholders who remain invested in
Consumer Healthcare post-separation and at the appropriate record dates.
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be calculated
based on the exchange rate on 29 June 2022. An annual fee of $0.03 per ADS (or
$0.0075 per ADS per quarter) is charged by the Depositary.
The ex-dividend date will be 19 May 2022, with a record date of 20 May 2022
and a payment date of 1 July 2022.
Paid/ Pence per £m
payable share
2022
First interim 1 July 2022 14 704
2021
First interim 8 July 2021 19 951
Second interim 7 October 2021 19 951
Third interim 13 January 2022 19 952
Fourth interim 7 April 2022 23 1,157
80 4,011
Weighted average number of shares
Q1 2022 Q1 2021
millions millions
Weighted average number of shares - basic 5,020 4,993
Dilutive effect of share options and share awards 48 44
Weighted average number of shares - diluted 5,068 5,037
At 31 March 2022, 5,030 million shares (Q1 2021: 5,003 million) were in free
issue (excluding Treasury shares and shares held by the ESOP Trusts). GSK made
no share repurchases during the period. The company issued 1.8 million shares
under employee share schemes in the period for proceeds of £17 million (Q1
2021: £15 million).
At 31 March 2022 , the ESOP Trust held 53.2 million GSK shares against the
future exercise of share options and share awards. The carrying value of £403
million has been deducted from other reserves. The market value of these
shares was £882 million.
At 31 March 2022, the company held 304.9 million Treasury shares at a cost of
£4,265 million, which has been deducted from retained earnings.
Total and Adjusted results
Total reported results represent the Group's overall performance.
GSK also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS measures may
be considered in addition to, but not as a substitute for or superior to,
information presented in accordance with IFRS. Adjusted results are defined
below and other non-IFRS measures are defined on page 42.
GSK believes that Adjusted results, when considered together with Total
results, provide investors, analysts and other stakeholders with helpful
complementary information to understand better the financial performance and
position of the Group from period to period, and allow the Group's performance
to be more easily compared against the majority of its peer companies. These
measures are also used by management for planning and reporting purposes. They
may not be directly comparable with similarly described measures used by other
companies.
GSK encourages investors and analysts not to rely on any single financial
measure but to review GSK's quarterly results announcements, including the
financial statements and notes, in their entirety.
GSK is committed to continuously improving its financial reporting, in line
with evolving regulatory requirements and best practice. In line with this
practice, GSK expects to continue to review and refine its reporting
framework.
Adjusted results exclude the following items from Total results, together with
the tax effects of all of these items:
· amortisation of intangible assets (excluding computer software and capitalised
development costs)
· impairment of intangible assets (excluding computer software) and goodwill
· Major restructuring costs, which include impairments of tangible assets and
computer software, (under specific Board approved programmes that are
structural, of a significant scale and where the costs of individual or
related projects exceed £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
· separation costs include costs to establish Consumer Healthcare as an
independent business, as well as admission listing and demerger costs
Costs for all other ordinary course smaller scale restructuring and legal
charges and expenses are retained within both Total and Adjusted results.
As Adjusted results include the benefits of Major restructuring programmes but
exclude significant costs (such as significant legal, major restructuring and
transaction items) they should not be regarded as a complete picture of the
Group's financial performance, which is presented in Total results. The
exclusion of other Adjusting items may result in Adjusted earnings being
materially higher or lower than Total earnings. In particular, when
significant impairments, restructuring charges and legal costs are excluded,
Adjusted earnings will be higher than Total earnings.
GSK has undertaken a number of Major restructuring programmes in response to
significant changes in the Group's trading environment or overall strategy, or
following material acquisitions. Within the Pharmaceuticals sector, the highly
regulated manufacturing operations and supply chains and long lifecycle of the
business mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites are likely to
take several years to complete. Costs, both cash and non-cash, of these
programmes are provided for as individual elements are approved and meet the
accounting recognition criteria. As a result, charges may be incurred over a
number of years following the initiation of a Major restructuring programme.
Significant legal charges and expenses are those arising from the settlement
of litigation or government investigations that are not in the normal course
and materially larger than more regularly occurring individual matters. They
also include certain major legacy matters.
Reconciliations between Total and Adjusted results, providing further
information on the key Adjusting items, are set out on page 15.
GSK provides earnings guidance to the investor community on the basis of
Adjusted results. This is in line with peer companies and expectations of the
investor community, supporting easier comparison of the Group's performance
with its peers. GSK is not able to give guidance for Total results as it
cannot reliably forecast certain material elements of the Total results,
particularly the future fair value movements on contingent consideration and
put options that can and have given rise to significant adjustments driven by
external factors such as currency and other movements in capital markets.
ViiV Healthcare
ViiV Healthcare is a subsidiary of the Group and 100% of its operating results
(turnover, operating profit, profit after tax) are included within the Group
income statement.
Earnings are allocated to the three shareholders of ViiV Healthcare on the
basis of their respective equity shareholdings (GSK 78.3%, Pfizer 11.7% and
Shionogi 10%) and their entitlement to preferential dividends, which are
determined by the performance of certain products that each shareholder
contributed. As the relative performance of these products changes over time,
the proportion of the overall earnings allocated to each shareholder also
changes. In particular, the increasing proportion of sales of dolutegravir and
cabotegravir-containing products has a favourable impact on the proportion of
the preferential dividends that is allocated to GSK. Adjusting items are
allocated to shareholders based on their equity interests. GSK was entitled to
approximately 86% of the Total earnings and 83% of the Adjusted earnings of
ViiV Healthcare for 2021.
As consideration for the acquisition of Shionogi's interest in the former
Shionogi-ViiV Healthcare joint venture in 2012, Shionogi received the 10%
equity stake in ViiV Healthcare and ViiV Healthcare also agreed to pay
additional future cash consideration to Shionogi, contingent on the future
sales performance of the products being developed by that joint venture,
dolutegravir and cabotegravir. Under IFRS 3 'Business combinations', GSK was
required to provide for the estimated fair value of this contingent
consideration at the time of acquisition and is required to update the
liability to the latest estimate of fair value at each subsequent period end.
The liability for the contingent consideration recognised in the balance sheet
at the date of acquisition was £659 million. Subsequent re-measurements are
reflected within other operating income/(expense) and within Adjusting items
in the income statement in each period.
On 1 February 2022, ViiV Healthcare reached agreement with Gilead to settle
the global patent infringement litigation relating to the commercialisation of
Gilead's Biktarvy. Under the terms of the global settlement and licensing
agreement, Gilead made an upfront payment of $1.25 billion to ViiV Healthcare
in February 2022. In addition, Gilead will also pay a 3% royalty on all future
US sales of Biktarvy and in respect of the bictegravir component of any other
future bictegravir-containing products sold in the US. These royalties will be
payable by Gilead to ViiV Healthcare from 1 February 2022 until the expiry of
ViiV Healthcare's US Patent No. 8,129,385 on 5 October 2027. Gilead's
obligation to pay royalties does not extend into any period of regulatory
paediatric exclusivity, if awarded.
