REG - GSK PLC - 2nd Quarter Results
26/07/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230726:nRSZ1738Ha&default-theme=true
RNS Number : 1738H GSK PLC 26 July 2023
Strong performance and momentum drive upgraded guidance
Sales and earnings growth delivered by key growth drivers
· Q2 2023 sales +4% and +11% ex COVID
· Vaccines sales +18%, +15% ex COVID with Shingrix +20%
· Specialty Medicines sales -7%, +12% ex COVID with HIV +12%
· General Medicines sales +8% with Trelegy +30%
· Strong sales growth of products launched since 2017 including in Vaccines and
HIV contributing to step change in performance
· Total operating profit and Total continuing EPS >100% driven by strong
operating performance and favourable movements in contingent consideration
liabilities
· Adjusted operating profit +11% and Adjusted EPS +16% reflects strong sales ex
COVID and higher royalty income offset by increased investment in R&D and
new product launches
(Financial Performance - Q2 2023 results unless otherwise stated, growth % and
commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page
54).
Q2 2023 Year to Date
£m % AER % CER £m % AER % CER
Turnover 7,178 4 4 14,129 - (2)
Turnover ex COVID-19 solutions 7,137 10 11 13,956 13 11
Total operating profit 2,141 98 >100 4,223 25 23
Total continuing EPS 40.1p >100 >100 76.9p 40 39
Adjusted operating profit 2,170 8 11 4,262 8 6
Adjusted operating margin % 30.2% 1.3ppts 2.0ppts 30.2% 2.2ppts 2.3ppts
Adjusted EPS 38.8p 12 16 75.8p 13 12
Cash generated from operations 1,620 3 1,907 (52)
R&D innovation continued delivery of organic portfolio and targeted
business development
· Arexvy, world's first RSV vaccine in older adults, approved in US and EU
· Shingrix approved, for shingles in at-risk adults aged 18 and over in Japan
· Positive phase III data for MenABCWY vaccine candidate presented at ESPID and
supports filing in 2024
· US FDA Fast Track designation granted to gonorrhoea vaccine candidate
· CHMP positive opinion for long-acting treatment cabotegravir in HIV prevention
· Paediatric exclusivity granted for dolutegravir extends US LOE to April 2028
· Completion of Bellus Health acquisition adds camlipixant, a phase III asset
for refractory chronic cough
· Next US FDA approval decisions include momelotinib (myelofibrosis) and
Jemperli (1L endometrial cancer)
· Development decisions on key phase I/II assets before year end include:
bepirovirsen (Hep B), mRNA influenza, CCL17 (pain), IL18 (atopic dermatitis)
and therapeutic HSV
2023 guidance upgraded, Q2 2023 dividend of 14p declared, 56.5p expected for
full year
· Turnover to increase 8-10% (from 6-8%)
· Adjusted operating profit growth 11-13% (from 10-12%)
· Adjusted EPS growth 14-17% (from 12-15%)
Guidance all at CER and excluding COVID-19 solutions.
Emma Walmsley, Chief Executive Officer, GSK:
"We have delivered another excellent quarter of performance, with strong sales
and earnings growth, notably in HIV and Vaccines, and continued strengthening
of the R&D pipeline and product portfolio. The approval of Arexvy, the
world's first RSV vaccine, was an important milestone for us and is at the
forefront of a next wave in vaccine innovation for GSK. Completion of the
Bellus Health acquisition also strengthened our late-stage respiratory
pipeline. Our momentum supports the upgrade we have made to our financial
guidance for 2023 and further increases our confidence in delivering
longer-term profitable growth for shareholders."
The Total results are presented in summary above and on page 7 and Adjusted
results reconciliations are presented on pages 19, 20, 22 and 23. Adjusted
results are a non-IFRS measure excluding discontinued operations and other
adjustments that may be considered in addition to, but not as a substitute
for, or superior to, information presented in accordance with IFRS. Adjusted
results are defined on page 17 and £% or AER% growth, CER% growth, turnover
excluding COVID-19 solutions and other non-IFRS measures are defined on page
54, COVID-19 solutions are defined on page 54. GSK provides guidance on an
Adjusted results basis only, for the reasons set out on page 17. All
expectations, guidance and targets regarding future performance and dividend
payments should be read together with 'Guidance, assumptions and cautionary
statements' on page 55.
2023 guidance
GSK revises its full year guidance at constant exchange rates (CER). All
expectations and full-year growth rates exclude any contributions from
COVID-19 solutions.
During the first half of 2023, GSK exceeded its full-year guidance
expectations with a strong performance. This was due to GSK's strong business
momentum across all product areas but particularly in HIV, as well as in
General Medicines. The strong allergy season and a favourable post-pandemic
recovery in comparison to the first half of 2022 also contributed to the
performance. As a result, GSK has upgraded its full-year 2023 guidance at
constant exchange rates (CER), excluding any contributions from COVID-19
solutions:
Turnover is expected to increase between 8 to 10 per cent (from 6 to 8 per
cent)
Adjusted operating profit is expected to increase between 11 to 13 per cent
(from 10 to 12 per cent)
Adjusted earnings per share is expected to increase between 14 to 17 per cent
(from 12 to 15 per cent)
In the second half of 2023, GSK expects continued strong performance across
all three product areas but with lower growth reflecting a tough comparison to
the second half of 2022, particularly in HIV and General Medicines. GSK still
expects Adjusted operating profit growth to be higher in the second half of
2023 relative to full-year expectations, with growth of investment reducing in
the second half, particularly in the fourth quarter.
This guidance is supported by the following turnover expectations for full
year 2023 at CER:
Vaccines - expected increase of mid-teens per cent in turnover (unchanged)
Specialty Medicines - expected increase of high single-digit per cent in turnover (from mid to high
single-digit increase)
General Medicines - expected increase of low single-digit per cent in turnover (from broadly flat
to slightly down)
Adjusted Operating profit is now expected to grow between 11 to 13 per cent at
CER (previously 10 to 12 per cent increase), reflecting higher sales and
higher royalty income partially offset by cost of sales which is now expected
to increase broadly in line with turnover, reflecting a greater contribution
from General Medicines. SG&A is anticipated to increase at a rate broadly
aligned to turnover, reflecting targeted support for launches and R&D
continues to be expected to increase at a rate slightly below turnover.
Adjusted earnings per share are now expected to increase between 14 to 17 per
cent at CER, reflecting higher operating profit and more favourable net
finance costs. Expectations for non-controlling interests and tax rate of
around 15% are unchanged.
Additional commentary
Dividend policies and expected pay-out ratios remain unchanged for GSK. The
future dividend policies and guidance regarding the expected dividend pay-out
in 2023 for GSK are provided on page 36.
COVID-19 solutions
In Q2 2023, turnover increased by 4% at CER reflecting the comparison to Q2
2022. Excluding COVID-19 solutions, turnover increased by 11% at CER. The
adverse impact of lower sales of COVID-19 solutions was one percentage point
of growth in the quarter on Adjusted operating profit but increased the margin
by 1.8 percentage points. GSK does not anticipate further significant COVID-19
pandemic-related sales or operating profit in 2023. Consequently, GSK now
expects full-year 2023 turnover growth to be impacted by approximately 8%,
with Adjusted Operating profit growth being reduced between 4% to 5% versus
the prior year.
All expectations, guidance and targets regarding future performance and
dividend payments should be read together with 'Guidance, assumptions and
cautionary statements' on page 55. If exchange rates were to hold at the
closing rates on 30 Jun 2023 ($1.26/£1, €1.17/£1 and Yen 183/£1) for the
rest of 2023, the estimated impact on 2023 Sterling turnover growth for GSK
would be -2% and if exchange gains or losses were recognised at the same level
as in 2022, the estimated impact on 2023 Sterling Adjusted Operating Profit
growth for GSK would be ‑5%.
Results presentation
A conference call and webcast for investors and analysts of the quarterly
results will be hosted by Emma Walmsley, CEO, at 12pm BST on 26 July 2023.
Presentation materials will be published on www.gsk.com prior to the webcast
and a transcript of the webcast will be published subsequently.
Notwithstanding the inclusion of weblinks, information available on the
Company's website, or from non GSK sources, is not incorporated by reference
into this Results Announcement.
Performance: turnover
Turnover Q2 2023 Year to date
£m Growth Growth £m Growth Growth
AER% CER% AER% CER%
Shingles 880 20 20 1,713 20 16
Meningitis 266 13 13 546 22 19
Influenza 23 (28) (28) 35 (30) (28)
Established Vaccines 812 13 13 1,627 12 8
Vaccines excluding COVID-19 1,981 16 15 3,921 16 12
solutions
COVID-19 solutions: Pandemic 41 - - 142 - -
vaccines
Vaccines 2,022 18 18 4,063 20 16
HIV 1,580 13 12 3,048 18 14
Respiratory/Immunology and Other 792 16 16 1,393 16 13
Oncology 151 (2) (3) 287 2 (1)
Specialty Medicines excluding 2,523 13 12 4,728 16 12
COVID-19 solutions
COVID-19 solutions: Xevudy - (100) (100) 31 (98) (98)
Specialty Medicines 2,523 (7) (7) 4,759 (18) (21)
Respiratory 1,792 9 9 3,559 12 10
Other General Medicines 841 (2) 4 1,748 2 6
General Medicines 2,633 5 8 5,307 8 8
Total 7,178 4 4 14,129 - (2)
Total excluding COVID-19 solutions 7,137 10 11 13,956 13 11
By Region:
US 3,610 9 7 6,880 - (5)
Europe 1,644 6 4 3,348 4 1
International 1,924 (7) - 3,901 (3) 1
Total 7,178 4 4 14,129 - (2)
Turnover excluding COVID-19 solutions is a non-IFRS measure defined on page 54
with the reconciliation to the IFRS measure Turnover included in the table
above.
£m AER CER £m AER CER
Vaccines Total Q2 23 2,022 18% 18% YTD 4,063 20% 16%
Excluding COVID-19 solutions Q2 23 1,981 16% 15% YTD 3,921 16% 12%
Double-digit growth for Vaccines in Q2 23 and YTD was driven by geographical
expansion and market growth for Shingrix, favourable US Center for Disease
Control (CDC) stockpile movements for Rotarix, and uptake in National
Immunisation Programmes for Bexsero.
Shingles Q2 23 880 20% 20% YTD 1,713 20% 16%
Shingrix, a vaccine against herpes zoster (shingles), grew in Q2 23 and YTD in
International and Europe reflecting geo-expansion and increased demand. Sales
outside of the US in the quarter also include stocking for the UK national
immunisation programme and channel inventory replenishment in China. US sales
declined 10% in the quarter impacted by unfavourable wholesaler and
distributor inventory movements plus lower non-retail demand partly offset by
strong retail growth and pricing. The US cumulative immunisation rate grew
from 30% at year end to 32% at the end of Q1 23 with vaccination in adults 65
and older boosted by co-pay removal in the Inflation Reduction Act. Shingrix
is now available in 33 countries.
Meningitis Q2 23 266 13% 13% YTD 546 22% 19%
Building upon the momentum from Q1 23, Meningitis vaccines grew again in Q2 23
primarily driven by Bexsero, the vaccine against meningitis B, with higher
sales in Europe mainly from inclusion in National Immunisation Programmes and
in International due to increased private and public market demand. YTD sales
benefitted from the initial stocking of Menveo liquid formulation and higher
CDC purchases in the US as well as demand in anticipation of a Bexsero price
increase in International in Q1 23.
£m AER CER £m AER CER
Established Vaccines Q2 23 812 13% 13% YTD 1,627 12% 8%
Established Vaccines growth in Q2 23 was driven by Rotarix, benefitting from
the favourable impacts of a US CDC stockpile borrow in 2022 and a
replenishment in the current quarter. Cervarix, grew in Q2 23 in International
and Europe reflecting higher demand and timing of deliveries. This is partly
offset by Infanrix/Pediarix, due to the negative impact of a CDC stockpile
borrow in the quarter and continued competitive pressure in the US. Outside of
Q2 23 performance drivers, YTD turnover includes growth of Hepatitis vaccines
resulting from continued travel market recovery in Europe and International
and a decline on Synflorix, reflecting lower demand related to decreased birth
cohorts and phasing of public market supply in International.
Specialty Medicines Total Q2 23 2,523 (7%) (7%) YTD 4,759 (18%) (21%)
Excluding COVID-19 solutions Q2 23 2,523 13% 12% YTD 4,728 16% 12%
In Q2 23 and YTD there were minimal sales of Xevudy contrasting with strong
sales YTD 2022. Specialty Medicines growth excluding COVID-19 solutions
reflects consistent performance in Q2 23 and YTD driven by HIV and
Respiratory/Immunology and Other categories.
HIV Q2 23 1,580 13% 12% YTD 3,048 18% 14%
The performance of HIV benefitted from strong patient demand, driven by the
Oral two-drug regimen (Oral 2DR) and Long-Acting medicines which contributed
approximately eight percentage points of growth. Pricing favourability driven
by the US contributed two percentage points of growth. YTD includes the
majority of the inventory depletion now expected from the 2022 build.
Oral 2DR and Long-Acting Q2 23 805 46% 44% YTD 1,502 53% 47%
Oral 2DR (Dovato, Juluca) and Long-Acting medicines (Cabenuva, Apretude) sales
growth continues and now represent 51% of the total HIV portfolio compared to
39% for Q2 22, driven by market share growth of 4 percentage points versus Q2
22. Long-Acting medicines sales in the quarter were £212 million, growing
£128 million versus Q2 22 and £61 million versus Q1 23, with approximately
three quarters of sales coming from patient switches from competitor products.
Respiratory/Immunology and Other Q2 23 792 16% 16% YTD 1,393 16% 13%
This therapy area includes sales of Nucala and Benlysta plus Duvroq
(Daprodustat) in Japan. Growth in Q2 23 exceeds YTD reflecting the impact of
wholesaler inventory movements in US and International regions in Q1 23.
Nucala Q2 23 424 16% 15% YTD 771 16% 13%
Nucala is a IL-5 antagonist monoclonal antibody treatment for severe asthma,
with additional indications including chronic rhinosinusitis with nasal
polyps, eosinophilic granulomatosis with polyangiitis (EGPA) and
hypereosinophilic syndrome (HES). Strong growth in all regions in Q2 23
reflected patient demand in severe eosinophilic asthma and for the new
indications with ongoing launches. YTD growth is slightly lower due to impact
of US inventory depletion in Q1 23 and an unfavourable prior period Return and
Rebates (RAR) adjustment.
Benlysta Q2 23 358 21% 19% YTD 611 19% 15%
Benlysta, a monoclonal antibody treatment for Lupus, continues to show
consistent growth representing strong demand in US and Europe alongside
biological penetration and volume uptake in China and Japan. US growth in Q2
23 shows an acceleration following wholesaler inventory movements in Q1 23.
£m AER CER £m AER CER
Oncology Q2 23 151 (2%) (3%) YTD 287 2% (1%)
In Q2 23 and YTD sales were impacted by the withdrawal of Blenrep from the US
market in November 2022. Jemperli grew strongly in Q2 23, achieving £25
million sales driven by increasing new patient starts in the US, and is now
available in 18 markets worldwide.
Zejula Q2 23 117 (3%) (2%) YTD 231 6% 4%
In the US, growth of the first line indication of Zejula, a PARP inhibitor
treatment for ovarian cancer, was more than offset by reduction in use in
second line following the update to prescribing information agreed with the
FDA in Q4 2022. Zejula delivered strong sales growth in Europe and
International markets in both Q2 23 and YTD.