Cash payments to settle the contingent consideration are made to Shionogi by
ViiV Healthcare each quarter, based on the actual sales performance and other
income of the relevant products in the previous quarter. These payments reduce
the balance sheet liability and hence are not recorded in the income
statement. The cash payments made to Shionogi by ViiV Healthcare in Q1 2022
were £208 million.
As the liability is required to be recorded at the fair value of estimated
future payments, there is a significant timing difference between the charges
that are recorded in the Total income statement to reflect movements in the
fair value of the liability and the actual cash payments made to settle the
liability.
Further explanation of the acquisition-related arrangements with ViiV
Healthcare are set out on pages 57 and 58 of the Annual Report 2021.
Financial information
Income statements
Q1 2022 Q1 2021
£m £m
TURNOVER 9,780 7,418
Cost of sales (3,690) (2,480)
Gross profit 6,090 4,938
Selling, general and administration (2,844) (2,427)
Research and development (1,167) (1,118)
Royalty income 139 91
Other operating income 583 209
OPERATING PROFIT 2,801 1,693
Finance income 10 10
Finance expense (212) (201)
Share of after tax (losses)/profits of associates and joint ventures (1) 16
PROFIT BEFORE TAXATION 2,598 1,518
Taxation (431) (258)
Tax rate % 16.6% 17.0%
PROFIT AFTER TAXATION 2,167 1,260
Profit attributable to non-controlling interests 365 187
Profit attributable to shareholders 1,802 1,073
2,167 1,260
EARNINGS PER SHARE 35.9p 21.5p
Diluted earnings per share 35.6p 21.3p
Statement of comprehensive income
Q1 2022 Q1 2021
£m £m
Profit for the period 2,167 1,260
Items that may be reclassified subsequently to income statement:
Exchange movements on overseas net assets and net investment hedges 267 (267)
Reclassification of exchange movements on liquidation or disposal of
overseas subsidiaries and associates
Fair value movements on cash flow hedges 194 (11)
Reclassification of cash flow hedges to income statement (1) 14
Deferred tax on fair value movements on cash flow hedges (44) -
416 (264)
Items that will not be reclassified to income statement:
Exchange movements on overseas net assets of non-controlling interests 4 (34)
Fair value movements on equity investments (543) 236
Tax on fair value movements on equity investments 47 54
Re-measurement gains on defined benefit plans 313 23
Tax on re-measurement losses on defined benefit plans (73) (12)
(252) 267
Other comprehensive income for the period 164 3
Total comprehensive income for the period 2,331 1,263
Total comprehensive income for the period attributable to:
Shareholders 1,962 1,110
Non-controlling interests 369 153
2,331 1,263
Specialty Medicines turnover - three months ended 31 March 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
HIV 1,181 15 14 697 17 13 299 4 8 185 26 30
Dolutegravir products 1,102 11 11 641 11 8 287 3 6 174 30 34
Tivicay 320 6 7 160 (2) (5) 65 (13) (11) 95 51 57
Triumeq 392 (10) (11) 245 (4) (7) 94 (22) (20) 53 (10) (8)
Juluca 133 19 18 99 19 16 30 15 23 4 33 33
Dovato 257 82 82 137 85 78 98 69 76 22 >100 >100
Rukobia 16 >100 >100 15 >100 >100 1 >100 >100 - - -
Cabenuva 38 >100 >100 32 >100 >100 6 - - - - -
Apretude 2 - - 2 - - - - - - - -
Other 23 (28) (19) 7 (42) (33) 5 (29) (14) 11 (15) (8)
Oncology 127 15 15 69 6 3 54 26 30 4 >100 >100
Zejula 98 11 11 51 - (4) 43 19 22 4 >100 >100
Blenrep 25 19 19 16 14 14 9 29 29 - - -
Jemperli 4 >100 >100 2 - - 2 >100 >100 - - -
Immuno- 520 18 18 347 18 14 84 8 13 89 35 38
inflammation,
respiratory and other
Benlysta 215 21 18 170 17 14 19 19 19 26 53 53
Nucala 295 16 16 177 18 15 65 5 10 53 26 31
Pandemic 1,307 - - 770 - - 311 - - 226 - -
Xevudy 1,307 - - 770 - - 311 - - 226 - -
Specialty Medicines 3,135 98 97 1,883 97 91 748 83 88 504 >100 >100
Vaccines turnover - three months ended 31 March 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Meningitis 212 12 12 99 80 75 83 (8) (6) 30 (33) (29)
Bexsero 163 22 23 66 >100 >100 79 (7) (5) 18 - 11
Menveo 42 8 5 33 37 33 3 (25) (25) 6 (45) (45)
Other 7 (59) (59) - - - 1 - - 6 (63) (63)
Influenza 18 - - 1 >100 >100 - - - 17 (6) (6)
Fluarix, FluLaval 18 - - 1 >100 >100 - - - 17 (6) (6)
Shingles 698 >100 >100 490 82 77 160 >100 >100 48 78 70
Shingrix 698 >100 >100 490 82 77 160 >100 >100 48 78 70
Established 741 8 8 302 67 61 166 (11) (8) 273 (15) (14)
Vaccines
Infanrix, Pediarix 175 29 27 112 75 70 29 (27) (25) 34 6 6
Boostrix 126 34 33 70 63 58 33 (8) (6) 23 53 53
Hepatitis 122 28 27 78 53 47 29 21 25 15 (25) (20)
Rotarix 117 3 5 35 59 55 32 7 10 50 (19) (15)
Synflorix 81 (21) (19) - - - 6 (50) (42) 75 (17) (16)
Priorix, Priorix 47 (25) (25) - - - 28 (12) (9) 19 (39) (42)
Tetra, Varilrix
Cervarix 29 (36) (38) - - - 4 (50) (50) 25 (32) (35)
Other 44 10 13 7 >100 >100 5 25 25 32 (9) (3)
Pandemic vaccines - - - - - - - - - - - -
Pandemic adjuvant - - - - - - - - - - - -
Vaccines 1,669 36 36 892 77 71 409 33 38 368 (11) (9)
General Medicines turnover - three months ended 31 March 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Respiratory 1,535 3 3 722 6 3 333 (2) 1 480 1 4
Arnuity Ellipta 13 >100 >100 11 >100 >100 - - - 2 - -
Anoro Ellipta 98 (16) (15) 41 (35) (37) 38 6 8 19 6 11
Avamys/Veramyst 94 (9) (5) - - - 16 - 6 78 (10) (7)
Flixotide/Flovent 127 9 8 85 21 17 18 12 12 24 (23) (16)
Incruse Ellipta 50 (4) (6) 26 (4) (4) 16 (11) (6) 8 14 (14)
Relvar/Breo Ellipta 275 3 3 120 7 4 83 1 5 72 (3) -
Seretide/Advair 302 (14) (14) 84 (28) (30) 73 (23) (21) 145 4 5
Trelegy Ellipta 340 37 35 238 38 34 53 18 20 49 63 70
Ventolin 201 6 6 117 4 1 30 20 24 54 4 10
Other Respiratory 35 (15) (10) - - - 6 - 17 29 (17) (11)
Other General Medicines 808 - 3 89 14 12 170 (16) (13) 549 4 8
Dermatology 92 (8) (5) - - - 27 (21) (18) 65 (2) 2
Augmentin 129 42 51 - - - 36 57 65 93 37 46
Avodart 81 (2) (1) - - - 27 (10) (10) 54 4 6
Lamictal 120 3 3 59 7 4 26 (7) (4) 35 6 9
Other 386 (8) (5) 30 36 36 54 (39) (36) 302 (3) 1
General Medicines 2,343 2 3 811 7 4 503 (7) (4) 1,029 2 6
Commercial Operations turnover - three months ended 31 March 2022
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Commercial Operations 7,147 40 40 3,586 62 57 1,660 32 36 1,901 17 20
Balance sheet
31 March 2022 31 December 2021
£m £m
ASSETS
Non-current assets
Property, plant and equipment 9,964 9,932
Right of use assets 740 740
Goodwill 10,705 10,552
Other intangible assets 30,468 30,079
Investments in associates and joint ventures 83 88
Other investments 1,656 2,126
Deferred tax assets 5,263 5,218
Derivative financial instruments 16 18
Other non-current assets 1,806 1,676
Total non-current assets 60,701 60,429
Current assets
Inventories 6,003 5,783
Current tax recoverable 497 486
Trade and other receivables 8,300 7,860
Derivative financial instruments 176 188
Liquid investments and short term loans to third parties 3,010 61
Cash and cash equivalents 10,967 4,274
Assets held for sale 35 22
Total current assets 28,988 18,674
TOTAL ASSETS 89,689 79,103
LIABILITIES
Current liabilities
Short-term borrowings (4,102) (3,601)
Contingent consideration liabilities (971) (958)
Trade and other payables (17,577) (17,554)
Derivative financial instruments (152) (227)
Current tax payable (783) (489)
Short-term provisions (693) (841)
Total current liabilities (24,278) (23,670)
Non-current liabilities
Long-term borrowings (29,226) (20,572)
Corporation tax payable (184) (180)
Deferred tax liabilities (3,668) (3,556)
Pensions and other post-employment benefits (2,940) (3,113)
Other provisions (643) (630)
Derivative financial instruments (23) (1)
Contingent consideration liabilities (5,198) (5,118)
Other non-current liabilities (897) (921)
Total non-current liabilities (42,779) (34,091)
TOTAL LIABILITIES (67,057) (57,761)
NET ASSETS 22,632 21,342
EQUITY
Share capital 1,347 1,347
Share premium account 3,436 3,301
Retained earnings 9,637 7,944
Other reserves 1,761 2,463
Shareholders' equity 16,181 15,055
Non-controlling interests 6,451 6,287
TOTAL EQUITY 22,632 21,342
Statement of changes in equity
Share 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 period 1,802 1,802 365 2,167
Other comprehensive 507 (347) 160 4 164
income/(expense) for the period
Total comprehensive income/(expense) 2,309 (347) 1,962 369 2,331
for the period
Distributions to non-controlling interests (213) (213)
Contributions from non-controlling 8 8
interests
Dividends to shareholders (952) (952) (952)
Shares issued 17 17 17
Shares acquired by ESOP Trusts 118 704 (822) - -
Realised after tax losses on disposal (10) 10 - -
of equity investments
Write-down on shares held by ESOP (457) 457 - -
Trusts
Share-based incentive plans 99 99 99
At 31 March 2022 1,347 3,436 9,637 1,761 16,181 6,451 22,632
At 1 January 2021 1,346 3,281 6,755 3,205 14,587 6,221 20,808
Profit for the period 1,073 1,073 187 1,260
Other comprehensive (expense)/ (255) 292 37 (34) 3
income for the period
Total comprehensive income for the 818 292 1,110 153 1,263
period
Distributions to non-controlling interests (236) (236)
Contributions from non-controlling 7 7
interests
Dividends to shareholders (946) (946) (946)
Shares issued 15 15 15
Realised after tax profits on disposal 29 (29) - -
of equity investments
Write-down on shares held by ESOP (55) 55 - -
Trusts
Share-based incentive plans 99 99 99
At 31 March 2021 1,346 3,296 6,700 3,523 14,865 6,145 21,010
Cash flow statement
Q1 2022 Q1 2021
£m £m
Profit after tax 2,167 1,260
Tax on profits 431 258
Share of after tax (losses)/profits of associates and joint ventures 1 (16)
Net finance expense 202 191
Depreciation, amortisation and other adjusting items 704 361
Decrease in working capital (671) (539)
Contingent consideration paid (185) (192)
Increase/(decrease) in other net liabilities (excluding contingent 106 (837)
consideration paid)
Cash generated from operations 2,755 486
Taxation paid (213) (155)
Net cash inflow from operating activities 2,542 331
Cash flow from investing activities
Purchase of property, plant and equipment (222) (201)
Proceeds from sale of property, plant and equipment 6 37
Purchase of intangible assets (379) (153)
Proceeds from sale of intangible assets 9 328
Purchase of equity investments (45) (103)
Proceeds from sale of equity investments - 44
Contingent consideration paid (26) (29)
Disposal of businesses 1 3
Cash advances and loans to third parties (2,947) -
Interest received 10 8
Decrease in liquid investments - 18
Net cash outflow from investing activities (3,593) (48)
Cash flow from financing activities
Issue of share capital 17 15
Shares acquired by ESOP Trusts (5) -
Increase in long-term loans 9,205 -
Repayment of short-term loans (249) (5)
Repayment of lease liabilities (59) (49)
Interest paid (85) (95)
Dividends paid to shareholders (952) (946)
Distributions to non-controlling interests (213) (236)
Contributions from non-controlling interests 8 7
Other financing items 306 (67)
Net cash inflow/(outflow) from financing activities 7,973 (1,376)
Increase/(decrease) in cash and bank overdrafts in the period 6,922 (1,093)
Cash and bank overdrafts at beginning of the period 3,817 5,262
Exchange adjustments 12 (35)
Increase/(decrease) in cash and bank overdrafts 6,922 (1,093)
Cash and bank overdrafts at end of the period 10,751 4,134
Cash and bank overdrafts at end of the period comprise:
Cash and cash equivalents 10,967 4,757
Overdrafts (216) (623)
10,751 4,134
Segment information
Operating segments are reported based on the financial information provided to
the Chief Executive Officer and the responsibilities of the GSK Leadership
Team (GLT). GSK has revised its operating segments from Q1 2022. Previously,
GSK reported results under four segments: Pharmaceuticals; Pharmaceuticals
R&D; Vaccines and Consumer Healthcare. From the first quarter 2022, GSK
reports results under three segments: Commercial Operations; Total R&D and
Consumer Healthcare, and members of the GLT are responsible for each segment.
Comparative information in this announcement has been retrospectively restated
on a consistent basis.
R&D investment is essential for the sustainability of the business.
However for segment reporting the Commercial operating profits exclude
allocations of globally funded R&D.