General Medicines Q2 23 2,633 5% 8% YTD 5,307 8% 8%
Growth driven in Q2 23 and YTD by both Respiratory and Other General Medicines
categories, with ongoing demand for Trelegy in all regions. YTD benefitted
from a strong allergy season in Japan and continued post pandemic recovery of
the antibiotic market in Europe and International regions.
Respiratory Q2 23 1,792 9% 9% YTD 3,559 12% 10%
Performance in Q2 23 and YTD reflects growth of Trelegy and the single inhaled
triple therapy (SITT) class across all regions and of Anoro in Europe and
International. YTD growth also includes the benefits of a strong allergy
season in Japan. In Q2 23 and YTD favourable US prior period RAR adjustments
to Seretide/Advair and Trelegy were offset by adverse adjustments to
Relvar/Breo and Flixotide/Flovent.
Trelegy Q2 23 611 31% 30% YTD 1,076 33% 29%
Trelegy is the most prescribed SITT treatment for COPD and asthma. Trelegy
grew in Q2 23 and YTD with strong performance across all regions, reflecting
increased patient demand and growth of the SITT market. Favourable US prior
period RAR adjustments contributed 7 percentage points of growth in Q2 23 and
3 percentage points YTD.
Seretide/Advair Q2 23 322 23% 26% YTD 661 17% 16%
Seretide/Advair is an ICS/LABA treatment for asthma and COPD. Growth in Q2 23
and YTD reflected targeted promotion in certain International markets and the
benefit of favourable US prior period RAR adjustments which contributed 16
percentage points in Q2 23 and 14 percentage points YTD. Growth was partially
offset by the ongoing impact of generic competition in Europe, US and certain
International markets.
Other General Medicines Q2 23 841 (2%) 4% YTD 1,748 2% 6%
Growth in Q2 23 reflects ongoing post pandemic demand for anti-infectives in
Europe and International, and certain third party manufacturing agreements.
Ongoing generic competition continues to impact this product group in Q2 23
and YTD.
By Region
£m AER CER £m AER CER
US Total Q2 23 3,610 9% 7% YTD 6,880 - (5%)
Excluding COVID-19 solutions Q2 23 3,611 10% 8% YTD 6,881 13% 7%
Strong Xevudy sales in 2022 caused a 12 percentage points adverse impact on
growth YTD, but in Q2 23 the impact is not significant. Excluding this effect,
Specialty Medicines grew in Q2 23 and YTD driven by strong HIV performance and
Nucala and Benlysta continued growth, partially offset by Oncology, due to the
withdrawal of Blenrep in November 2022. General Medicines growth was driven by
Trelegy increased patient demand and growth of the SITT market. Vaccines
product group was broadly flat in Q2 23 and YTD reflecting lower non-retail
demand, wholesaler destocking and a strong Q1 22 comparator on Shingrix growth
resulting in a decline of 10% in the quarter for Shingrix, offset by
favourable CDC stockpile movements in Established Vaccines.
Europe Total Q2 23 1,644 6% 4% YTD 3,348 4% 1%
Excluding COVID-19 solutions Q2 23 1,621 14% 12% YTD 3,224 16% 13%
Strong Xevudy sales in 2022 caused a 8 percentage points adverse impact on
growth in Q2 23 and 12 percentage points in YTD. Excluding this effect, Europe
grew strongly in Q2 23 and YTD. Vaccines strong growth reflected Shingrix
stocking, launches and uptake and Bexsero national immunisation campaigns in
France and Spain alongside ongoing travel vaccine recovery. Specialty
Medicines delivered double digit growth due to HIV, Oncology, and in
Respiratory/ Immunology for Benlysta and Nucala which included the impact of
new indication launches.
International Total Q2 23 1,924 (7%) - YTD 3,901 (3%) 1%
Excluding COVID-19 solutions Q2 23 1,905 9% 17% YTD 3,851 11% 15%
Strong Xevudy sales in 2022 caused a 17 percentage points adverse impact on
growth in Q2 23 and 14 percentage points in YTD. Excluding this effect, all
product groups grew in Q2 23 and YTD. Vaccines double digit growth was driven
by Shingrix stocking in China and uptake in Japan plus launches in other
markets. Specialty Medicines grew due to HIV, Oncology and
Respiratory/Immunology with Nucala delivering strong growth in severe
eosinophilic asthma and new indications. General Medicines product group was
driven by Respiratory, with Trelegy growth and a strong allergy season in
Japan. Other General Medicines growth was driven by strong post pandemic
antibiotic demand for Augmentin.
Financial performance
Total Results Q2 2023 Year to Date
£m % AER % CER £m % AER % CER
Turnover 7,178 4 4 14,129 - (2)
Cost of sales (1,932) (11) (11) (3,875) (21) (21)
Selling, general and administration (2,268) 10 9 (4,411) 14 10
Research and development (1,341) 8 7 (2,601) 11 8
Royalty income 226 42 44 406 37 36
Other operating income/(expense) 278 575
Operating profit 2,141 98 >100 4,223 25 23
Net Finance expense (152) (326) (14) (17)
Share of after tax profit/(loss) of associates (2) (4)
and joint ventures
Profit/(loss) on disposal of interest in - 1
associates
Profit before taxation 1,987 >100 >100 3,894 30 28
Taxation (242) (518)
Tax rate % 12.2% 13.3%
Profit after taxation 1,745 >100 >100 3,376 34 32
Profit attributable to non-controlling 121 262
interests
Profit attributable to shareholders 1,624 3,114
1,745 >100 >100 3,376 34 32
Earnings per share 40.1p >100 >100 76.9p 40 39
Financial Performance - Q2 2023 results unless otherwise stated, growth % and
commentary at CER.
Adjusted results
Reconciliations between Total results and Adjusted results for Q2 2023, Q2
2022, H1 2023 and H1 2022 are set out on pages 19, 20, 22 and 23.
Q2 2023 Year to Date
£m % AER % CER £m % AER % CER
Turnover 7,178 4 4 14,129 - (2)
Cost of sales (1,728) (12) (12) (3,480) (23) (23)
Selling, general and administration (2,191) 12 11 (4,256) 14 11
Research and development (1,315) 14 13 (2,537) 13 10
Royalty income 226 42 44 406 37 36
Adjusted operating profit 2,170 8 11 4,262 8 6
Adjusted profit before taxation 2,016 10 14 3,936 10 8
Taxation (315) 14 18 (618) 10 8
Adjusted profit after taxation 1,701 10 14 3,318 10 9
Adjusted profit attributable to non-controlling interests 130 251
Adjusted profit attributable to shareholders 1,571 3,067
1,701 10 14 3,318 10 9
Earnings per share 38.8p 12 16 75.8p 13 12
Q2 2023 Year to Date
£m AER CER £m AER CER
Cost of sales Total 1,932 (11%) (11%) 3,875 (21%) (21%)
% of sales 26.9% (4.5%) (4.5%) 27.4% (7.2%) (6.8%)
Adjusted 1,728 (12%) (12%) 3,480 (23%) (23%)
% of sales 24.1% (4.4%) (4.3%) 24.6% (7.2%) (6.8%)
The decrease in Total and Adjusted cost of sales as a percentage of sales in
Q2 2023 and year to date primarily reflected lower sales of lower margin
Xevudy compared to Q2 2022 and YTD 2022. In the quarter, positive mix and
efficiencies were offset by higher freight and energy costs and the year to
date also reflected an unfavourable comparator to a one-time benefit from
inventory adjustments in Q1 2022.
Q2 2023 Year to Date
£m AER CER £m AER CER
Selling, general & administration Total 2,268 10% 9% 4,411 14% 10%
% of sales 31.6% 1.8% 1.3% 31.2% 3.8% 3.4%
Adjusted 2,191 12% 11% 4,256 14% 11%
% of sales 30.5% 2.3% 1.8% 30.1% 3.7% 3.4%
Growth in Total and Adjusted SG&A in Q2 2023 primarily reflected an
increased level of launch investment in Specialty Medicines, particularly HIV
and Vaccines including Shingrix and preparation for the launch of Arexvy.
Total SG&A also reflected an increase in significant legal costs in the
quarter (see details on page 19).
Year to date growth in Total and Adjusted SG&A is primarily relating to an
increased level of launch investment in Specialty Medicines, particularly HIV
and Vaccines, and the Zejula royalty dispute provision in Q1 2023. Growth was
partly offset by favourable comparison due to impairment provisions relating
to Ukraine in the year to date 2022 and the continuing benefit of
restructuring and tight control of ongoing costs.
Q2 2023 Year to Date
£m AER CER £m AER CER
Research & development Total 1,341 8% 7% 2,601 11% 8%
% of sales 18.7% 0.8% 0.5% 18.4% 1.8% 1.7%
Adjusted 1,315 14% 13% 2,537 13% 10%
% of sales 18.3% 1.7% 1.4% 18.0% 2.1% 1.9%
Growth in Total and Adjusted R&D reflected continued investment across a
combination of both early and late-stage programmes. There was increased
investment in the early-stage research portfolio, particularly CCL17 for osteo
arthritic pain and IL18 for atopic dermatitis. There was also increased
investment in the HIV portfolio, particularly in next generation long-acting
HIV medicines. In addition, there was higher investment in Jemperli as phase
II/III trials in rectal and colon cancer progress as well as in ongoing trials
in endometrial cancer and momelotinib, a potential new treatment of
myelofibrosis patients with anaemia; and for bepirovirsen, to support
development in chronic hepatitis B. These increases in investment were partly
offset by decreases related to the completion of late-stage clinical
programmes for otilimab and Cell & Gene Therapy.
Within Vaccines there was increased investment in recently acquired
pneumococcal programmes, partly offset by reduced investment in RSV following
the successful completion of a phase III clinical trial and decreased spend on
other programmes.
The year to date factors were similar, but also included reduced R&D
investment in Blenrep versus the same period in 2022.
Q2 2023 Year to Date
£m AER CER £m AER CER
Royalty income Total 226 42% 44% 406 37% 36%
Adjusted 226 42% 44% 406 37% 36%
Growth in Total and Adjusted royalty income in Q2 2023 primarily related to
Gardasil royalties, which increased to £132 million in the quarter and £203
million in the year to date, as well as Kesimpta and Biktarvy royalties.
Q2 2023 Year to Date
£m AER CER £m AER CER
Other operating income/(expense) Total 278 >100% >100% 575 >100% >100%
The increase in Q2 2023 primarily reflected an accounting credit of £189
million (Q2 2022: £699 million charge) arising from the remeasurement of
contingent consideration liabilities and the liabilities for the Pfizer, Inc.
(Pfizer) put option and Pfizer and Shionogi & Co. Ltd (Shionogi)
preferential dividends in ViiV Healthcare.
Year to date includes a favourable comparison due to an accounting credit of
£460 million (YTD 2022: £1,031 million charge) arising from the
remeasurement of contingent consideration liabilities and the liabilities for
the Pfizer put option and the Pfizer and Shionogi preferential dividends. This
was partly offset by the upfront income in Q1 2022 of £0.9 billion received
from the settlement with Gilead Sciences, Inc. (Gilead).
Q2 2023 Year to Date
£m AER CER £m AER CER
Operating profit Total 2,141 98% >100% 4,223 25% 23%
% of sales 29.8% 14.2% 15.0% 29.9% 6.0% 6.2%
Adjusted 2,170 8% 11% 4,262 8% 6%
% of sales 30.2% 1.3% 2.0% 30.2% 2.2% 2.3%
Total operating profit margin was higher in the quarter and year to date due
to strong operating performance and favourable movements in contingent
consideration liabilities, partly offset in the year to date by an
unfavourable comparison due to the £0.9 billion upfront income received from
the settlement with Gilead in Q1 2022.
Adjusted operating profit in Q2 2023 benefitted from strong sales across all
three product areas and higher royalty income, partly offset by increased
investment in R&D and product launches. The adverse impact of lower sales
of COVID-19 solutions was one percentage point of growth in the quarter but
increased the Adjusted operating profit margin by 1.8 percentage points. Year
to date Adjusted operating profit was also impacted by lower sales of COVID-19
solutions which led to a drag of 3 percentage points at AER and CER but
increased the Adjusted operating profit margin by 2.9 percentage points.
Excluding COVID-19 solutions sales, year to date Adjusted operating profit
benefitted from strong sales partly offset by increased legal charges
primarily relating to the Zejula royalty dispute and an unfavourable
comparison to one-time benefits from inventory adjustments in the year to date
2022.
Contingent consideration cash payments made to Shionogi and other companies
reduce the balance sheet liability. Total contingent consideration cash
payments in the year to date 2023 amounted to £579 million (YTD 2022: £615
million). These included cash payments made to Shionogi of £565 million (YTD
2022: £603 million).
Q2 2023 Year to Date
£m AER CER £m AER CER
Adjusted operating profit by business Commercial Operations 3,481 5% 6% 6,856 7% 4%
% of sales 48.5% 0.8% 0.7% 48.5% 3.0% 2.6%
R&D (1,273) 11% 10% (2,505) 11% 8%
Commercial Operations Adjusted operating profit in the quarter and year to
date benefitted from product mix upside (with minimal Xevudy sales) and
increased royalty income, partly offset by increased investment in growth and
launch assets as well as an increase in legal provisions in the year to date.
The R&D segment operating expenses primarily reflected continued
investment across a combination of both early and late-stage programmes, as
well as pneumococcal programmes. This was partly offset by decreases related
to the completion of late-stage clinical development programmes and reduced
investment in RSV and Blenrep versus the same period in 2022.
Q2 2023 Year to Date
£m AER CER £m AER CER
Net finance costs Total 152 (17%) (17%) 326 (14%) (17%)
Adjusted 152 (16%) (17%) 322 (15%) (17%)
The decrease in net finance costs in Q2 2023 and year to date is mainly driven
by the net savings from maturing bonds including the Sterling Notes repurchase
in Q4 2022 and higher interest income on cash.
Q2 2023 Year to Date
£m AER CER £m AER CER
Taxation Total 242 61% 67% 518 10% 7%
Tax rate % 12.2% 13.3%
Adjusted 315 14% 18% 618 10% 8%
Tax rate % 15.6% 15.7%
The effective tax rate impact is broadly in line with expectations for the
quarter. Issues related to taxation are described in Note 14, 'Taxation' in
the Annual Report 2022. 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.
Q2 2023 Year to Date
£m AER CER £m AER CER
Non-controlling interests Total 121 >100% >100% 262 (17%) (22%)
Adjusted 130 (13%) (15%) 251 (19%) (24%)
The increase in Total profit from continuing operations allocated to
non-controlling interests in Q2 2023 was primarily driven by a higher
allocation of ViiV Healthcare profits of £127 million (Q2 2022: £41
million). The year to date was impacted by lower net profits in some of the
Group's other entities with non-controlling interests with a stable allocation
of ViiV Healthcare profits of £267 million (2022: £268 million).
The Q2 2023 and year to date decreases in Adjusted profit from continuing
operations allocated to non-controlling interests reflected lower profit
allocations from ViiV Healthcare of £136 million in the quarter (Q2 2022:
£151 million) and year to date £256 million (2022: £264 million) and lower
net profits in some of the Group's other entities with non-controlling
interests.
Q2 2023 Year to Date
£p AER CER £p AER CER
Earnings per share Total 40.1p >100% >100% 76.9p 40% 39%
Adjusted 38.8p 12% 16% 75.8p 13% 12%
The increase in Total EPS in the quarter primarily reflected remeasurement
credits for contingent consideration liabilities compared to charges in Q2
2022 partly offset by higher non-controlling interests. In the year to date
there is an unfavourable comparison due to upfront income received from the
settlement with Gilead in Q1 2022.