The Total R&D segment is the responsibility of the Chief Scientific
Officer and President, R&D and is reported as a separate segment. The
operating profit of this segment includes R&D activities across Specialty
Medicines, including HIV and Vaccines. It includes R&D and some SG&A
costs relating to regulatory and other functions.
The Group's management reporting process allocates intra-Group profit on a
product sale to the market in which that sale is recorded, and the profit
analyses below have been presented on that basis.
Turnover by segment
Q1 2022 Q1 2021 Growth Growth
£m £m £% CER%
Commercial Operations 7,147 5,106 40 40
Consumer Healthcare 2,633 2,312 14 14
Total turnover 9,780 7,418 32 32
Operating profit by segment
Q1 2022 Q1 2021 Growth Growth
£m £m £% CER%
Commercial Operations 3,121 2,451 27 27
Research and Development (1,095) (1,030) 6 6
Consumer Healthcare 650 535 21 26
Segment profit 2,676 1,956 37 38
Corporate and other unallocated costs (63) (75)
Adjusted operating profit 2,613 1,881 39 39
Adjusting items 188 (188)
Total operating profit 2,801 1,693 65 65
Finance income 10 10
Finance costs (212) (201)
Share of after tax (losses)/profits of (1) 16
associates and joint ventures
Profit before taxation 2,598 1,518 71 71
Adjusting items reconciling segment profit and operating profit comprise items
not specifically allocated to segment profit. These include impairment and
amortisation of intangible assets; major restructuring costs, which include
impairments of tangible assets and computer software; transaction-related
adjustments related to significant acquisitions; proceeds and costs of
disposals of associates, products and businesses, significant legal charges
and expenses on the settlement of litigation and government investigations,
other operating income other than royalty income and other items, and
separation costs.
Legal matters
The Group is involved in significant legal and administrative proceedings,
principally product liability, intellectual property, tax, anti-trust,
consumer fraud and governmental investigations, which are more fully described
in the 'Legal Proceedings' note in the Annual Report 2021. At 31 March 2022,
the Group's aggregate provision for legal and other disputes (not including
tax matters described on page 14) was £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 developments since the date of the Annual Report 2021 are as
follows:
Dovato
In September 2019, ViiV Healthcare received a paragraph IV letter from Cipla
Ltd. (Cipla) relating to Dovato and challenging only the crystal form patent.
On 4 November 2019, ViiV Healthcare filed suit against Cipla in the US
District Court for the District of Delaware. In March 2022, the parties
reached a settlement, thereby concluding the matter.
Juluca
In January 2020, ViiV Healthcare received a paragraph IV letter from Lupin
Ltd. (Lupin) relating to Juluca and challenging the crystal form patent as
well as a patent relating to the combination of dolutegravir and rilpivirine
that expires on 24 January 2031. On 28 February 2020, ViiV Healthcare filed
suit against Lupin on both patents. In March 2022, the parties reached a
settlement, thereby concluding the matter.
Additional information
Accounting policies and basis of preparation
This unaudited Results Announcement contains condensed financial information
for the three months ended 31 March 2022, and should be read in conjunction
with the Annual Report 2021, which was prepared in accordance with United
Kingdom adopted International Financial Reporting Standards. This Results
Announcement has been prepared applying consistent accounting policies to
those applied by the Group in the Annual Report 2021.
The Group has not identified any changes to its key sources of accounting
judgements or estimations of uncertainty compared with those disclosed in the
Annual Report 2021.
This Results Announcement does not constitute statutory accounts of the Group
within the meaning of sections 434(3) and 435(3) of the Companies Act 2006.
The full Group accounts for 2021 were published in the Annual Report 2021,
which has been delivered to the Registrar of Companies and on which the report
of the independent auditor was unqualified and did not contain a statement
under section 498 of the Companies Act 2006.
COVID-19 pandemic
The potential impact of the COVID-19 pandemic on GSK's trading performance and
all its principal risks have been assessed, with appropriate mitigation plans
put in place. GSK is encouraged by the uptake in demand in the first quarter
for its medicines and vaccines, particularly Shingrix. Overall, the Company
remains confident in the underlying demand for its medicines and vaccines. GSK
is encouraged by the rate at which COVID-19 vaccinations and boosters have
been administered worldwide, providing support for healthcare systems ahead of
the anticipated return to normal. This continues, however, to be a dynamic
situation with the risk of future variants of concern unknown; these variants
of concern could potentially impact GSK's trading results, clinical trials,
supply continuity, and its employees materially.
Exchange rates
GSK operates in many countries, and earns revenues and incurs costs in many
currencies. The results of the Group, as reported in Sterling, are affected by
movements in exchange rates between Sterling and other currencies. Average
exchange rates, as modified by specific transaction rates for large
transactions, prevailing during the period, are used to translate the results
and cash flows of overseas subsidiaries, associates and joint ventures into
Sterling. Period-end rates are used to translate the net assets of those
entities. The currencies which most influenced these translations and the
relevant exchange rates were:
Q1 2022 Q1 2021 2021
Average rates:
US$/£ 1.34 1.38 1.38
Euro/£ 1.19 1.14 1.16
Yen/£ 156 146 151
Period-end rates:
US$/£ 1.31 1.38 1.35
Euro/£ 1.18 1.17 1.19
Yen/£ 160 152 155
During Q1 2022 average Sterling exchange rates were stronger against the Yen
and the Euro but weaker against the US Dollar compared with the same period in
2021. Period-end Sterling exchange rates were stronger against the Euro and
the Yen and weaker against the US Dollar compared with the 2021 period-end
rates.
Name change
GSK announces that it will change its company name to GSK plc from
GlaxoSmithKline plc from a date in mid-May. A subsequent announcement will be
made when the name change becomes effective. The company's stock ticker on the
LSE and NYSE ("GSK") will not change. No action is required on the part of any
equity holders with respect to their rights as an equity holder.
Net assets
The book value of net assets increased by £1,290 million from £21,342
million at 31 December 2021 to £22,632 million at 31 March 2022. This
primarily reflected the Total profit for the period, the re-measurement gains
on the defined benefit plans plus an increase in intangible assets, other
non-current assets and trade receivables. These increases were partially
offset by the decrease in fair value of equity investments and the dividends
paid during the period. Cash and cash equivalents and long term borrowings
increased due to the Consumer Healthcare bond debt issuance.
The carrying value of investments in associates and joint ventures at 31 March
2022 was £83 million (31 December 2021: £88 million), with a market value of
£83 million (31 December 2021: £88 million).
At 31 March 2022, the net deficit on the Group's pension plans was £914
million compared with £1,129 million at 31 December 2021. The decrease in the
net deficit primarily relate to increase in the rates used to discount UK
pension liabilities from 2.0% to 2.8%, and US pension liabilities from 2.7% to
3.7%, partly offset by an increase in the UK inflation rate from 3.2% to 3.5%,
increase in the US cash balance credit rate from 2.0% to 2.4% and lower UK
asset values.
The estimated present value of the potential redemption amount of the Pfizer
put option related to ViiV Healthcare, recorded in Other payables in Current
liabilities, was £1,040 million (31 December 2021: £1,008 million).