Adjusted EPS in the quarter and YTD reflected strong growth in sales across
all product areas excluding COVID-19 solutions, a benefit from mix, higher
royalty income, lower finance costs and lower non-controlling interests,
partly offset by investment behind launches in Specialty Medicines including
HIV and Vaccines and higher supply chain costs, freight and distribution
costs. The year to date growth was also impacted by increased legal charges
primarily relating to royalties. The decline in lower margin COVID-19
solutions sales resulted in 1 percentage point impact on Adjusted EPS growth
in the quarter and 3 percentage points in the year to date.
Currency impact on results
The results for the year to date 2023 are based on average exchange rates,
principally £1/$1.23, £1/€1.14 and £1/Yen 168. The results for Q2 2023
are based on average exchange rates, principally £1/$1.25, £1/€1.15 and
£1/Yen 173. The period-end exchange rates were £1/$1.26, £1/€1.17 and
£1/Yen 183. Comparative exchange rates are given on page 37.
In Q2 2023, turnover was up 4% at AER and 4% at CER. Total EPS from continuing
operations was 40.1p compared with 17.5p in Q2 2022. Adjusted EPS was 38.8p
compared with 34.7p in Q2 2022, up 12% at AER and 16% at CER. The adverse
currency impact primarily reflected the weakening of emerging market
currencies against Sterling partly offset by weakening of Sterling against the
US Dollar and the Euro. Exchange gains or losses on the settlement of
intercompany transactions had a two percent adverse impact on the four
percentage points adverse currency impact on Adjusted EPS.
In the year to date 2023, turnover was stable at AER and down 2% at CER. Total
EPS from continuing operations was 76.9p compared with 54.8p in YTD 2022.
Adjusted EPS was 75.8p compared with 67.0p in YTD 2022, up 13% at AER and 12%
at CER. The favourable currency impact primarily reflected the weakening of
Sterling against the US Dollar and the Euro partly offset by the weakening of
emerging market currencies against Sterling. Exchange gains or losses on the
settlement of intercompany transactions had a one percent adverse impact on
the one percentage point favourable currency impact on Adjusted EPS.
Cash generation
Cash flow
Q2 2023 H1 2023 H1 2022
£m £m £m
Cash generated from operations attributable to continuing 1,620 1,907 3,936
operations (£m)
Cash generated from operations attributable to discontinued - - 918
operations (£m)
Total cash generated from operations (£m) 1,620 1,907 4,854
Total net cash generated from operating activities (£m) 1,307 1,360 4,177
Free cash inflow/(outflow) from continuing operations* (£m) 348 (341) 1,741
Free cash flow from continuing operations growth (%) 34% <(100)% >100%
Free cash flow conversion from continuing operations* (%) 21% - 79%
Total net debt** (£m) 18,220 18,220 21,458
* Free cash flow from continuing operations and free cash flow conversion are
defined on page 54. Free cash flow from continuing operations is analysed on
page 44.
** Net debt is analysed on page 44.
Q2 2023
Cash generated from operating activities from continuing operations for the
quarter was £1,620 million (Q2 2022: £1,584 million). The increase primarily
reflected favourable timing of profit share payments for Xevudy and timing of
returns and rebates, partly offset by additional pension contributions and an
increase in trade receivables due to higher sales.
Total cash payments to Shionogi in relation to the ViiV Healthcare contingent
consideration liability in the quarter were £278 million (Q2 2022: £395
million), all of which was recognised in cash flows from operating activities.
These payments are deductible for tax purposes.
Free cash inflow was £348 million for the quarter (Q2 2022: £264 million
inflow). The increase primarily reflected favourable timing of profit share
payments for Xevudy and timing of returns and rebates, partly offset by an
increase in trade receivables due to higher sales, additional pension
contributions and higher dividend payments to non-controlling interests.
H1 2023
Cash generated from operating activities from continuing operations was
£1,907 million (H1 2022: £3,936 million). The decrease primarily reflected
an unfavourable comparison due to the upfront income from the settlement with
Gilead received in Q1 2022, additional pension contributions, increase in
trade receivables due to higher sales, increase in seasonal inventory and
lower payable balances reflecting increased investment in 2022.
Total cash payments to Shionogi in relation to the ViiV Healthcare contingent
consideration liability in the half year were £565 million (H1 2022: £603
million), all of which was recognised in cash flows from operating activities.
These payments are deductible for tax purposes.
Free cash outflow was £341 million for the six months (H1 2022: £1,741
million inflow). The decrease primarily reflected an unfavourable comparison
due to the upfront income from the settlement with Gilead received in Q1 2022,
additional pension contributions, increase in trade receivables due to higher
sales, increase in seasonal inventory, lower payable balances reflecting
increased investment in 2022 and higher dividend payments to non-controlling
interests.
Total Net debt
At 30 June 2023, net debt was £18,220 million, compared with £17,197 million
at 31 December 2022, comprising gross debt of £21,474 million and cash and
liquid investments of £3,254 million.
Net debt increased by £1 billion primarily due to the net acquisition cost of
Bellus Health for £1.4 billion, dividends paid to shareholders of £1.1
billion, and £0.3 billion free cash outflow. This was partly offset by £0.8
billion disposal of investments, £0.1 billion disposal of businesses, £0.2
billion of income received from equity investments and net favourable exchange
impacts of £0.7 billion from the translation of non-Sterling denominated debt
and exchange on other financing items.
At 30 June 2023, GSK had short-term borrowings (including overdrafts and lease
liabilities) repayable within 12 months of £5,921 million with loans of
£2,286 million repayable in the subsequent year.
Q2 2023 pipeline highlights (since 26 April 2023)
Medicine/vaccine Trial (indication, presentation) Event
Regulatory approvals or other regulatory action Arexvy RSV, older adults aged Regulatory approval
60+ years (US, EU)
Shingrix Shingles, at-risk adults aged 18+ years Regulatory approval (JP)
cabotegravir HIV, pre-exposure prophylaxis, long-acting injectable and tablets Positive CHMP opinion (EU)
daprodustat ASCEND-D (anaemia of chronic kidney disease on dialysis) Positive CHMP opinion (EU) refer to page 52
Regulatory submissions or acceptances Menveo Liquid formulation, meningitis ACWY Regulatory acceptance (EU)
Jemperli RUBY (1L mismatch repair deficient/microsatellite instability-high Regulatory acceptance (US)
(dMMR/MSI‑H) endometrial cancer)
Phase III data readouts or other significant events Arexvy RSV, older adults aged Positive phase III data (season two)
60+ years
Arexvy RSV, older adults aged US CDC ACIP recommendation
60+ years
MenABCWY (gen 1) Meningitis ABCWY Phase III data presentation
vaccine candidate
Neisseria gonorrhoeae vaccine candidate Neisseria gonorrhoeae US FDA Fast Track designation granted
GSK3858279 (anti-CCL17 antibody) Osteoarthritis pain, diabetic peripheral neuropathic pain US FDA Fast Track designation granted
Anticipated news flow
Timing Medicine/vaccine Trial (indication, presentation) Event
H2 2023 Arexvy RSV, older adults aged Phase III data readout
50-59 years
Arexvy RSV, older adults aged Regulatory submission
50-59 years (US, EU, JP)
RSV older adult vaccine RSV, older adults aged Regulatory decision (JP)
candidate 60+ years
bepirovirsen B-Together (hepatitis B virus) Phase IIb data readout
gepotidacin EAGLE-2/3 (uncomplicated urinary tract infection) Regulatory submission
(US, EU)
cabotegravir HIV, pre-exposure prophylaxis, long-acting injectable Regulatory decision (EU)
Vocabria HIV Regulatory decision (CN)
Nucala Chronic rhinosinusitis with nasal polyps Regulatory submission
(CN, JP)
Blenrep DREAMM-7 (2L+ multiple myeloma) Phase III data readout
Blenrep DREAMM-8 (2L+ multiple myeloma) Phase III data readout
Jemperli RUBY (1L dMMR/MSI-H endometrial cancer) Regulatory decision (US)
momelotinib MOMENTUM (myelofibrosis with anaemia) Regulatory decision (US)
momelotinib MOMENTUM (myelofibrosis with anaemia) Regulatory submission (JP)
H1 2024 gepotidacin EAGLE-1 (urogenital gonorrhoea) Phase III data readout
MenABCWY (gen 2) Meningitis ABCWY Phase II data readout
vaccine candidate
MenABCWY (gen 1) Meningitis ABCWY Regulatory submission
vaccine candidate (US, EU)
Blenrep DREAMM-7 (2L+ multiple myeloma) Regulatory submission
(US, EU)
Blenrep DREAMM-8 (2L+ multiple myeloma) Regulatory submission
(US, EU)
Jemperli RUBY (1L dMMR/MSI-H endometrial cancer) Regulatory decision (EU)
Jemperli RUBY part 2 (1L endometrial cancer) Phase III data readout
Jemperli RUBY part 2 (1L endometrial cancer) Regulatory submission
(US, EU)
momelotinib MOMENTUM (myelofibrosis with anaemia) Regulatory decision
(EU, JP)
Zejula FIRST (1L maintenance ovarian cancer) Phase III data readout
H2 2024 Arexvy RSV, older adults aged Regulatory decision
50-59 years (US, EU, JP)
gepotidacin EAGLE-2/3 (uncomplicated urinary tract infection) Regulatory decision
(US, EU)
gepotidacin EAGLE-1 (urogenital gonorrhoea) Regulatory submission (US)
depemokimab SWIFT-1/2 (severe asthma) Phase III data readout
depemokimab ANCHOR-1/2 (chronic rhinosinusitis with nasal polyps) Phase III data readout
Nucala Severe asthma Regulatory decision (CN)
Nucala Chronic rhinosinusitis with nasal polyps Regulatory decision (JP)
Nucala MATINEE (chronic obstructive pulmonary disease) Phase III data readout
Nucala MATINEE (chronic obstructive pulmonary disease) Regulatory submission (US)
cobolimab COSTAR (non-small cell lung cancer) Phase III data readout
Zejula ZEAL (1L maintenance non-small cell lung cancer) Phase III data readout
linerixibat GLISTEN (cholestatic pruritus in primary biliary cholangitis) Phase III data readout
Refer to pages 45 to 52 for further details on several key medicines and
vaccines in development by therapy area.
Trust: progress on our six priority areas for responsible business
Building Trust by operating responsibly is integral to GSK's strategy and
culture. This will support growth and returns to shareholders, reduce risk,
and help GSK's people thrive while delivering sustainable health impact at
scale. The Company has identified six Environmental, Social, and Governance
(ESG) focus areas that address what is most material to GSK's business and the
issues that matter the most to its stakeholders. Highlights below include
activity since Q1 2023 results. For more details on annual updates, please see
GSK'S ESG Performance Report 2022 at: https://gsk.to/2022ESGPerf
(https://gsk.to/2022ESGPerf) .
Access
Commitment: to make GSK's vaccines and medicines available at value-based
prices that are sustainable for the business and implement access strategies
that increase the use of GSK's vaccines and medicines to treat and protect
underserved people.
Progress since Q1 2023:
· GSK continues to support access to vaccines through Gavi, the Vaccine
Alliance. In July, Gavi announced the first countries to be allocated doses of
the RTS,S/AS01E vaccine against malaria, a vaccine developed by GSK and
partners for use in malaria endemic countries. These nine new countries will
start rolling out the vaccine with Gavi support from early 2024, joining the
three countries (Ghana, Kenya and Malawi) involved in the Malaria Vaccine
Implementation Programme. The announcement marks an important step towards
reaching millions more children with this ground-breaking vaccine.
· In 2013, GSK and Save the Children formed an ambitious and strategic global
partnership using the companies' combined expertise, resources and influence
to help save one million children's lives. In June, the partnership reached a
ten-year milestone and reported progress reaching over 3.5 million children in
51 countries with essential healthcare, training over 39,000 health workers
and immunising over 240,000 children under the age of five.
· Performance metrics related to access are updated annually with details from
the most recent year on page 9 of GSK's ESG Performance Report 2022.
Global health and health security
Commitment: develop novel products and technologies to treat and prevent
priority diseases, including pandemic threats.
Progress since Q1 2023:
· GSK is committed to tackling tuberculosis, the world's second-leading cause of
death by infectious diseases after COVID-19. GSK's early research, up to
proof-of-concept (phase IIb), led to the development of candidate vaccine
M72/AS01E against tuberculosis. GSK partnered with the Bill and Melinda Gates
Medical Research institute for further development. In June, Wellcome and the
Bill & Melinda Gates Foundation announced funding (approximately $550
million) for a phase III trial of the M72/AS01E candidate vaccine. If
successful in late-stage clinical trials, it will be the first new vaccine to
help prevent pulmonary tuberculosis in over a century.
· GSK has been working with partners since 1999 to tackle neglected tropical
diseases, including lymphatic filariasis (LF), a debilitating disease caused
by a parasite transmitted to humans through the bites of mosquitoes. A key
component in eliminating LF, is the use of GSK's albendazole to reduce the
level of parasites in infected people and break the cycle of transmission to
endemic countries. GSK provides albendazole to endemic countries, including
Bangladesh, through its donation programme. In June, Bangladesh, via the WHO's
South-East Asia Regional Office, announced that it has eliminated LF - a
significant milestone in our joint effort to get ahead of disease together.
· Performance metrics related to global health and health security are updated
annually with details from the most recent year on page 13 of GSK's ESG
Performance Report 2022.
Environment
Commitment: committed to a net zero, nature-positive, healthier planet with
ambitious goals set for 2030 and 2045.
Progress since Q1 2023:
· GSK is dedicated to doing more to protect the environment and was selected by
the Science Based Target Network (SBTN) to be part of the first group of
companies preparing to set science-based targets for nature, building on our
existing nature targets. GSK will be using their new guidance and
methodologies to reduce our impacts on nature, increase positive outcomes for
people, and build business resilience.
· GSK remains resolutely focused on delivering on existing nature targets while
following new guidance and methodologies. GSK is supporting key suppliers to
reduce their impact on nature by setting ambitious new standards for suppliers
who provide materials that are highly dependent on nature, like lactose,
gelatine and soy. The standards, developed in collaboration with third-party
experts, aim to support these suppliers to assess, improve, and verify their
approach to addressing a range of nature impacts - and associated climate and
social impacts - including land-use, water stewardship and biodiversity.
Meeting these standards should have positive impacts for nature and people and
make our supply chains more resilient. More information can be found at:
https://gsk.to/sustainable (https://gsk.to/sustainable) .
· Performance metrics related to environment are updated annually with details
from the most recent year on page 16 of GSK's ESG Performance Report 2022
Diversity, equity and inclusion
Commitment: create a diverse, equitable and inclusive workplace; enhance
recruitment of diverse patient populations in GSK clinical trials; and support
diverse communities.
Progress since Q1 2023:
· GSK is committed to reducing health inequities and understands the industry
can do more by investing in local interventions to help create healthier
communities and sustain best practices from the pandemic. In June, GSK
announced the launch of the COiMMUNITY Initiative to contribute to a more
equitable and resilient public health infrastructure and bolster existing
partner efforts - leading to more vaccinated adults. Through the initiative,
grant funding will be provided to support national, state, and local
non-profit organisations and community-based groups focused on adult
immunisation and health equity, increased information on adult immunisation
trends will be made available through enhanced vaccine tracking capabilities
and new resources will help implement tangible solutions. More information can
be found at https://gsk.to/COiMMUNITY (https://gsk.to/COiMMUNITY) .