Contingent consideration amounted to £6,169 million at 31 March 2022 (31
December 2021: £6,076 million), of which £5,607 million (31 December 2021:
£5,559 million) represented the estimated present value of amounts payable to
Shionogi relating to ViiV Healthcare and £529 million (31 December 2021:
£479 million) represented the estimated present value of contingent
consideration payable to Novartis related to the Vaccines acquisition.
Of the contingent consideration payable (on a post-tax basis) to Shionogi at
31 March 2022, £947 million (31 December 2021: £937 million) is expected to
be paid within one year.
Movements in contingent consideration are as follows:
Q1 2022 ViiV Group
Healthcare £m
£m
Contingent consideration at beginning of the period 5,559 6,076
Re-measurement through income statement 256 304
Cash payments: operating cash flows (183) (185)
Cash payments: investing activities (25) (26)
Contingent consideration at end of the period 5,607 6,169
Q1 2021 ViiV Group
Healthcare £m
£m
Contingent consideration at beginning of the period 5,359 5,869
Re-measurement through income statement 134 160
Cash payments: operating cash flows (189) (192)
Cash payments: investing activities (27) (29)
Contingent consideration at end of the period 5,277 5,808
Contingent liabilities
There were contingent liabilities at 31 March 2022 in respect of guarantees
and indemnities entered into as part of the ordinary course of the Group's
business. No material losses are expected to arise from such contingent
liabilities. Provision is made for the outcome of legal and tax disputes where
it is both probable that the Group will suffer an outflow of funds and it is
possible to make a reliable estimate of that outflow. Descriptions of the
significant legal disputes to which the Group is a party are set out on page
30.
Business acquisitions
On 13 April 2022, GSK announced it had reached agreement to acquire Sierra
Oncology, Inc. a California-based, late-stage biopharmaceutical company
focused on targeted therapies for the treatment of rare forms of cancer, for
$55 per share of common stock in cash representing an approximate total equity
value of $1.9 billion (£1.5 billion). Under the terms of the agreement, the
acquisition will be effected through a one-step merger in which the shares of
Sierra Oncology outstanding will be cancelled and converted into the right to
receive $55 per share in cash. Subject to customary conditions, including the
approval of the merger by at least a majority of the issued and outstanding
shares of Sierra Oncology, and the expiration or earlier termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
the transaction is expected to close in the third quarter of 2022 or before.
Reconciliation of cash flow to movements in net debt
Q1 2022 Q1 2021
£m £m
Net debt at beginning of the period (19,838) (20,780)
Increase/(decrease) in cash and bank overdrafts 6,922 (1,093)
Decrease in liquid investments - (18)
Net decrease in short-term loans 249 5
Increase in long-term loans (9,205) -
Repayment of lease liabilities 59 49
Cash advances and loans to third parties 2,947 -
Exchange adjustments (427) 466
Other non-cash movements (58) (31)
Decrease in net debt 487 (622)
Net debt at end of the period (19,351) (21,402)
Net debt analysis
31 March 2022 31 December 2021
£m £m
Liquid investments 63 61
Cash and cash equivalents 10,967 4,274
Cash advances and loans to third parties 2,947 -
Short-term borrowings (4,102) (3,601)
Long-term borrowings (29,226) (20,572)
Net debt at end of the period (19,351) (19,838)
Free cash flow reconciliation
Q1 2022 Q1 2021
£m £m
Net cash inflow from operating activities 2,542 331
Purchase of property, plant and equipment (222) (201)
Proceeds from sale of property, plant and equipment 6 37
Purchase of intangible assets (379) (153)
Proceeds from disposals of intangible assets 9 328
Net finance costs (75) (87)
Dividends from joint ventures and associates - -
Contingent consideration paid (reported in investing activities) (26) (29)
Distributions to non-controlling interests (213) (236)
Contributions from non-controlling interests 8 7
Free cash flow 1,650 (3)
R&D commentary
GSK focuses on the science of the immune system, human genetics, and advanced
technologies to develop Specialty Medicines and Vaccines in four core
therapeutic areas - Infectious Diseases, HIV, Oncology and Immunology. GSK
remains open to opportunities outside of these core therapy areas,
specifically those opportunities that are aligned to the Company's focus on
the science of the immune system and human genetic validation. The table below
highlights medicines and vaccines in late-stage (phase III) development by
therapy area:
Pipeline overview
Medicines and vaccines in phase III development (including major lifecycle 21 Infectious Diseases (11)
innovation or under regulatory review)
· Bexsero infants (US) vaccine
· COVID-19 (Medicago) vaccine candidate
· COVID-19 (Sanofi) vaccine candidate
· COVID-19 (SK Bioscience) vaccine candidate
· MenABCWY (1st gen) vaccine candidate
· Menveo liquid vaccine
· MMR (US) vaccine
· Rotarix liquid (US) vaccine
· RSV older adults vaccine candidate
· gepotidacin (bacterial topoisomerase inhibitor) uUTI
and GC
· Xevudy (sotrovimab/VIR-7831) COVID-19
Oncology (4)
· Blenrep (anti-BCMA ADC) multiple myeloma
· Jemperli (PD-1 antagonist) 1L endometrial cancer
· Zejula (PARP inhibitor) 1L ovarian, lung and breast cancer
· letetresgene-autoleucel (NY-ESO-1 TCR) synovial sarcoma/myxoid/round cell
liposarcoma
Immunology (4)
· latozinemab (AL001, anti-sortilin) frontotemporal dementia
· depemokimab (LA anti-IL5 antagonist) asthma, eosinophilic granulomatosis with
polyangiitis, chronic rhinosinusitis with nasal polyps
· Nucala chronic obstructive pulmonary disease
· otilimab (aGM-CSF inhibitor) rheumatoid arthritis
Opportunity driven (2)
· daprodustat (HIF-PHI) anaemia of chronic kidney disease
· linerixibat (IBATi) cholestatic pruritus in primary biliary cholangitis
Total vaccines and medicines in all phases of clinical development 64
Total projects in clinical development (inclusive of all phases and 79
indications)
Our key growth assets by therapy area
The following outlines several key medicines and vaccines by therapy area that
will help drive growth for GSK to meet its outlooks and ambition for 2021-2026
and beyond.
Infectious Diseases
bepirovirsen (HBV ASO)
GSK is investigating bepirovirsen for the treatment of chronic hepatitis B
both as a monotherapy (B-Clear) and in combination with existing treatments
(B-Together) with the aim to explore additional combinations in the future. In
April 2022, the Company began the first phase II combination trial of
bepirovirsen and a hepatitis B virus targeted immunotherapy.
Key trials for bepirovirsen:
Trial name (population) Phase Design Timeline Status
B-Clear bepirovirsen monotherapy (chronic hepatitis B) IIb A multi-centre, randomised, partial-blind parallel cohort study to assess the Trial start: Active, not recruiting
efficacy and safety of treatment with bepirovirsen in participants with
chronic hepatitis B virus Q3 2020
NCT04449029
B-Together bepirovirsen sequential combination therapy with Peg-interferon II A multi-centre, randomised, open label study 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 study on the safety, efficacy and immune response following sequential Trial start: Active,
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 recruiting
receiving nucleos(t)ide analogue (NA) therapy
NCT05276297
gepotidacin (bacterial topoisomerase inhibitor)
First in class novel antibiotic for the treatment of uncomplicated urinary
tract infections (uUTI) and gonorrhea. Interim analysis for EAGLE is scheduled
in the second half of 2022.
Key phase III trials for gepotidacin:
Trial name (population) Phase Design Timeline Status
EAGLE-1 (uncomplicated urogenital gonorrhea) III A randomised, multi-centre, open-label study 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 gonorrhea 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 study Trial start: Recruiting
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 study Trial start: Recruiting
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)
NCT04187144
MenABCWY vaccine candidate:
GSK is developing two MenABCWY pentavalent (5-in-1) vaccines, the first
generation is in late-stage development, the second generation in an earlier
stage. The goal is to help protect against all five major disease-causing
serogroups. Phase III pivotal results from the first generation MenABCWY
vaccine are expected in the second half of this year.
Key phase III trials for MenABCWY vaccine candidate:
Trial name (population) Phase Design Timeline Status
MenABCWY - 019 IIIb A randomised, controlled, observer-blind study to evaluate safety and Trial start: 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 study to demonstrate effectiveness, Trial start: Active, not recruiting
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 February 2022, GSK stopped enrolment and vaccination in trials evaluating
its potential respiratory syncytial virus (RSV) maternal vaccine candidate in
pregnant women. This decision does not impact the ongoing phase III trial for
RSV older adults (60 years and above). This trial remains on track with an
anticipated data readout in the first half of 2022.
Key phase III trials for RSV older adult and maternal vaccine candidates:
Trial name (population) Phase Design Timeline Status
RSV OA-004 III A randomised, open-label, multi-country study to evaluate the immunogenicity, Trial start: Active, not recruiting
safety, reactogenicity and persistence of a single dose of the RSVPreF3 OA
(Adults ≥60 yo) investigational vaccine and different revaccination schedules in adults aged Q1 2021
60 years and above
NCT04732871
RSV OA-006 III A randomised, placebo-controlled, observer-blind, multi-country study to Trial start: Active, not recruiting
demonstrate the efficacy of a single dose of GSK's RSVPreF3 OA investigational
(Adults ≥60 yo) vaccine in adults aged 60 years and above Q2 2021
NCT04886596
RSV OA-007 III An open-label, randomised, controlled, multi-country study to evaluate the Trial start: Complete; results anticipated to be shared 2022+
immune response, safety and reactogenicity of RSVPreF3 OA investigational
(Adults ≥60 yo) vaccine when co-administered with FLU-QIV vaccine in adults aged 60 years and Q2 2021
above
NCT04841577
RSV OA-009 III A randomised, double-blind, multi-country study to evaluate consistency, Trial start: Active, not recruiting
safety, and reactogenicity of 3 lots of RSVPreF3 OA investigational vaccine
(Adults ≥60 yo) administrated as a single dose in adults aged 60 years and above Q4 2021
NCT05059301
GRACE (pregnant women aged 14-49 yo) III A randomised, double-blind, placebo-controlled multi-country study 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
In March 2022, the US Food and Drug Administration (FDA) approved an updated
label for Cabenuva (cabotegravir, rilpivirine) that streamlines the initiation
process for the first and only complete long-acting HIV treatment by allowing
people to start directly with injections without an optional oral lead-in
period. Additionally, the US FDA also approved Cabenuva for the treatment of
HIV-1 in virologically suppressed adolescents (HIV-1 RNA less than 50 copies
per millilitre c/mL ) who are 12 years of age or older and weigh at least
35kg on a stable antiretroviral regimen, with no history of treatment failure,
and with no known or suspected resistance to either cabotegravir or
rilpivirine.
At the Conference on Retroviruses and Opportunistic Infections 2022, held
virtually on 12-16 February, GSK presented data demonstrating further evidence
for the long-acting regimen of Cabenuva administered every two months. This
included the ATLAS-2M 152-week efficacy and safety findings for the treatment
of HIV-1 in virologically suppressed adults, which builds upon previous
96-week efficacy and safety data. An investigator-sponsored analysis of
adolescent perspectives toward the long-acting regimen was also presented.
Key phase III trials for cabotegravir:
Trial name (population) Phase Design Timeline Status
HPTN 083 III A double-blind safety and efficacy study 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 study 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 study 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 study 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 study 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 naive adult participants
Oncology
Blenrep (belantamab mafodotin)
GSK is continuing the DREAMM clinical development programme evaluating the
potential of Blenrep in a broader multiple myeloma (MM) patient population,
including as a monotherapy and in combination with standard and novel
therapies in earlier lines of treatment.
Trial name (population) Phase Design Timeline Status
DREAMM-3 (3L/4L+ MM pts who have failed Len + PI) III An open-label, randomised study to evaluate the efficacy and safety of single Trial start: Recruiting
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 study 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 study to evaluate the efficacy and Trial start: Recruiting
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)
New data for Jemperli was presented at the Society of Gynaecologic Oncology
(SGO) 2022 Annual Meeting on Women's Cancer, held on 18-21 March, in Phoenix,
Arizona. A GARNET trial subgroup presentation included a post-hoc analysis
evaluating the antitumour activity and safety of Jemperli in patients with
endometrial cancer by age subgroups. Additionally, a Jemperli indirect
treatment comparison compared the clinical effectiveness of Jemperli in
combination with doxorubicin, a chemotherapy medicine, in the treatment of
advanced or recurrent endometrial cancer, which may help further contextualize
how Jemperli fits in the recurrent or advanced mismatch repair-deficient
(dMMR) endometrial cancer treatment landscape.
Key phase III trials for Jemperli:
Trial name (population) Phase Design Timeline Status
RUBY III A randomised, double-blind, multi-centre study of dostarlimab (TSR-042) plus Trial start: 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
Zejula (niraparib)
New data presented at the SGO 2022 Annual Meeting on Women's Cancer included
both the OVARIO and ROYAL trials. OVARIO featured an updated analysis from
this phase II study evaluating Zejula in combination with bevacizumab, an
anti-vascular endothelial growth factor antibody (VEGFA) targeted cancer
medicine, as first-line maintenance therapy in patients with ovarian cancer
following platinum-based chemotherapy and bevacizumab. ROYAL was a real-world
evidence study examining the evolution of the ovarian cancer treatment
paradigm in the US and Europe from 2017 to 2020. The findings from this study
showed that the use of 1L maintenance PARP inhibitor monotherapy increased
over time and the use of VEGF inhibitor monotherapy decreased over time. These
findings also showed that many patients with advanced ovarian cancer did not
receive 1L maintenance therapy and treatment patterns vary by country. In
addition, GSK's alliance partner Zai Lab Limited presented a late-breaking
oral presentation of the PRIME phase III trial, which evaluated Zejula
(independently manufactured by Zai Lab) in Chinese patients with newly
diagnosed advanced ovarian cancer using an individualised starting dose.
Zejula demonstrated a statistically significant and clinically meaningful
improvement in progression-free survival (PFS) with a tolerable safety profile
in the overall study population, regardless of biomarker status, when compared
to placebo.