· Performance metrics related to diversity, equity and inclusion are updated
annually with details from the most recent year on page 23 of GSK's ESG
Performance Report 2022.
Ethical standards
Commitment: promote ethical behaviour across GSK's business by supporting its
employees to do the right thing and working with suppliers that share GSK's
standards and operate responsibly.
· Performance metrics related to ethical standards are updated annually with
details from the most recent year on page 26 of GSK's ESG Performance Report
2022.
Product governance
Commitment: maintain robust quality and safety processes and responsibly use
data and new technologies.
· Performance metrics related to product governance are updated annually with
details from the most recent year on page 30 of GSK's ESG Performance Report
2022.
ESG rating performance
Detailed below is how GSK performs in key ESG ratings.
Current Previous
External benchmark score/ranking score/ranking Comments
S&P Global's Corporate Sustainability Assessment 86 88 2nd in the pharmaceutical industry group; Assessment conducted annually,
current score based on 2022 submission
Access to Medicines Index 4.23 4.06 Led the bi-annual index since its inception in 2008; Updated bi-annually,
current results from Nov 2022
Antimicrobial resistance benchmark 86% 84% Led the bi-annual benchmark since its inception in 2018; Current ranking
updated Nov 2021
CDP Climate Change A- A- Updated annually, current scores updated Dec 2022 (for supplier engagement,
March 2023)
CDP Water Security B B
CDP Forests (palm oil) A- B
CDP Forests (timber) B B
CDP supplier engagement rating Leader Leader
Sustainalytics 18.6 18.8 2nd percentile in pharma subindustry group; Lower score represents lower risk.
Current ranking updated Apr 2022
MSCI AA AA Last rating action date: Nov 2022
Moody's ESG solutions 61 61 2nd in the pharmaceutical sector; Current score updated Sept 2021
ISS Corporate Rating B+ B+ Current score updated June 2023
FTSE4Good Member Member Member since 2004
ShareAction's Workforce Disclosure Initiative 77% 75% Current score updated Feb 2023
Contents Page
Q2 2023 pipeline highlights 12
ESG 14
Total and Adjusted results 17
Income statement 25
Statement of comprehensive income 26
Balance sheet 27
Statement of changes in equity 28
Cash flow statement 29
Sales tables 30
Segment information 33
Legal matters 35
Returns to shareholders 36
Additional information 37
Net assets 38
Reconciliation of cash flow to movements in net debt 43
Net debt analysis 44
Free cash flow reconciliation 44
R&D commentary 45
Principal risks and uncertainties 53
Reporting definitions 54
Guidance, assumptions and cautionary statements 55
Directors' responsibility statement 56
Independent review report to GSK plc 57
Contacts
GSK plc (LSE/NYSE:GSK) is a global biopharma company with a purpose to unite
science, technology, and talent to get ahead of disease together. Find out
more at www.gsk.com (http://www.gsk.com/) .
GSK enquiries:
Media Tim Foley +44 (0) 20 8047 5502 (London)
Kathleen Quinn +1 202 603 5003 (Washington)
Investor Relations 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 +1 215 751 4855 (Philadelphia)
Registered in England & Wales:
No. 3888792
Registered Office:
980 Great West Road
Brentford, Middlesex
TW8 9GS
Total and Adjusted results
Total reported results represent the Group's overall performance.
GSK also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS measures may
be considered in addition to, but not as a substitute for or superior to,
information presented in accordance with IFRS. Adjusted results are defined
below and other non-IFRS measures are defined on page 54.
GSK believes that Adjusted results, when considered together with Total
results, provide investors, analysts and other stakeholders with helpful
complementary information to understand better the financial performance and
position of the Group from period to period, and allow the Group's performance
to be more easily compared against the majority of its peer companies. These
measures are also used by management for planning and reporting purposes. They
may not be directly comparable with similarly described measures used by other
companies.
GSK encourages investors and analysts not to rely on any single financial
measure but to review GSK's quarterly results announcements, including the
financial statements and notes, in their entirety.
GSK is committed to continuously improving its financial reporting, in line
with evolving regulatory requirements and best practice. In line with this
practice, GSK expects to continue to review and refine its reporting
framework.
Adjusted results exclude the profits from discontinued operations from the
Consumer Healthcare business and the following items in relation to our
continuing operations from Total results, together with the tax effects of all
of these items:
· amortisation of intangible assets (excluding computer software and capitalised
development costs)
· impairment of intangible assets (excluding computer software) and goodwill
· major restructuring costs, which include impairments of tangible assets and
computer software, (under specific Board approved programmes that are
structural, of a significant scale and where the costs of individual or
related projects exceed £25 million), including integration costs following
material acquisitions
· transaction-related accounting or other adjustments related to significant
acquisitions
· proceeds and costs of disposal of associates, products and businesses;
significant settlement income; significant legal charges (net of insurance
recoveries) and expenses on the settlement of litigation and government
investigations; other operating income other than royalty income, and other
items
Costs for all other ordinary course smaller scale restructuring and legal
charges and expenses from continuing operations are retained within both Total
and Adjusted results.
As Adjusted results include the benefits of Major restructuring programmes but
exclude significant costs (such as significant legal, major restructuring and
transaction items) they should not be regarded as a complete picture of the
Group's financial performance, which is presented in Total results. The
exclusion of other Adjusting items may result in Adjusted earnings being
materially higher or lower than Total earnings. In particular, when
significant impairments, restructuring charges and legal costs are excluded,
Adjusted earnings will be higher than Total earnings.
GSK has undertaken a number of Major restructuring programmes in response to
significant changes in the Group's trading environment or overall strategy or
following material acquisitions. Within the Pharmaceuticals sector, the highly
regulated manufacturing operations and supply chains and long lifecycle of the
business mean that restructuring programmes, particularly those that involve
the rationalisation or closure of manufacturing or R&D sites are likely to
take several years to complete. Costs, both cash and non-cash, of these
programmes are provided for as individual elements are approved and meet the
accounting recognition criteria. As a result, charges may be incurred over a
number of years following the initiation of a Major restructuring programme.
Significant legal charges and expenses are those arising from the settlement
of litigation or government investigations that are not in the normal course
and materially larger than more regularly occurring individual matters. They
also include certain major legacy matters.
Reconciliations between Total and Adjusted results, providing further
information on the key Adjusting items, are set out on pages 19, 20, 22 and
23.
GSK provides earnings guidance to the investor community on the basis of
Adjusted results. This is in line with peer companies and expectations of the
investor community, supporting easier comparison of the Group's performance
with its peers. GSK is not able to give guidance for Total results as it
cannot reliably forecast certain material elements of the Total results,
particularly the future fair value movements on contingent consideration and
put options that can and have given rise to significant adjustments driven by
external factors such as currency and other movements in capital markets.
ViiV Healthcare
ViiV Healthcare is a subsidiary of the Group and 100% of its operating results
(turnover, operating profit, profit after tax) are included within the Group
income statement.
Earnings are allocated to the three shareholders of ViiV Healthcare on the
basis of their respective equity shareholdings (GSK 78.3%, Pfizer 11.7% and
Shionogi 10%) and their entitlement to preferential dividends, which are
determined by the performance of certain products that each shareholder
contributed. As the relative performance of these products changes over time,
the proportion of the overall earnings allocated to each shareholder also
changes. In particular, the increasing proportion of sales of dolutegravir and
cabotegravir-containing products has a favourable impact on the proportion of
the preferential dividends that is allocated to GSK. Adjusting items are
allocated to shareholders based on their equity interests. GSK was entitled to
approximately 83% of the Total earnings and 82% of the Adjusted earnings of
ViiV Healthcare for 2022.
As consideration for the acquisition of Shionogi's interest in the former
Shionogi-ViiV Healthcare joint venture in 2012, Shionogi received the 10%
equity stake in ViiV Healthcare and ViiV Healthcare also agreed to pay
additional future cash consideration to Shionogi, contingent on the future
sales performance of the products being developed by that joint venture,
dolutegravir and cabotegravir. Under IFRS 3 'Business combinations', GSK was
required to provide for the estimated fair value of this contingent
consideration at the time of acquisition and is required to update the
liability to the latest estimate of fair value at each subsequent period end.
The liability for the contingent consideration recognised in the balance sheet
at the date of acquisition was £659 million. Subsequent remeasurements are
reflected within other operating income/(expense) and within Adjusting items
in the income statement in each period.
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 H1 2023
were £565 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 71 and 72 of the Annual Report 2022.
Adjusting items
The reconciliations between Total results and Adjusted results for Q2 2023 and
Q2 2022 are set out below.
Three months ended 30 June 2023
Total Intangible Intangible Major Trans- Divest- Adjusted
results amort- impair- restruct- action- ments, results
£m isation ment uring related significant £m
£m £m £m £m legal and
other
items
£m
Turnover 7,178 7,178
Cost of sales (1,932) 164 33 7 (1,728)
Gross profit 5,246 164 33 7 5,450
Selling, general and administration (2,268) 11 66 (2,191)
Research and development (1,341) 20 4 2 (1,315)
Royalty income 226 226
Other operating income/(expense) 278 (189) (89) -
Operating profit 2,141 184 4 46 (189) (16) 2,170
Net finance cost (152) 1 (1) (152)
Share of after tax profit/(loss) of associates (2) (2)
and joint venture
Profit before taxation 1,987 184 4 47 (189) (17) 2,016
Taxation (242) (40) (1) (11) 17 (38) (315)
Tax rate % 12.2% 15.6%
Profit after taxation from continuing 1,745 144 3 36 (172) (55) 1,701
operations
Profit attributable to non-controlling 121 9 130
interests from continuing operations
Profit attributable to shareholders from 1,624 144 3 36 (181) (55) 1,571
continuing operations
1,745 144 3 36 (172) (55) 1,701
Earnings per share from continuing operations 40.1p 3.5p 0.1p 0.9p (4.5)p (1.3)p 38.8p
Weighted average number of shares (millions) 4,053 4,053
Three months ended 30 June 2022
Total Profit from Intangible Intangible Major Trans- Divest- Adjusted
results discon- amort- impair- restruct- action- ments, results
£m tinued isation ment uring related significant £m
operations £m £m £m £m legal and
£m other
items
£m
Turnover 6,929 6,929
Cost of sales (2,176) 166 21 10 9 (1,970)
Gross profit 4,753 166 21 10 9 4,959
Selling, general and administration (2,066) 107 4 (1,955)
Research and development (1,242) 26 55 6 (1,155)
Royalty income 159 159
Other operating income/(expense) (523) 675 (152) -
Operating profit 1,081 192 55 134 685 (139) 2,008
Net finance cost (183) 1 1 (181)
Share of after tax losses of (2) (2)
associates and joint ventures
Profit before taxation 896 192 55 135 685 (138) 1,825
Taxation (150) (41) (10) (24) (78) 26 (277)
Tax rate % 16.7% 15.2%
Profit after taxation from 746 151 45 111 607 (112) 1,548
continuing operations
Profit after taxation from 229 (229) -
discontinued operations
Total profit after taxation for 975 (229) 151 45 111 607 (112) 1,548
the period
Profit attributable to non- 40 110 150
controlling interest from
continuing operations
Profit attributable to shareholders 706 151 45 111 497 (112) 1,398
from continuing operations
Profit attributable to non- 97 (97) -
controlling interest from
discontinued operations
Profit attributable to 132 (132) -
shareholders from
discontinued operations
975 (229) 151 45 111 607 (112) 1,548
Total profit attributable to 137 (97) 110 150
non-controlling interests
Total profit attributable to 838 (132) 151 45 111 497 (112) 1,398
shareholders
975 (229) 151 45 111 607 (112) 1,548
Earnings per share from 17.5p 3.8p 1.1p 2.8p 12.3p (2.8)p 34.7p
continuing operations
Earnings per share from 3.3p (3.3)p -
discontinued operations
Total earnings per share 20.8p (3.3)p 3.8p 1.1p 2.8p 12.3p (2.8)p 34.7p
Weighted average number of 4,025 4,025
shares (millions)
Major restructuring and integration
Total Major restructuring charges from continuing operations incurred in Q2
2023 were £46 million (Q2 2022: £134 million), analysed as follows:
Q2 2023 Q2 2022
Cash Non- Total Cash Non- Total
£m cash £m £m cash £m
£m £m
Separation Preparation restructuring 25 4 29 28 105 133
programme
Significant acquisitions 15 1 16 - - -
Legacy programmes 2 (1) 1 (1) 2 1
42 4 46 27 107 134
The Separation Preparation programme incurred cash charges of £25 million
primarily from the restructuring of some administrative functions as well as
Global Supply Chain and R&D.
The benefit in Q2 2023 from restructuring programmes was £0.1 billion,
primarily relating to the Separation Preparation restructuring programme. The
programme has delivered £1.0 billion of annual savings to date and targets to
deliver £1.1 billion by 2023, with total costs estimated at £2.4 billion, of
which £1.6 billion is expected to be cash costs.
Costs of significant acquisitions relate to integration costs of Sierra
Oncology Inc. (Sierra) and Affinivax Inc. (Affinivax) which were acquired in
Q3 2022.
Transaction-related adjustments
Transaction-related adjustments from continuing operations resulted in a net
credit of £189 million (Q2 2022: £685 million charge) all of which related
to accounting (credits)/charge for the remeasurement of contingent
consideration liabilities, the liabilities for the Pfizer put option, and
Pfizer and Shionogi preferential dividends in ViiV Healthcare.
Charge/(credit) Q2 2023 Q2 2022
£m £m
Contingent consideration on former Shionogi-ViiV Healthcare joint Venture (9) 585
(including Shionogi preferential dividends)
ViiV Healthcare put options and Pfizer preferential dividends (138) 118
Contingent consideration on former Novartis Vaccines business (53) (4)
Contingent consideration on acquisition of Affinivax 11 -
Other adjustments - (14)
Total transaction-related charges (189) 685
The £9 million credit relating to the contingent consideration for the former
Shionogi-ViiV Healthcare joint venture represented a reduction in the
valuation of the contingent consideration due to Shionogi, as a result of a
credit of £106 million primarily from exchange rates as well as sales
forecasts, partly offset by the unwind of the discount for £97 million. The
£138 million credit relating to the ViiV Healthcare put option and Pfizer
preferential dividends represented a reduction in the valuation of the put
option primarily as a result of updated exchange rates as well as updated
sales forecasts and lower cash balances.
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 18.
The £53 million credit relating to the contingent consideration on the former
Novartis Vaccines business primarily relates to changes to future sales
forecasts.
Divestments, significant legal charges, and other items
Divestments, significant legal charges, and other items primarily included
dividend and distribution income received from investments including £35
million fair value gain on the investment in Haleon plc (Haleon) and £30
million dividend income in the quarter. Legal charges provide for all
significant legal matters, including Zantac, and are not broken out separately
by litigation or investigation. Significant legal charges in the quarter
primarily reflected increased legal charges for Zantac of which the vast
majority relate to the prospective legal costs for the defence of the
litigation.
The reconciliations between Total results and Adjusted results for H1 2023 and
H1 2022 are set out below.