Key phase III trials for Zejula:
Trial name (population) Phase Design Timeline Status
ZEAL-1L (maintenance for 1L advanced NSCLC) III A randomised, double-blind, placebo-controlled, multi-centre study comparing Trial start: 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 study 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 nonmucinous epithelial Q4 2018
ovarian cancer
NCT03602859
Immunology
depemokimab (LA anti-IL5 antagonist)
In Q1 2022, GSK began initiating three additional phase III trials for
depemokimab in eosinophil diseases, one in eosinophilic granulomatosis with
polyangiitis (EGPA) and two in chronic rhinosinusitis with nasal polyps
(CRSwNP). A fourth study in hypereosinophilic syndrome (HES) will be
initiating in Q2 2022.
Key phase III trials for depemokimab:
Trial name (population) Phase Design Timeline Status
SWIFT-1 (severe eosinophilic asthma) III A 52-week, randomised, double-blind, placebo-controlled, parallel-group, Trial start: Recruiting
multi-centre study 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 study 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
NIMBLE (SEA) III A 52-week, randomised, double-blind, double-dummy, parallel group, Trial start: Recruiting
multi-centre, non-inferiority study 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 Initiating Initiating
NCT05274750
ANCHOR-2 (CRSwNP) III Efficacy and safety of depemokimab in participants with CRSwNP Initiating Initiating
NCT05281523
OCEAN (EGPA) III Efficacy and safety of depemokimab compared with mepolizumab in adults with Initiating Initiating
relapsing or refractory EGPA
NCT05263934
otilimab (aGM-CSF inhibitor)
GSK is investigating otilimab, an anti-GM-CSF monoclonal antibody, as a
potential new treatment for rheumatoid arthritis (RA). We expect to report
results from three phase III studies by the end of 2022.
Key phase III trials for otilimab:
Trial name (population) Phase Design Timeline Status
contRAst-1 III A 52-week, multi-centre, randomised, double blind, efficacy and safety study Trial start: Active, not recruiting
comparing otilimab with placebo and with tofacitinib, in combination with
(Moderate to severe RA MTX-IR patients) methotrexate in participants with moderately to severely active rheumatoid Q2 2019
arthritis who have an inadequate response to methotrexate
NCT03980483
contRAst-2 (Moderate to severe RA DMARD-IR patients) III A 52-week, multi-centre, randomised, double blind, efficacy and safety study, Trial start: Active, not recruiting
comparing otilimab with placebo and with tofacitinib in combination with
conventional synthetic DMARDs, in participants with moderately to severely Q2 2019
active rheumatoid arthritis who have an inadequate response to conventional
NCT03970837 synthetic DMARDs or biologic
contRAst-3 (Moderate to severe RA patients IR to biologic DMARD and/or JAKs) III A 24-week, multi-centre, randomised, double-blind, efficacy and safety study, Trial start: Complete; results anticipated to be shared H2 2022
comparing otilimab with placebo and with sarilumab, in combination with
conventional synthetic DMARDs, in participants with moderately to severely Q4 2019
active rheumatoid arthritis who have an inadequate response to biological
NCT04134728 DMARDs and/or Janus Kinase inhibitors
Opportunity driven
daprodustat (oral hypoxia-inducible factor prolyl hydroxylase inhibitor)
The European Medicines Agency (EMA) validated the marketing authorisation
application (MAA) and the US FDA accepted the New Drug Application (NDA) for
daprodustat based on the positive data from the ASCEND phase III clinical
trial programme. The programme included five pivotal trials assessing the
efficacy and safety of daprodustat for the treatment of anaemia of chronic
kidney disease (CKD). The data confirmed the potential of daprodustat as a new
oral medicine for patients with anaemia of CKD in both non-dialysis and
dialysis settings. The data were previously presented in November 2021 at the
American Society of Nephrology's Kidney Week 2021 and simultaneously published
in the New England Journal of Medicine.
Trial name (population) Phase Design Timeline Status
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 study in dialysis subjects with anemia associated
with chronic kidney disease to evaluate the safety and efficacy of daprodustat
compared to recombinant human erythropoietin, following a switch from
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 study 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
study in hemodialysis 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 analogs
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 study 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, study in recombinant human erythropoietin (rhEPO) naïve
non-dialysis participants with anemia of chronic kidney disease to evaluate
the efficacy, safety and effects on quality of life of daprodustat compared to
NCT03409107 placebo
Reporting definitions
Total and Adjusted results
Total reported results represent the Group's overall performance.
GSK also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS measures may
be considered in addition to, but not as a substitute for or superior to,
information presented in accordance with IFRS. Adjusted results are defined on
page 20 and other non-IFRS measures are defined below.
Free cash flow
Free cash flow is defined as the net cash inflow/outflow from operating
activities less capital expenditure on property, plant and equipment and
intangible assets, contingent consideration payments, net finance costs, and
dividends paid to non-controlling interests plus proceeds from the sale of
property, plant and equipment and intangible assets, and dividends received
from joint ventures and associates. It is used by management for planning and
reporting purposes and in discussions with and presentations to investment
analysts and rating agencies. Free cash flow growth is calculated on a
reported basis. A reconciliation of net cash inflow from operations to free
cash flow is set out on page 33.
Free cash flow conversion
Free cash flow conversion is free cash flow as a percentage of earnings.
Working capital
Working capital represents inventory and trade receivables less trade
payables.
CER and AER growth
In order to illustrate underlying performance, it is the Group's practice to
discuss its results in terms of constant exchange rate (CER) growth. This
represents growth calculated as if the exchange rates used to determine the
results of overseas companies in Sterling had remained unchanged from those
used in the comparative period. CER% represents growth at constant exchange
rates. £% or AER% represents growth at actual exchange rates.
Net debt
Net debt is defined as total borrowings less cash, cash equivalents, liquid
investments, and short-term loans to third parties that are subject to an
insignificant risk of change in value.
COVID-19 solutions
COVID-19 solutions include the sales of pandemic adjuvant and other COVID-19
solutions including vaccine manufacturing and Xevudy and the associated costs
but does not include reinvestment in R&D. This categorisation is used by
management and we believe is helpful to investors through providing clarity on
the results of the Group by showing the contribution to growth from COVID-19
solutions.
New GSK
New GSK refers to the current GSK group excluding the Consumer Healthcare
business that is intended to be (or will have been) demerged.
General Medicines
General Medicines are usually prescribed in the primary care or community
settings by general healthcare practitioners. For GSK, this includes medicines
in inhaled respiratory, dermatology, antibiotics and other diseases.
Specialty Medicines
Specialty Medicines are typically prescription medicines used to treat complex
or rare chronic conditions. For GSK, this comprises medicines in infectious
diseases, HIV, oncology, immunology and respiratory.
Organic revenue growth
Organic growth represents revenue growth as determined under IFRS excluding
the impact of acquisitions, divestments and closures of brands or businesses,
revenue attributable to manufacturing service agreements relating to
divestments and the closure of sites or brands, at CER.