Six months ended 30 June 2023
Total Intangible Intangible Major Trans- Divest- Adjusted
results amort- impair- restruct- action- ments, results
£m isation ment uring related significant £m
£m £m £m £m legal and
other
items
£m
Turnover 14,129 14,129
Cost of sales (3,875) 315 68 12 (3,480)
Gross profit 10,254 315 68 12 10,649
Selling, general and administration (4,411) 80 75 (4,256)
Research and development (2,601) 38 20 6 (2,537)
Royalty income 406 406
Other operating income/(expense) 575 (460) (115) -
Operating profit 4,223 353 20 154 (460) (28) 4,262
Net finance cost (326) 1 3 (322)
Share of after tax profit/(loss) of associates (4) (4)
and joint venture
Profit/(loss) on disposal of interest in associates 1 (1) -
Profit before taxation 3,894 353 20 155 (460) (26) 3,936
Taxation (518) (76) (5) (33) 32 (18) (618)
Tax rate % 13.3% 15.7%
Profit after taxation from continuing 3,376 277 15 122 (428) (44) 3,318
operations
Profit attributable to non-controlling 262 (11) 251
interests from continuing operations
Profit attributable to shareholders from 3,114 277 15 122 (417) (44) 3,067
continuing operations
3,376 277 15 122 (428) (44) 3,318
Earnings per share from continuing operations 76.9p 6.8p 0.4p 3.0p (10.3)p (1.0)p 75.8p
Weighted average number of shares (millions) 4,048 4,048
Six months ended 30 June 2022
Total Profit from Intangible Intangible Major Trans- Divest- Adjusted
results discon- amort- impair- restruct- action- ments, results
£m tinued isation ment uring related significant £m
operations £m £m £m £m legal and
£m other
items
£m
Turnover 14,119 14,119
Cost of sales (4,893) 329 36 22 9 (4,497)
Gross profit 9,226 329 36 22 9 9,622
Selling, general and administration (3,878) 135 18 (3,725)
Research and development (2,345) 49 39 14 (2,243)
Royalty income 297 297
Other operating 74 1,010 (1,084) -
income/(expense)
Operating profit 3,374 378 39 185 1,032 (1,057) 3,951
Net finance cost (381) 1 1 (379)
Share of after tax losses of (3) (3)
associates and joint ventures
Profit before taxation 2,990 378 39 186 1,032 (1,056) 3,569
Taxation (473) (80) (7) (36) (131) 163 (564)
Tax rate % 15.8% 15.8%
Profit after taxation from 2,517 298 32 150 901 (893) 3,005
continuing operations
Profit after taxation from 625 (625) -
discontinued operations
Total profit after taxation 3,142 (625) 298 32 150 901 (893) 3,005
for the period
Profit attributable to non- 315 (4) 311
controlling interest from
continuing operations
Profit attributable to 2,202 298 32 150 905 (893) 2,694
shareholders from
continuing operations
Profit attributable to non- 187 (187) -
controlling interest from
discontinued operations
Profit attributable to shareholders 438 (438) -
from discontinued operations
3,142 (625) 298 32 150 901 (893) 3,005
Total profit attributable to 502 (187) (4) 311
non-controlling interests
Total profit attributable to 2,640 (438) 298 32 150 905 (893) 2,694
shareholders
3,142 (625) 298 32 150 901 (893) 3,005
Earnings per share from 54.8p 7.4p 0.8p 3.7p 22.5p (22.2)p 67.0p
continuing operations
Earnings per share from 10.9p (10.9)p -
discontinued operations
Total earnings per share 65.7p (10.9)p 7.4p 0.8p 3.7p 22.5p (22.2)p 67.0p
Weighted average number of 4,021 4,021
shares (millions)
Major restructuring and integration
Total Major restructuring charges from continuing operations incurred in H1
2023 were £154 million (H1 2022: £185 million), analysed as follows:
H1 2023 H1 2022
Cash Non- Total Cash Non- Total
£m cash £m £m cash £m
£m £m
Separation Preparation restructuring 62 51 113 39 142 181
programme
Significant acquisitions 36 2 38 - - -
Legacy programmes 2 1 3 1 3 4
100 54 154 40 145 185
The Separation Preparation programme incurred cash charges of £62 million
primarily from the restructuring of some administrative functions as well as
Global Supply Chain and R&D. The non-cash charges of £51 million
primarily reflected the write-down of assets in administrative as well as
manufacturing locations.
The benefit in H1 2023 from restructuring programmes was £0.2 billion,
primarily relating to the Separation Preparation restructuring programme. The
programme has delivered £1.0 billion of annual savings to date and targets to
deliver £1.1 billion by 2023, with total costs estimated at £2.4 billion, of
which £1.6 billion is expected to be cash costs.
Costs of significant acquisitions relate to integration costs of Sierra and
Affinivax which were acquired in Q3 2022.
Transaction-related adjustments
Transaction-related adjustments from continuing operations resulted in a net
credit of £460 million (H1 2022: £1,032 million charge) all of which related
to accounting (credits)/charge for the remeasurement of contingent
consideration liabilities, the liabilities for the Pfizer put option, and
Pfizer and Shionogi preferential dividends in ViiV Healthcare.
Charge/(credit) H1 2023 H1 2022
£m £m
Contingent consideration on former Shionogi-ViiV Healthcare joint Venture (73) 841
(including Shionogi preferential dividends)
ViiV Healthcare put options and Pfizer preferential dividends (243) 150
Contingent consideration on former Novartis Vaccines business (122) 40
Contingent consideration on acquisition of Affinivax (22) -
Other adjustments - 1
Total transaction-related charges (460) 1,032
The £73 million credit relating to the contingent consideration for the
former Shionogi-ViiV Healthcare joint venture represented a reduction in the
valuation of the contingent consideration due to Shionogi, as a result of a
credit of £278 million primarily from exchange rates as well as sales
forecasts, partly offset by the unwind of the discount for £205 million. The
£243 million credit relating to the ViiV Healthcare put option and Pfizer
preferential dividends represented a reduction in the valuation of the put
option primarily as a result of updated exchange rates as well as updated
sales forecasts and lower cash balances.
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 18.
The £122 million credit relating to the contingent consideration on the
former Novartis Vaccines business primarily relates to changes to future sales
forecasts.
Divestments, significant legal charges, and other items
Divestments, significant legal charges, and other items primarily included
dividend and distribution income received from investments including £30
million dividend from the retained investment in Haleon which was partly
offset by a £29 million fair value loss in H1 2023. Significant legal charges
in the year to date primarily reflected increased legal charges for Zantac of
which the vast majority relate to the prospective legal costs for the defence
of the litigation.
Financial information
Income statements
Q2 2023 Q2 2022 H1 2023 H1 2022
£m £m £m £m
TURNOVER 7,178 6,929 14,129 14,119
Cost of sales (1,932) (2,176) (3,875) (4,893)
Gross profit 5,246 4,753 10,254 9,226
Selling, general and administration (2,268) (2,066) (4,411) (3,878)
Research and development (1,341) (1,242) (2,601) (2,345)
Royalty income 226 159 406 297
Other operating income/(expense) 278 (523) 575 74
OPERATING PROFIT 2,141 1,081 4,223 3,374
Finance income 33 21 62 28
Finance expense (185) (204) (388) (409)
Share of after tax profit/(loss) of associates and joint (2) (2) (4) (3)
ventures
Profit/(loss) on disposal of interests in associates - - 1 -
PROFIT BEFORE TAXATION 1,987 896 3,894 2,990
Taxation (242) (150) (518) (473)
Tax rate % 12.2% 16.7% 13.3% 15.8%
PROFIT AFTER TAXATION FROM CONTINUING OPERATIONS 1,745 746 3,376 2,517
Profit after taxation from discontinued operations - 229 - 625
and other gains from the demerger
PROFIT AFTER TAXATION FROM DISCONTINUED OPERATIONS - 229 - 625
PROFIT AFTER TAXATION FOR THE PERIOD 1,745 975 3,376 3,142
Profit attributable to non-controlling interests from 121 40 262 315
continuing operations
Profit attributable to shareholders from continuing 1,624 706 3,114 2,202
operations
Profit attributable to non-controlling interests from - 97 - 187
discontinued operations
Profit attributable to shareholders from discontinued - 132 - 438
operations
1,745 975 3,376 3,142
Profit attributable to non-controlling interests 121 137 262 502
Profit attributable to shareholders 1,624 838 3,114 2,640
1,745 975 3,376 3,142
EARNINGS PER SHARE FROM CONTINUING OPERATIONS 40.1p 17.5p 76.9p 54.8p
EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS - 3.3p - 10.9p
TOTAL EARNINGS PER SHARE 40.1p 20.8p 76.9p 65.7p
Diluted earnings per share from continuing operations 39.7p 17.4p 76.2p 54.3p
Diluted earnings per share from discontinued - 3.2p - 10.7p
operations
Total diluted earnings per share 39.7p 20.6p 76.2p 65.0p
Statement of comprehensive income
Q2 2023 Q2 2022 H1 2023 H1 2022
£m £m £m £m
Total profit for the period 1,745 975 3,376 3,142
Items that may be reclassified subsequently to continuing operations income
statement:
Exchange movements on overseas net assets and (80) (179) 7 (198)
net investment hedges
Reclassification of exchange movements on liquidation (10) 9 (13) 9
or disposal of overseas subsidiaries and associates
Fair value movements on cash flow hedges 1 - 1 2
Deferred tax on fair value movements on cash flow (1) - (1) -
hedges
Reclassification of cash flow hedges to income 2 14 3 13
statement
(88) (156) (3) (174)
Items that will not be reclassified to continuing operations income statement:
Exchange movements on overseas net assets of (8) (3) (22) -
non-controlling interests
Fair value movements on equity investments 51 (81) (117) (624)
Tax on fair value movements on equity investments (5) 10 17 57
Fair value movements on cash flow hedges (34) - (34) -
Remeasurement gains/(losses) on defined benefit plans (300) 200 50 513
Tax on remeasurement losses/(gains) on defined 79 (53) (8) (126)
benefit plans
(217) 73 (114) (180)
Other comprehensive expense for the period from (305) (83) (117) (354)
continuing operations
Other comprehensive income for the period from - 493 - 928
discontinued operations
Total comprehensive income for the period 1,440 1,385 3,259 3,716
Total comprehensive income for the period attributable
to:
Shareholders 1,327 1,277 3,019 3,239
Non-controlling interests 113 108 240 477
1,440 1,385 3,259 3,716
Balance sheet
30 June 2023 31 December 2022
£m £m
ASSETS
Non-current assets
Property, plant and equipment 8,661 8,933
Right of use assets 654 687
Goodwill 6,716 7,046
Other intangible assets 15,531 14,318
Investments in associates and joint ventures 64 74
Other investments 1,286 1,467
Deferred tax assets 5,799 5,658
Other non-current assets 1,402 1,194
Total non-current assets 40,113 39,377
Current assets
Inventories 5,512 5,146
Current tax recoverable 319 405
Trade and other receivables 6,776 7,053
Derivative financial instruments 164 190
Current equity investments 3,250 4,087
Liquid investments 114 67
Cash and cash equivalents 3,140 3,723
Assets held for sale 73 98
Total current assets 19,348 20,769
TOTAL ASSETS 59,461 60,146
LIABILITIES
Current liabilities
Short-term borrowings (5,921) (3,952)
Contingent consideration liabilities (947) (1,289)
Trade and other payables (13,951) (16,263)
Derivative financial instruments (136) (183)
Current tax payable (544) (471)
Short-term provisions (609) (652)
Total current liabilities (22,108) (22,810)
Non-current liabilities
Long-term borrowings (15,553) (17,035)
Corporation tax payable (76) (127)
Deferred tax liabilities (500) (289)
Pensions and other post-employment benefits (2,337) (2,579)
Other provisions (544) (532)
Contingent consideration liabilities (5,280) (5,779)
Other non-current liabilities (904) (899)
Total non-current liabilities (25,194) (27,240)
TOTAL LIABILITIES (47,302) (50,050)
NET ASSETS 12,159 10,096
EQUITY
Share capital 1,348 1,347
Share premium account 3,450 3,440
Retained earnings 6,418 4,363
Other reserves 1,475 1,448
Shareholders' equity 12,691 10,598
Non-controlling interests (532) (502)
TOTAL EQUITY 12,159 10,096
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 2023 1,347 3,440 4,363 1,448 10,598 (502) 10,096
Profit for the period 3,114 3,114 262 3,376
Other comprehensive 15 (110) (95) (22) (117)
income/(expense) for the period
Total comprehensive income/(expense) 3,129 (110) 3,019 240 3,259
for the period
Distributions to non-controlling interests (277) (277)
Contributions from non-controlling 7 7
interests
Dividends to shareholders (1,112) (1,112) (1,112)
Realised after tax losses on disposal (9) 9 - -
or liquidation of equity investments
Share of associates and joint ventures 2 (2) - -
realised profit/(loss) on disposal of equity
investments
Shares issued 1 8 9 9
Write-down on shares held by ESOP (101) 101 - -
Trusts
Shares acquired by ESOP Trusts 2 1 (3) - -
Share-based incentive plans 145 145 145
Hedging gain/loss after taxation 32 32 32
transferred to non-financial assets
At 30 June 2023 1,348 3,450 6,418 1,475 12,691 (532) 12,159
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 2,640 2,640 502 3,142
Other comprehensive 1,010 (411) 599 (25) 574
income/(expense) for the period
Total comprehensive income/(expense) 3,650 (411) 3,239 477 3,716
for the period
Distributions to non-controlling interests (506) (506)
Contributions from non-controlling 8 8
interests
Dividends to shareholders (2,108) (2,108) (2,108)
Realised after tax losses on disposal (23) 23 - -
or liquidation of equity investments
Shares issued 20 20 20
Write-down on shares held by ESOP (510) 510 - -
Trusts
Shares acquired by ESOP Trusts 118 704 (822) - -
Share of associates and joint ventures (1) 1 - -
realised profits on disposal of equity
investments
Share-based incentive plans 168 168 168
At 30 June 2022 1,347 3,439 9,824 1,764 16,374 6,266 22,640
Cash flow statement six months ended 30 June 2023
H1 2023 H1 2022
£m £m
Profit after tax from continuing operations 3,376 2,517
Tax on profits 518 473
Share of after tax loss/(profit) of associates and joint ventures 4 3
(Profit)/loss on disposal of interest in associates and joint ventures (1) -
Net finance expense 326 381
Depreciation, amortisation and other adjusting items 1,092 1,335
Increase in working capital (1,237) (198)
Contingent consideration paid (575) (542)
Decrease in other net liabilities (excluding contingent consideration paid) (1,596) (33)
Cash generated from operations attributable to continuing operations 1,907 3,936
Taxation paid (547) (534)
Net cash inflow/(outflow) from continuing operating activities 1,360 3,402
Cash generated from operations attributable to discontinued operations - 918
Taxation paid from discontinued operations - (143)
Net operating cash flows attributable to discontinued operations - 775
Total net cash inflows/(outflows) from operating activities 1,360 4,177
Cash flow from investing activities
Purchase of property, plant and equipment (529) (430)
Proceeds from sale of property, plant and equipment 10 6
Purchase of intangible assets (535) (597)
Proceeds from sale of intangible assets 12 13
Purchase of equity investments (59) (59)
Proceeds from sale of equity investments 809 -
Share transactions with minority shareholders - 1
Purchase of businesses, net of cash acquired (1,399) -
Contingent consideration paid (4) (73)
Disposal of businesses 58 (12)
Interest received 62 26
Proceeds from disposal of associates and joint ventures 1 -
Dividend and distributions from investments 201 -
Dividends from associates and joint ventures 1 -
Net cash inflow/(outflow) from continuing investing activities (1,372) (1,125)
Net investing cash flows attributable to discontinued operations - (3,013)
Total net cash inflow/(outflow) from investing activities (1,372) (4,138)
Cash flow from financing activities
Issue of share capital 9 20
Shares acquired by ESOP trust - (3)
Decrease in long-term loans (150) (3)
Repayment of short-term loans((1)) (653) (2,645)
Net increase/(repayment) of short-term loans((1)) 2,247 (417)
Repayment of lease liabilities (94) (99)
Interest paid (448) (437)
Dividends paid to shareholders (1,112) (2,108)
Distribution to non-controlling interests (277) (177)
Contributions from non-controlling interests 7 8
Other financing items 184 264
Net cash inflow/(outflow) from continuing financing activities (287) (5,597)
Net financing cash flows attributable to discontinued operations - 9,084
Total net cash inflow/(outflow) from financing activities (287) 3,487
Increase/(decrease) in cash and bank overdrafts in the period (299) 3,526
Cash and bank overdrafts at beginning of the period 3,425 3,817
Exchange adjustments (88) 83
Increase/(decrease) in cash and bank overdrafts (299) 3,526
Cash and bank overdrafts at end of the period 3,038 7,426
Cash and bank overdrafts at end of the period comprise:
Cash and cash equivalents 3,140 6,465
Cash and cash equivalents reported in assets held for sale/distribution - 1,421
Overdrafts (102) (460)
3,038 7,426
(1) Amended to reflect the gross cashflows with no impact on overall financing
cashflows.