Biopharma
Biopharma refers to sales in Commercial Operations.
Brand names and partner acknowledgements
Brand names appearing in italics throughout this document are trademarks of
GSK or associated companies or used under licence by the Group.
Guidance, assumptions and cautionary statements
2022 guidance
For new GSK we expect sales to grow between 5% to 7% CER and Adjusted
operating profit to grow between 12% to 14% CER as compared with 2021. This
guidance is provided at CER and excludes the commercial benefit of COVID-19
solutions.
Assumptions related to 2022 guidance
In outlining the guidance for 2022, the Group has made certain assumptions
about the healthcare sector, the different markets in which the Group operates
and the delivery of revenues and financial benefits from its current
portfolio, pipeline and restructuring programmes. The Group also assumes that
the demerger of our Consumer Healthcare business will be delivered in July
2022 and this guidance relates only to new GSK.
The Group has made planning assumptions for 2022 that healthcare systems will
approach normality as the year progresses, and we expect sales of Specialty
Medicines to grow approximately 10% CER and sales of General Medicines to show
a slight decrease, primarily reflecting increased genericisation of
established Respiratory medicines. Vaccines sales are expected to grow at a
low teens percentage at CER for the year. However, as noted at the time of
announcing full-year 2021 results, we anticipated governments' prioritisation
of COVID-19 vaccination programmes and ongoing measures to contain the
pandemic would result in some continued disruption to adult immunisations. In
the first-quarter 2022 Shingrix demonstrated strong demand recovery,
particularly in the US, as well as channel inventory build and the benefit of
a favourable comparator to Q1 2021. Despite the potential for short-term
pandemic disruption, we continue to expect strong double-digit growth and
record annual sales for Shingrix in 2022 based on strong demand in existing
markets and continued geographical expansion. Guidance also includes the
future benefit in royalty income from the settlement and license agreement
with Gilead announced on 1 February 2022.
These planning assumptions as well as operating profit guidance and dividend
expectations assume no material interruptions to supply of the Group's
products, no material mergers, acquisitions or disposals, no material
litigation or investigation costs for the company (save for those that are
already recognised or for which provisions have been made) and no change in
the Group's shareholdings in ViiV Healthcare. The assumptions also assume no
material changes in the healthcare environment or unexpected significant
changes in pricing as a result of government or competitor action. The 2022
guidance factors in all divestments and product exits announced to date.
The Group's guidance assumes successful delivery of the Group's integration
and restructuring plans. It also assumes that the separation programme to
deliver the demerger of the Consumer Healthcare business is delivered
successfully. Material costs for investment in new product launches and
R&D have been factored into the expectations given. Given the potential
development options in the Group's pipeline, the outlook may be affected by
additional data-driven R&D investment decisions. The guidance is given on
a constant currency basis.
Assumptions and cautionary statement regarding forward-looking statements
The Group's management believes that the assumptions outlined above are
reasonable, and that the guidance, outlooks, ambitions and expectations
described in this report are achievable based on those assumptions. However,
given the forward-looking nature of these guidance, outlooks, ambitions and
expectations, they are subject to greater uncertainty, including potential
material impacts if the above assumptions are not realised, and other material
impacts related to foreign exchange fluctuations, macro-economic activity, the
impact of outbreaks, epidemics or pandemics, such as the COVID-19 pandemic and
ongoing challenges and uncertainties posed by the COVID-19 pandemic for
businesses and governments around the world, changes in legislation,
regulation, government actions or intellectual property protection, product
development and approvals, actions by our competitors, and other risks
inherent to the industries in which we operate.
This document contains statements that are, or may be deemed to be,
"forward-looking statements". Forward-looking statements give the Group's
current expectations or forecasts of future events. An investor can identify
these statements by the fact that they do not relate strictly to historical or
current facts. They use words such as 'anticipate', 'estimate', 'expect',
'intend', 'will', 'project', 'plan', 'believe', 'target' and other words and
terms of similar meaning in connection with any discussion of future operating
or financial performance. In particular, these include statements relating to
future actions, prospective products or product approvals, future performance
or results of current and anticipated products, sales efforts, expenses, the
outcome of contingencies such as legal proceedings, dividend payments and
financial results. Other than in accordance with its legal or regulatory
obligations (including under the Market Abuse Regulation, the UK Listing Rules
and the Disclosure and Transparency Rules of the Financial Conduct Authority),
the Group undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise. The reader
should, however, consult any additional disclosures that the Group may make in
any documents which it publishes and/or files with the SEC. All readers,
wherever located, should take note of these disclosures. Accordingly, no
assurance can be given that any particular expectation will be met and
investors are cautioned not to place undue reliance on the forward-looking
statements.
All outlooks, ambitions considerations should be read together with; for
Haleon the section "Assumptions and cautionary statement and regarding
forward-looking statements" on page 163 of the Haleon Capital Markets Day all
presentation slides dated 28 February 2022, and for GSK pages 5-7 of the Stock
Exchange announcement relating to an update to investors dated 23 June 2021
and the Guidance, assumptions and cautionary statements of our Q2 2021
earnings release.
Forward-looking statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the Group's
control or precise estimate. The Group cautions investors that a number of
important factors, including those in this document, could cause actual
results to differ materially from those expressed or implied in any
forward-looking statement. Such factors include, but are not limited to, those
discussed under Item 3.D 'Risk Factors' in the Group's Annual Report on Form
20-F for 2021 and any impacts of the COVID-19 pandemic. Any forward looking
statements made by or on behalf of the Group speak only as of the date they
are made and are based upon the knowledge and information available to the
Directors on the date of this report.
Independent review report to GlaxoSmithKline plc
We have been engaged by GlaxoSmithKline plc ("the Company") to review the
condensed financial information in the Results Announcement of the Company for
the three months ended 31 March 2022.
What we have reviewed
The condensed financial information comprises:
· the income statement and statement of comprehensive income for the three month
period ended
31 March 2022 on pages 22 to 23;
· the balance sheet as at 31 March 2022 on page 26;
· the statement of changes in equity for the three month period then ended on
page 27;
· the cash flow statement for the three month period then ended on page 28 and;
· the accounting policies and basis of preparation and the explanatory notes to
the condensed financial information on pages 24 to 25 and 29 to 33 that have
been prepared applying consistent accounting policies to those applied by the
Group in the Annual Report 2021, which was prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the United
Kingdom.
We have read the other information contained in the Results Announcement,
including the non-IFRS measures contained on pages 24 to 25 and 29 to 33, and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the Company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The Results Announcement of GlaxoSmithKline plc, including the condensed
financial information, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Results
Announcement by applying consistent accounting policies to those applied by
the Group in the Annual Report 2021, which are prepared in accordance with
IFRS as adopted by the United Kingdom.
Our responsibility
Our responsibility is to express to the Company a conclusion on the interim
financial information in the Results Announcement based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed financial information in the Results Announcement
for the three months ended 31 March 2022 are not prepared, in all material
respects in accounting policies set out in the accounting policies and basis
of preparation section on page 31.
Deloitte LLP
Statutory Auditor
London, United Kingdom
27 April 2022
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