Vaccines turnover - three months ended 30 June 2023
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Shingles 880 20 20 473 (9) (10) 243 61 58 164 >100 >100
Shingrix 880 20 20 473 (9) (10) 243 61 58 164 >100 >100
Meningitis 266 13 13 120 - (2) 105 21 18 41 46 61
Bexsero 194 18 18 69 6 5 102 26 22 23 21 42
Menveo 66 (4) (4) 51 (7) (9) 2 (60) (40) 13 44 44
Other 6 >100 >100 - - - 1 - - 5 >100 >100
Influenza 23 (28) (28) - >(100) >(100) - - - 23 (26) (26)
Fluarix, FluLaval 23 (28) (28) - >(100) >(100) - - - 23 (26) (26)
Established Vaccines 812 13 13 309 20 20 189 7 5 314 11 11
Infanrix, Pediarix 85 (29) (27) 34 (33) (29) 20 (35) (39) 31 (18) (13)
Boostrix 164 4 2 101 6 4 32 (16) (18) 31 24 24
Hepatitis 158 (1) (2) 83 (15) (15) 46 18 15 29 32 27
Rotarix 184 53 53 78 >100 >100 28 (3) (7) 78 1 4
Synflorix 76 (10) (11) - - - 11 10 10 65 (12) (14)
Priorix, Priorix Tetra, 54 35 32 5 - - 30 30 39 19 12 -
Varilrix
Cervarix 52 >100 >100 - - - 19 >100 >100 33 83 89
Other 39 >100 >100 8 >100 >100 3 50 (100) 28 >100 >100
Vaccines excluding 1,981 16 15 902 1 - 537 30 27 542 34 37
COVID-19 solutions
Pandemic vaccines 41 - - - - - 22 - - 19 - -
Pandemic adjuvant 41 - - - - - 22 - - 19 - -
Vaccines 2,022 18 18 902 1 - 559 35 33 561 39 41
Vaccines turnover - Six months ended 30 June 2023
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Shingles 1,713 20 16 981 (3) (7) 457 47 42 275 >100 >100
Shingrix 1,713 20 16 981 (3) (7) 457 47 42 275 >100 >100
Meningitis 546 22 19 239 9 4 220 29 25 87 50 55
Bexsero 412 26 22 143 9 4 212 32 28 57 54 59
Menveo 125 13 9 96 9 3 6 (25) (25) 23 53 60
Other 9 13 13 - - - 2 - - 7 17 17
Influenza 35 (30) (28) 1 (50) (50) - - - 34 (29) (27)
Fluarix, FluLaval 35 (30) (28) 1 (50) (50) - - - 34 (29) (27)
Established Vaccines 1,627 12 8 662 18 13 382 12 8 583 5 4
Infanrix, Pediarix 262 (11) (14) 142 (13) (17) 53 (12) (13) 67 (7) (7)
Boostrix 303 7 2 193 17 11 63 (11) (14) 47 (2) (2)
Hepatitis 328 17 12 181 3 (2) 92 35 31 55 49 46
Rotarix 322 36 33 125 >100 >100 61 - (3) 136 7 9
Synflorix 138 (16) (18) - - - 19 19 19 119 (20) (22)
Priorix, Priorix Tetra, 107 23 20 7 - - 63 24 22 37 3 -
Varilrix
Cervarix 79 55 57 - - - 28 >100 >100 51 19 23
Other 88 52 45 14 >100 >100 3 (57) (86) 71 58 51
Vaccines excluding 3,921 16 12 1,883 5 - 1,059 29 25 979 27 27
COVID-19 solutions
Pandemic vaccines 142 - - - - - 123 - - 19 - -
Pandemic adjuvant 142 - - - - - 123 - - 19 - -
Vaccines 4,063 20 16 1,883 5 - 1,182 44 39 998 29 30
Specialty Medicines turnover - three months ended 30 June 2023
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
HIV 1,580 13 12 1,056 18 16 358 7 4 166 (5) 4
Dolutegravir products 1,325 4 3 845 6 5 326 2 - 154 (6) 6
Tivicay 340 (2) - 211 5 3 69 (4) (7) 60 (18) (3)
Triumeq 392 (15) (16) 270 (12) (13) 74 (24) (26) 48 (16) (11)
Juluca 163 7 6 126 9 6 34 3 3 3 - 33
Dovato 430 34 33 238 38 37 149 26 24 43 43 53
Rukobia 27 42 37 25 39 39 1 >100 >100 1 - (100)
Cabenuva 176 >100 >100 148 >100 >100 25 >100 >100 3 >100 >100
Apretude 36 >100 >100 36 >100 >100 - - - - - -
Other 16 (38) (46) 2 (78) (67) 6 (25) (13) 8 (11) (56)
Respiratory/Immunology and Other 792 16 16 554 14 11 116 26 24 122 21 30
Nucala 424 16 15 256 8 6 95 28 26 73 28 40
Benlysta 358 21 19 297 18 16 25 25 25 36 38 46
Other 10 (38) (38) 1 - - (4) >(100) >(100) 13 (28) (28)
Oncology 151 (2) (3) 67 (19) (20) 75 21 19 9 - 11
Zejula 117 (3) (2) 51 (19) (21) 57 19 19 9 - 22
Blenrep 9 (70) (73) (2) >(100) >(100) 11 - (9) - - -
Jemperli 25 >100 >100 18 >100 >100 8 >100 >100 (1) - -
Other - - - - - - (1) - - 1 - -
Specialty Medicines 2,523 13 12 1,677 15 12 549 12 10 297 5 13
excluding COVID-19
solutions
Pandemic - (100) (100) (1) >(100) >(100) 1 (99) (99) - (100) (100)
Xevudy - (100) (100) (1) >(100) >(100) 1 (99) (99) - (100) (100)
Specialty Medicines 2,523 (7) (7) 1,676 13 11 550 (10) (12) 297 (51) (47)
Specialty Medicines turnover - six months ended 30 June 2023
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
HIV 3,048 18 14 1,973 24 18 704 11 7 371 3 4
Dolutegravir products 2,602 9 5 1,605 12 6 645 6 3 352 4 6
Tivicay 697 5 1 396 10 4 135 (1) (4) 166 (1) (1)
Triumeq 766 (10) (13) 519 (6) (11) 149 (22) (25) 98 (11) (9)
Juluca 313 10 5 237 10 5 69 10 6 7 - 14
Dovato 826 43 38 453 47 39 292 35 31 81 56 62
Rukobia 52 49 40 48 45 39 3 >100 >100 1 - (100)
Cabenuva 303 >100 >100 251 >100 >100 45 >100 >100 7 >100 >100
Apretude 60 >100 >100 60 >100 >100 - - - - - -
Other 31 (37) (41) 9 (44) (44) 11 (15) (15) 11 (45) (55)
Respiratory/Immunology and Other 1,393 16 13 947 14 8 224 27 23 222 17 23
Nucala 771 16 13 445 8 2 184 32 28 142 29 36
Benlysta 611 19 15 501 19 13 48 23 21 62 19 23
Other 11 (58) (54) 1 - - (8) >(100) >(100) 18 (36) (32)
Oncology 287 2 (1) 122 (20) (24) 147 27 23 18 38 54
Zejula 231 6 4 101 (11) (16) 112 23 20 18 38 62
Blenrep 20 (64) (65) (2) >(100) >(100) 22 10 5 - - -
Jemperli 36 >100 >100 23 >100 >100 13 >100 >100 - - -
Other - - - - - - - - - - - -
Specialty Medicines 4,728 16 12 3,042 18 12 1,075 16 12 611 9 12
excluding COVID-19
solutions
Pandemic 31 (98) (98) (1) >(100) >(100) 1 (100) (100) 31 (94) (95)
Xevudy 31 (98) (98) (1) >(100) >(100) 1 (100) (100) 31 (94) (95)
Specialty Medicines 4,759 (18) (21) 3,041 (10) (14) 1,076 (21) (23) 642 (42) (41)
General Medicines turnover - three months ended 30 June 2023
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Respiratory 1,792 9 9 950 12 11 351 1 (1) 491 8 15
Arnuity Ellipta 13 - (8) 11 - - - - - 2 - (50)
Anoro Ellipta 140 19 19 69 17 14 48 23 21 23 15 30
Avamys/Veramyst 74 - 3 - - - 17 (15) (15) 57 6 9
Flixotide/Flovent 96 (33) (31) 53 (46) (45) 17 (6) (6) 26 (4) 4
Incruse Ellipta 44 (14) (14) 24 (17) (21) 14 (18) (18) 6 20 40
Relvar/Breo Ellipta 288 (7) (6) 121 (19) (21) 92 6 3 75 4 14
Seretide/Advair 322 23 26 125 >100 >100 65 (11) (12) 132 3 10
Trelegy Ellipta 611 31 30 461 30 28 67 16 14 83 51 60
Ventolin 171 (2) 1 87 2 2 20 (26) (26) 64 3 10
Other Respiratory 33 (13) (11) (1) - - 11 22 11 23 (23) (20)
Other General Medicines 841 (2) 4 82 (6) (7) 184 6 3 575 (4) 6
Dermatology 88 (3) 3 - - - 26 (7) (7) 62 (2) 8
Augmentin 134 3 11 - - - 40 8 5 94 1 13
Avodart 90 11 15 - - - 30 11 4 60 11 20
Lamictal 115 (9) (6) 56 (14) (12) 27 - (4) 32 (9) 3
Other 414 (4) 4 26 18 9 61 11 11 327 (8) 2
General Medicines 2,633 5 8 1,032 11 9 535 2 1 1,066 1 10
General Medicines turnover - six months ended 30 June 2023
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Respiratory 3,559 12 10 1,782 14 8 723 6 3 1,054 13 16
Arnuity Ellipta 21 (19) (23) 17 (23) (23) - - - 4 - (25)
Anoro Ellipta 260 20 18 120 20 14 94 22 19 46 18 23
Avamys/Veramyst 198 18 18 - - - 35 (3) (6) 163 23 25
Flixotide/Flovent 253 (6) (9) 159 (13) (17) 38 6 3 56 10 14
Incruse Ellipta 79 (22) (24) 37 (33) (36) 30 (9) (12) 12 (8) -
Relvar/Breo Ellipta 562 (4) (5) 221 (18) (22) 190 12 8 151 5 10
Seretide/Advair 661 17 16 245 69 61 136 (7) (10) 280 3 6
Trelegy Ellipta 1,076 33 29 788 33 27 134 21 18 154 48 54
Ventolin 376 - (1) 195 (3) (8) 48 (16) (18) 133 15 18
Other Respiratory 73 - 3 - - - 18 20 13 55 (7) (2)
Other General Medicines 1,748 2 6 174 (1) (6) 367 7 3 1,207 1 8
Dermatology 185 1 5 - - - 54 (2) (4) 131 2 9
Augmentin 311 20 24 - - - 96 32 27 215 16 23
Avodart 182 12 12 - - - 59 9 4 123 14 16
Lamictal 244 (1) (2) 122 (2) (6) 55 4 2 67 (4) -
Other 826 (4) 2 52 - (8) 103 (6) (8) 671 (4) 4
General Medicines 5,307 8 8 1,956 12 7 1,090 6 3 2,261 6 12
Commercial Operations turnover
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Three months ended 7,178 4 4 3,610 9 7 1,644 6 4 1,924 (7) -
30 June 2023
Six months ended 14,129 - (2) 6,880 - (5) 3,348 4 1 3,901 (3) 1
30 June 2023
Commercial Operations turnover excluding COVID-19 solutions
Total US Europe International
Growth Growth Growth Growth
£m £% CER% £m £% CER% £m £% CER% £m £% CER%
Three months ended 7,137 10 11 3,611 10 8 1,621 14 12 1,905 9 17
30 June 2023
Six months ended 13,956 13 11 6,881 13 7 3,224 16 13 3,851 11 15
30 June 2023
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 reports results under two segments: Commercial Operations and
Total R&D. Members of the GLT are responsible for each segment.
R&D investment is essential for the sustainability of the business.
However, for segment reporting the Commercial operating profits exclude
allocations of globally funded R&D.
The Total R&D segment is the responsibility of the Chief Scientific
Officer and is reported as a separate segment. The operating costs of this
segment includes R&D activities across Specialty Medicines, including HIV
and Vaccines. It 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
Q2 2023 Q2 2022 Growth Growth
£m £m £% CER%
Commercial Operations (total turnover) 7,178 6,929 4 4
Operating profit by segment
Q2 2023 Q2 2022 Growth Growth
£m £m £% CER%
Commercial Operations 3,481 3,304 5 6
Research and Development (1,273) (1,152) 11 10
Segment profit 2,208 2,152 3 4
Corporate and other unallocated costs (38) (144)
Adjusted operating profit 2,170 2,008 8 11
Adjusting items (29) (927)
Total operating profit 2,141 1,081 98 >100
Finance income 33 21
Finance costs (185) (204)
Share of after tax profit/(loss) of associates (2) (2)
and joint ventures
Profit before taxation from continuing operations 1,987 896 >100 >100
Adjusting items reconciling segment profit and operating profit comprise items
not specifically allocated to segment profit. These include impairment and
amortisation of intangible assets, major restructuring costs, which include
impairments of tangible assets and computer software, transaction-related
adjustments related to significant acquisitions, proceeds and costs of
disposals of associates, products and businesses, significant legal charges
and expenses on the settlement of litigation and government investigations,
other operating income other than royalty income and other items.
Turnover by segment
H1 2023 H1 2022 Growth Growth
£m £m £% CER%
Commercial Operations (total turnover) 14,129 14,119 - (2)
Operating profit by segment
H1 2023 H1 2022 Growth Growth
£m £m £% CER%
Commercial Operations 6,856 6,421 7 4
Research and Development (2,505) (2,247) 11 8
Segment profit 4,351 4,174 4 1
Corporate and other unallocated costs (89) (223)
Adjusted operating profit 4,262 3,951 8 6
Adjusting items (39) (577)
Total operating profit 4,223 3,374 25 23
Finance income 62 28
Finance costs (388) (409)
Share of after tax profit/(loss) of associates (4) (3)
and joint ventures
Profit on disposal of associates and joint ventures 1 -
Profit before taxation from continuing operations 3,894 2,990 30 28
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 2022. At 30 June 2023,
the Group's aggregate provision for legal and other disputes (not including
tax matters described on page 10 was £0.3 billion (31 December 2022: £0.2
billion).
The Group may become involved in significant legal proceedings in respect of
which it is not possible to meaningfully assess whether the outcome will
result in a probable outflow, or to quantify or reliably estimate the
liability, if any, that could result from ultimate resolution of the
proceedings. In these cases, the Group would provide appropriate disclosures
about such cases, but no provision would be made.
The ultimate liability for legal claims may vary from the amounts provided and
is dependent upon the outcome of litigation proceedings, investigations and
possible settlement negotiations. The Group's position could change over time,
and, therefore, there can be no assurance that any losses that result from the
outcome of any legal proceedings will not exceed by a material amount the
amount of the provisions reported in the Group's financial accounts.
Significant legal developments since the date of the Q1 2023 results:
Intellectual Property
Coreg
In 2014, GSK initiated suit against Teva in the US District Court for the
District of Delaware for inducing infringement of its patent relating to the
use of carvedilol (Coreg). In 2017, the jury returned a verdict in GSK's
favour, awarding GSK lost profits and reasonable royalties for a total award
of $235.51 million, which was ultimately upheld by the Court of Appeals for
the Federal Circuit. On 11 July 2022, Teva filed a petition for writ of
certiorari with the Supreme Court of the United States seeking to overturn the
Federal Court decision. On 15 May 2023, the US Supreme Court denied Teva's
request. Certain issues remain to be resolved at the District Court and the
parties await the scheduling of a status conference.
Product Liability
Zantac
On 23 June 2023, GSK reached a confidential settlement in the first case that
was scheduled to go to trial in California state court (the Goetz case). The
settlement reflects the Company's desire to avoid distraction related to
protracted litigation in this case. GSK does not admit any liability in this
settlement and will continue to vigorously defend itself based on the facts
and the science in all other Zantac cases.
The next case in California (the Cantlay/Harper case) has been set for trial
in November 2023. Cases in Texas, Illinois, and Florida have also been
scheduled for trial in 2024 and 2025. The Delaware Superior Court has
scheduled a hearing regarding admissibility of expert testimony as to general
causation for 22 January 2024. GSK will continue to defend itself vigorously
against all claims.
On 12 May 2023, the British Columbia Supreme Court dismissed a proposed class
action on behalf of a class of ranitidine users in Canada. Plaintiffs have
filed an appeal. GSK will continue to vigorously defend proposed class actions
by ranitidine users that have been filed in Ontario and Quebec as well as
individual actions filed by ranitidine users in Canada.
Commercial and corporate
Zejula Royalty Dispute
On 12 June 2023, the Court of Appeal of England and Wales granted the Group's
request for permission to appeal the 5 April 2023 judgment which upheld
AstraZeneca's interpretation of the two license agreements. The appeal will be
heard in January 2024.
Returns to shareholders
Quarterly dividends
The Board has declared a second interim dividend for 2023 of 14p per share (Q2
2022: 16.25p((1)) per share).
Dividends remain an essential component of total shareholder return and GSK
recognises the importance of dividends to shareholders. On 23 June 2021, at
the GSK Investor Update, GSK set out that from 2022 a progressive dividend
policy will be implemented guided by a 40 to 60 percent pay-out ratio through
the investment cycle. The dividend policy, the total expected cash
distribution, and the respective dividend pay-out ratios for GSK remain
unchanged. GSK expects to declare a dividend of 56.5p per share for 2023. In
setting its dividend policy, GSK considers the capital allocation priorities
of the Group, its investment strategy for growth alongside the sustainability
of the dividend.
Payment of dividends
The equivalent interim dividend receivable by ADR holders will be calculated
based on the exchange rate on 10 October 2023. An annual fee of $0.03 per ADS
(or $0.0075 per ADS per quarter) is charged by the Depositary. The ex-dividend
date will be 17 August 2023, with a record date of 18 August 2023 and a
payment date of 12 October 2023.
Paid/ Pence per Pence per £m
Payable share/ share/
pre share post share
consolidation consolidation
2023
First interim 13 July 2023 - 14 567
Second interim 12 October 2023 - 14 567
2022
First interim 1 July 2022 14 17.50 704
Second interim 6 October 2022 13 16.25 654
Third interim 12 January 2023 11 13.75 555
Fourth interim 13 April 2023 11 13.75 557
49 61.25 2,470
(1) Adjusted for the Share Consolidation on 18 July 2022. For details of the Share
Consolidation see page 54.
Weighted average number of shares
Q2 2023 Q2 2022
millions millions
Weighted average number of shares - basic 4,053 4,025
Dilutive effect of share options and share awards 40 39
Weighted average number of shares - diluted 4,093 4,064
Weighted average number of shares
H1 2023 H1 2022
millions millions
Weighted average number of shares - basic 4,048 4,021
Dilutive effect of share options and share awards 41 38
Weighted average number of shares - diluted 4,089 4,059
At 30 June 2023, 4,053 million shares (Q2 2022: 4,026 million) were in free
issue (excluding Treasury shares and shares held by the ESOP Trusts). No
Treasury shares have been repurchased since 2014. The Company issued 0.1
million shares under employee share schemes in the quarter for proceeds of £1
million (Q2 2022: £3 million).
At 30 June 2023, the ESOP Trusts held 42.0 million GSK shares against the
future exercise of share options and share awards. The carrying value of £228
million has been deducted from other reserves. The market value of these
shares was £587 million.
At 30 June 2023, the Company held 217 million Treasury shares at a cost of
£3,796 million which has been deducted from retained earnings.
Additional information
Disposal group and discontinued operations accounting policy
Disposal groups are classified as held for distribution if their carrying
amount will be recovered principally through a distribution to shareholders
rather than through continuing use, they are available for distribution in
their present condition and the distribution is considered highly probable.
They are measured at the lower of their carrying amount and fair value less
costs to distribute.
Non-current assets included as part of a disposal group are not depreciated or
amortised while they are classified as held for distribution. The assets and
liabilities of a disposal group classified as held for distribution are
presented separately from the other assets and liabilities in the balance
sheet.
A discontinued operation is a component of the entity that has been disposed
of or distributed or is classified as held for distribution and that
represents a separate major line of business. The results of discontinued
operations are presented separately in the statement of profit or loss and
comparatives are restated on a consistent basis.
IAS 12 'Income Taxes'
On 20 June 2023, the UK Government substantively enacted legislation
introducing a global minimum corporate income tax rate, to have effect from
2024 in line with the Organisation for Economic Co-operation and Development's
(OECD) Pillar Two model framework. GSK has applied the mandatory IAS 12
'Income Taxes' exception under paragraph 98 M (b) and is not recognising any
deferred tax impact.
Accounting policies and basis of preparation
This unaudited Results Announcement contains condensed financial information
for the three and six months ended 30 June 2023 and should be read in
conjunction with the Annual Report 2022, 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 2022.
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 2022.
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 2022 were published in the Annual Report 2022,
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.
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:
Q2 2023 Q2 2022 H1 2023 H1 2022 2022
Average rates:
US$/£ 1.25 1.26 1.23 1.30 1.24
Euro/£ 1.15 1.18 1.14 1.19 1.17
Yen/£ 173 162 168 159 161
Period-end rates:
US$/£ 1.26 1.21 1.26 1.21 1.20
Euro/£ 1.17 1.16 1.17 1.16 1.13
Yen/£ 183 165 183 165 159
Net assets
The book value of net assets increased by £2,063 million from £10,096
million at 31 December 2022 to £12,159 million at 30 June 2023. This
primarily reflected contribution from Total comprehensive income for the
period partly offset by dividends paid to shareholders.
At 30 June 2023, the net deficit on the Group's pension plans was £945
million compared with £1,355 million at 31 December 2022. This decrease in
the net deficit is primarily related to higher UK asset values, an increase to
the UK discount rate from 4.8% to 5.3%, decrease to the US Cash balance credit
rate from 3.9% to 3.7% and cash contributions of £353 million made to the UK
Pension schemes offset by an actuarial experience adjustment for higher
inflation than expected in UK pension increases of approximately £400
million.
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 £850 million (31 December 2022: £1,093 million).
Contingent consideration amounted to £6,227 million at 30 June 2023 (31
December 2022: £7,068 million), of which £5,252 million (31 December 2022:
£5,890 million) represented the estimated present value of amounts payable to
Shionogi relating to ViiV Healthcare, £516 million (31 December 2022: £673
million) represented the estimated present value of contingent consideration
payable to Novartis related to the Vaccines acquisition and £455 million (31
December 2022: £501 million) represented the estimated present value of
contingent consideration payable to Affinivax.
Of the contingent consideration payable (on a post-tax basis) to Shionogi at
30 June 2023, £903 million (31 December 2022: £940 million) is expected to
be paid within one year.
Movements in contingent consideration are as follows:
H1 2023 ViiV Group
Healthcare £m
£m
Contingent consideration at beginning of the period 5,890 7,068
Remeasurement through income statement and other movements (73) (262)
Cash payments: operating cash flows (565) (575)
Cash payments: investing activities - (4)
Contingent consideration at end of the period 5,252 6,227
H1 2022 ViiV Group
Healthcare £m
£m
Contingent consideration at beginning of the period 5,559 6,076
Remeasurement through income statement and other movements 841 899
Cash payments: operating cash flows (534) (542)
Cash payments: investing activities (69) (73)
Contingent consideration at end of the period 5,797 6,360
Contingent liabilities
There were contingent liabilities at 30 June 2023 in respect of arrangements
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 35 and on
pages 265 to 267 of the 2022 Annual Report.
Business acquisitions
On 18 April 2023, GSK announced it had reached agreement to acquire late-stage
biopharmaceutical company BELLUS Health Inc. (Bellus). On 28 June 2023, GSK
completed the acquisition which was effected through a Plan of Arrangement
(the "Arrangement") pursuant to the Canada Business Corporations Act. The
Arrangement was approved by Bellus' shareholders on 16 June 2023. Upon
completion, GSK acquired all outstanding common shares of Bellus for US$14.75
per common share in cash, representing a total equity value of US$2.0 billion
(£1.6 billion). The acquisition provides GSK access to camlipixant, a
potential best-in-class and highly selective P2X3 antagonist currently in
phase III development for the first-line treatment of adult patients with
refractory chronic cough (RCC). The values in the table on the next page are
provisional and are subject to change.
The provisional fair values of the net assets acquired, including goodwill,
are as follows:
£m
Net assets acquired:
Intangible assets 1,630
Cash and cash equivalents 145
Other net assets/(liabilities) 55
Deferred tax liabilities (216)
1,614
Goodwill -
Total consideration 1,614
Of the £1,614 million consideration, £70 million was unpaid as at 30 June
2023 and was subsequently settled in July 2023.
Related party transactions
Details of GSK's related party transactions are disclosed on page 236 of our
2022 Annual Report.
Financial instruments fair value disclosures
The following tables categorise the Group's financial assets and liabilities
held at fair value by the valuation methodology applied in determining their
fair value. Where possible, quoted prices in active markets are used (Level
1). Where such prices are not available, the asset or liability is classified
as Level 2, provided all significant inputs to the valuation model used are
based on observable market data. If one or more of the significant inputs to
the valuation model is not based on observable market data, the instrument is
classified as Level 3. Other investments classified as Level 3 in the tables
below comprise equity investments in unlisted entities with which the Group
has entered into research collaborations and also investments in emerging life
science companies.
At 30 June 2023 Level 1 Level 2 Level 3 Total
£m £m £m £m
Financial assets at fair value
Financial assets at fair value through other comprehensive income (FVTOCI):
Other investments designated at FVTOCI 899 - 174 1,073
Trade and other receivables - 2,244 - 2,244
Financial assets mandatorily at fair value through
profit or loss (FVTPL):
Current equity investments and Other investments 3,250 - 213 3,463
Other non-current assets - - 14 14
Trade and other receivables - 55 - 55
Held for trading derivatives that are not in a - 39 - 39
designated and effective hedging relationship
Cash and cash equivalents 1,641 - - 1,641
Derivatives designated and effective as hedging - 125 - 125
instruments (FVTOCI)
5,790 2,463 401 8,654
Financial liabilities at fair value
Financial liabilities mandatorily at fair value through profit or loss
(FVTPL):
Contingent consideration liabilities - - (6,227) (6,227)
Held for trading derivatives that are not in a - (119) - (119)
designated and effective hedging relationship
Derivatives designated and effective as hedging - (17) - (17)
instruments (FVTOCI)
- (136) (6,227) (6,363)
At 31 December 2022 Level 1 Level 2 Level 3 Total
£m £m £m £m
Financial assets at fair value
Financial assets at fair value through other comprehensive income (FVTOCI):
Other investments designated at FVTOCI 823 - 330 1,153
Trade and other receivables - 2,327 - 2,327
Financial assets mandatorily at fair value through profit or loss (FVTPL):
Current equity investments and Other investments 4,087 - 314 4,401
Other non-current assets - - 13 13
Trade and other receivables - 50 - 50
Held for trading derivatives that are not in a - 165 - 165
designated and effective hedging relationship
Cash and cash equivalents 2,399 - - 2,399
Derivatives designated and effective as hedging - 25 - 25
instruments (FVTOCI)
7,309 2,567 657 10,533
Financial liabilities at fair value
Financial liabilities mandatorily at fair value through profit or loss
(FVTPL):
Contingent consideration liabilities - - (7,068) (7,068)
Held for trading derivatives that are not in a - (77) - (77)
designated and effective hedging relationship
Derivatives designated and effective as hedging - (106) - (106)
instruments (FVTOCI)
- (183) (7,068) (7,251)
Movements in the six months to 30 June 2023 and the six months to 30 June 2022
for financial instruments measured using Level 3 valuation methods are
presented below:
Financial Financial
assets liabilities
£m £m
At 1 January 2023 657 (7,068)
Gains/(losses) recognised in the income statement (88) 262
Gains/(losses) recognised in other comprehensive income (149) -
Additions 30 -
Disposals and settlements (17) -
Transfer from Level 3 (8) -
Payments in the period - 579
Exchange adjustments (24) -
At 30 June 2023 401 (6,227)
At 1 January 2022 419 (6,076)
Gains/(losses) recognised in the income statement (7) (900)
Gains/(losses) recognised in other comprehensive income 32 -
Additions 60 -
Disposals and settlements - -
Transfer from Level 3 - -
Payments in the period - 615
At 30 June 2022 504 (6,361)
Net gains of £174 million (H1 2022: net losses of £907 million) reported in
other operating income were attributable to Level 3 financial instruments held
at the end of the period. £8 million of investments transferred from Level 3
as a result of the exchange of shares in an unlisted investee entity for
shares in a listed entity (H1 2022: £nil). A gain of £4m arose prior to
transfer from Level 3 on the equity investment which transferred to a Level 1
valuation methodology. Net gains and losses include the impact of exchange
movements.
Financial liabilities measured using Level 3 valuation methods at 30 June 2023
included £5,252 million (31 December 2022: £5,890 million) of contingent
consideration for the acquisition in 2012 of the former Shionogi-ViiV
Healthcare joint venture, £516 million (31 December 2022: £673 million) of
contingent consideration for the acquisition of the Novartis Vaccines business
in 2015 and £455 million (31 December 2022: £501 million) of contingent
consideration payable for the acquisition of Affinivax in 2022. Contingent
consideration is expected to be paid over a number of years and will vary in
line with the future performance of specified products, the achievement of
certain milestone targets and movements in certain foreign currencies.
The financial liabilities are measured at the present value of expected future
cash flows, the most significant inputs and assumptions in the valuation
models being future sales forecasts, probability of milestone success, the
discount rate, the Sterling/US Dollar exchange rate and the Sterling/Euro
exchange rate. The exchange rates used are consistent with market rates at 30
June 2023.
The table below shows, on an indicative basis, the income statement and
balance sheet sensitivity to reasonably possible changes in key inputs to the
valuation of the largest contingent consideration liabilities.
Increase/(decrease) in liability Shionogi- Novartis Affinivax
ViiV Vaccines contingent
Healthcare contingent consideration
contingent consideration £m
consideration £m
£m
10% increase in sales forecasts* 519 72 -
15% increase in sales forecasts* 776 109 -
10% decrease in sales forecasts* (516) (71) -
15% decrease in sales forecasts* (776) (106) -
10% increase in probability of milestone success - 20 75
10% decrease in probability of milestone success - (10) (75)
1% (100 basis points) increase in discount rate (169) (38) (9)
1.5% (150 basis points) increase in discount rate (248) (55) (13)
1% (100 basis points) decrease in discount rate 182 45 9
1.5% (150 basis points) decrease in discount rate 275 70 14
10 cent appreciation of US Dollar 349 22 39
15 cent appreciation of US Dollar 549 35 61
10 cent depreciation of US Dollar (299) (18) (33)
15 cent depreciation of US Dollar (432) (26) (48)
10 cent appreciation of Euro 90 17 -
15 cent appreciation of Euro 140 27 -
10 cent depreciation of Euro (74) (14) -
15 cent depreciation of Euro (106) (20) -
* The sales forecasts for the Shionogi-ViiV Healthcare contingent consideration
are for ViiV Healthcare sales only.
The Group transfers financial instruments between different levels in the fair
value hierarchy when, as a result of an event or change in circumstances, the
valuation methodology applied in determining their fair values alters in such
a way that it meets the definition of a different level. There were no
transfers between the Level 1 and Level 2 fair value measurement categories.
The following methods and assumptions are used to measure the fair value of
the significant financial instruments carried at fair value on the balance
sheet:
· Current equity investments and Other investments - equity investments traded
in an active market determined by reference to the relevant stock exchange
quoted bid price; other equity investments determined by reference to the
current market value of similar instruments, recent financing rounds or the
discounted cash flows of the underlying net assets
· Trade receivables carried at fair value - based on invoiced amount, which is
not materially different to the present value of future cash flows.
· Interest rate swaps, foreign exchange forward contracts, swaps and options -
based on the present value of contractual cash flows or option valuation
models using market-sourced data (exchange rates or interest rates) at the
balance sheet date
· Cash and cash equivalents carried at fair value - based on net asset value of
the funds
· Contingent consideration for business acquisitions and divestments - based on
present values of expected future cash flows
There are no material differences between the carrying value of the Group's
other financial assets and liabilities and their estimated fair values, with
the exception of bonds, for which the carrying values and fair values are set
out in the table below:
30 June 2023 31 December 2022
Carrying Fair Carrying Fair
value value value value
£m £m £m £m
Bonds in a designated hedging relationship (5,476) (5,209) (6,322) (6,035)
Other bonds (11,490) (11,270) (12,017) (11,930)
(16,966) (16,479) (18,339) (17,965)
The following methods and assumptions are used to estimate the fair values of
financial assets and liabilities which are not measured at fair value on the
balance sheet:
· Receivables and payables, including put options over non-controlling interests
carried at amortised cost - approximates to the carrying amount
· Liquid investments - approximates to the carrying amount
· Cash and cash equivalents carried at amortised cost - approximates to the
carrying amount
· Short-term loans, overdrafts and commercial paper - approximates to the
carrying amount because of the short maturity of these instruments
· Long-term loans (European and US Medium Term Notes) - based on quoted market
prices (a Level 1 fair value measurement); approximates to the carrying amount
in the case of floating rate bank loans
Put option
Other payables in Current liabilities includes the present value of the
expected redemption amount of the Pfizer put option over its non-controlling
interest in ViiV Healthcare of £850 million (31 December 2022: £1,093
million). This reflects a number of assumptions around future sales, profit
forecasts and the Sterling/US Dollar exchange rate and the Sterling/Euro
exchange rate. The exchange rates used are consistent with market rates at 30
June 2023.
The table below shows on an indicative basis the income statement and balance
sheet sensitivity to reasonably possible changes in the key inputs to the
measurement of this liability.
Increase/(decrease) in liability ViiV
Healthcare
put option
£m
10% increase in sales forecasts* 85
15% increase in sales forecasts* 128
10% decrease in sales forecasts* (85)
15% decrease in sales forecasts* (127)
1% (100 basis points) increase in discount rate (22)
1.5% (150 basis points) increase in discount rate (33)
1% (100 basis points) decrease in discount rate 24
1.5% (150 basis points) decrease in discount rate 36
10 cent appreciation of US Dollar 58
15 cent appreciation of US Dollar 90
10 cent depreciation of US Dollar (49)
15 cent depreciation of US Dollar (71)
10 cent appreciation of Euro 25
15 cent appreciation of Euro 40
10 cent depreciation of Euro (21)
15 cent depreciation of Euro (31)
* The sales forecasts for the ViiV Healthcare put option are for the ViiV
Healthcare sales only.
Reconciliation of cash flow to movements in net debt
H1 2023 H1 2022
£m £m
Total Net debt at beginning of the period (17,197) (19,838)
Increase/(decrease) in cash and bank overdrafts (299) (3,320)
Net decrease/(increase) in short-term loans (1,594) 3,062
Net decrease/(increase) in long-term loans 150 3
Repayment of lease liabilities 94 99
Net debt of subsidiary undertakings acquired 49 -
Exchange adjustments 660 (1,381)
Other non-cash movements (83) (52)
Decrease/(increase) in net debt from continuing operations (1,023) (1,589)
Decrease/(increase) in net debt from discontinued operations - (31)
Total Net debt at end of the period (18,220) (21,458)
Net debt analysis
30 June 31 December
2023 2022
£m £m
Liquid investments 114 67
Cash and cash equivalents 3,140 3,723
Short-term borrowings (5,921) (3,952)
Long-term borrowings (15,553) (17,035)
Total Net debt at the end of the period (18,220) (17,197)
Free cash flow reconciliation from continuing operations
Q2 2023 H1 2023 H1 2022
£m £m £m
Net cash inflow/(outflow) from continuing operating activities 1,307 1,360 3,402
Purchase of property, plant and equipment (296) (529) (430)
Proceeds from sale of property, plant and equipment 3 10 6
Purchase of intangible assets (239) (535) (597)
Proceeds from disposals of intangible assets 8 12 13
Net finance costs (295) (386) (411)
Dividends from associates and joint ventures - 1 -
Contingent consideration paid (reported in investing activities) (3) (4) (73)
Distributions to non-controlling interests (137) (277) (177)
Contributions from non-controlling interests - 7 8
Free cash inflow/(outflow) from continuing operations 348 (341) 1,741
R&D commentary
Pipeline overview
Medicines and vaccines in phase III development (including major lifecycle 17 Infectious Diseases (7)
innovation or under regulatory review)
· Arexvy (RSV vaccine) RSV older adults
· gepotidacin (bacterial topoisomerase inhibitor) uncomplicated urinary tract
infection and urogenital gonorrhoea
· bepirovirsen (HBV ASO) hepatitis B virus
· Bexsero infants vaccine (US)
· MenABCWY (gen 1) vaccine candidate
· tebipenem pivoxil (antibacterial carbapenem) complicated urinary tract
infection
· ibrexafungerp (antifungal glucan synthase inhibitor) invasive candidiasis
Respiratory/Immunology (4)
· Nucala (anti-IL5) chronic obstructive pulmonary disease
· depemokimab (long acting anti-IL5) severe eosinophilic asthma, eosinophilic
granulomatosis with polyangiitis, chronic rhinosinusitis with nasal polyps,
hyper-eosinophilic syndrome
· latozinemab (AL001, anti-sortilin) frontotemporal dementia
· camlipixant (P2X2/P2X3 receptor antagonist) refractory chronic cough
Oncology (5)
· momelotinib (JAK1, JAK2 and ACVR1 inhibitor) myelofibrosis with anaemia
· Blenrep (anti-BCMA ADC) multiple myeloma
· Jemperli (anti-PD-1) 1L endometrial cancer
· Zejula (PARP inhibitor) 1L ovarian and non-small cell lung cancer
· cobolimab (anti-TIM-3) 2L non-small cell lung cancer
Opportunity driven (1)
· linerixibat (IBATi) cholestatic pruritus in primary biliary cholangitis
Total vaccines and medicines in all phases of clinical development 68
Total projects in clinical development (inclusive of all phases and 87
indications)
Our key growth assets by therapy area
The following outlines several key vaccines and medicines by therapy area that
will help drive growth for GSK to meet its outlooks and ambition for 2021-2026
and beyond.
Infectious Diseases
Arexvy (respiratory syncytial virus vaccine, adjuvanted)
In May 2023, the US Food and Drug Administration (FDA) approved Arexvy
(respiratory syncytial virus vaccine, adjuvanted) for the prevention of lower
respiratory tract disease (LRTD) caused by respiratory syncytial virus (RSV)
in individuals 60 years of age and older. This was the first RSV vaccine for
older adults to be approved anywhere in the world. The US Centers for Disease
Control and Prevention's (CDC) Advisory Committee on Immunisation Practices
(ACIP) voted in favour of recommending the vaccine in adults aged 60 and older
using shared clinical decision making in June 2023.
Also in June 2023, the European Commission authorised the vaccine for active
immunisation for the prevention of LRTD caused by RSV in adults 60 years of
age and older. This followed a positive opinion from the European Medicines
Agency's Committee for Medicinal Products for Human Use (CHMP) which was
adopted in April 2023.
New data from the AReSVi-006 (Adult Respiratory Syncytial Virus) phase III
trial showing that one dose of the vaccine is efficacious against RSV-LRTD and
severe LRTD in adults aged 60 years and older over two full RSV seasons were
reported in June 2023. Safety and reactogenicity data were consistent with
initial observation from the phase III programme. The trial also evaluated
efficacy following an annual revaccination schedule. Results suggested
revaccination after 12 months does not appear to confer additional benefit for
the overall population. The clinical development programme will continue to
evaluate longer term follow up and the optimal timing for potential
revaccination.
Key phase III trials for Arexvy:
Trial name (population) Phase Design Timeline Status
RSV OA=ADJ-004 III A randomised, open-label, multi-country trial to evaluate the immunogenicity, Trial start: Active, not recruiting; primary endpoint met
safety, reactogenicity and persistence of a single dose of the RSVPreF3 OA
(Adults ≥ 60 years old) investigational vaccine and different revaccination schedules in adults aged Q1 2021
60 years and above
NCT04732871 Primary data reported:
Q2 2022
RSV OA=ADJ-006 III A randomised, placebo-controlled, observer-blind, multi-country trial to Trial start: Active, not recruiting; primary endpoint met
demonstrate the efficacy of a single dose of GSK's RSVPreF3 OA investigational
(ARESVI-006; Adults ≥ 60 years old) vaccine in adults aged 60 years and above Q2 2021
NCT04886596 Primary data reported:
Q2 2022; two season data reported:
Q2 2023
RSV OA=ADJ-007 III An open-label, randomised, controlled, multi-country trial to evaluate the Trial start: Complete; primary endpoint met
immune response, safety and reactogenicity of RSVPreF3 OA investigational
(Adults ≥ 60 years old) vaccine when co-administered with FLU-QIV vaccine in adults aged 60 years and Q2 2021
above
NCT04841577 Primary data reported:
Q4 2022
RSV OA=ADJ-008 III A phase III, open-label, randomised, controlled, multi country trial to Trial start: Active, not recruiting
evaluate the immune response, safety and reactogenicity of RSVPreF3 OA
investigational vaccine when co-administered with FLU HD vaccine in adults Q4 2022
aged 65 years and above
(Adults ≥ 65 years old)
Primary data reported:
NCT05559476 Q2 2023
RSV OA=ADJ-009 III A randomised, double-blind, multi-country trial to evaluate consistency, Trial start: Complete; primary endpoint met
safety, and reactogenicity of 3 lots of RSVPreF3 OA investigational vaccine
(Adults ≥ 60 years old) administrated as a single dose in adults aged 60 years and above Q4 2021
NCT05059301 Trial end: Q2 2022
RSV OA=ADJ-017 III A phase III, open-label, randomised, controlled, multi-country trial to Trial start: Active, not recruiting
evaluate the immune response, safety and reactogenicity of an RSVPreF3 OA
(Adults ≥ 65 years old) investigational vaccine when co-administered with FLU aQIV (inactivated Q4 2022
influenza vaccine - adjuvanted) in adults aged 65 years and above
NCT05568797 Primary data reported:
Q2 2023
RSV OA=ADJ-018 III A phase III, observer-blind, randomised, placebo-controlled trial to evaluate Trial start: Active, not recruiting
the non-inferiority of the immune response and safety of the RSVPreF3 OA
(Adults 50-59 years) investigational vaccine in adults 50-59 years of age, including adults at Q4 2022
increased risk of respiratory syncytial virus lower respiratory tract disease,
compared to older adults ≥60 years of age.
NCT05590403 Data anticipated: H2 2023
RSV OA=ADJ-019 III An open-label, randomised, controlled, multi-country trial to evaluate the Trial start: Q2 2023 Active, recruiting
immune response, safety and reactogenicity of RSVPreF3 OA investigational
(Adults ≥ 60 years old) vaccine when co-administered with PCV20 in adults aged 60 years and older
NCT05879107
RSV OA=ADJ-023 IIb A randomised, controlled, open-label trial to evaluate the immune response and Trial start: Q3 2023 Not yet recruiting
safety of the RSVPreF3 OA investigational vaccine in adults (≥50 years of
(Immunocompromised Adults 50-59 years) age) when administered to lung and renal transplant recipients comparing one
versus two doses and compared to healthy controls (≥50 years of age)
receiving one dose
NCT05921903
bepirovirsen (HBV ASO)
Bepirovirsen is a potential new treatment option for people with chronic
hepatitis B being evaluated in nucleos(t)ide analogue-treated patients, and as
a sequential therapy with both existing and novel treatments. Two randomised,
double-blind, placebo-controlled phase III trials (B-Well 1 and B-Well 2)
evaluating the safety and efficacy of bepirovirsen in nucleos(t)ide analogue
treated patients started in Q1 2023 and are actively recruiting.
Key trials for bepirovirsen:
Trial name (population) Phase Design Timeline Status
B-Well 1 bepirovirsen in nucleos(t)ide treated patients (chronic hepatitis B) III A multi-centre, randomised, double-blind, placebo-controlled trial to confirm Trial Start: Recruiting
the efficacy and safety of treatment with bepirovirsen in participants with
chronic hepatitis B virus Q1 2023
NCT05630807
Data anticipated: 2025+
B-Well 2 bepirovirsen in nucleos(t)ide treated patients (chronic hepatitis B) III A multi-centre, randomised, double-blind, placebo-controlled trial to confirm Trial Start: Recruiting
the efficacy and safety of treatment with bepirovirsen in participants with
chronic hepatitis B virus Q1 2023
NCT05630820
Data anticipated: 2025+
B-Together bepirovirsen sequential combination therapy with Peg-interferon IIb A multi-centre, randomised, open label trial to assess the efficacy and safety Trial start: Active, not recruiting
(chronic hepatitis B) of sequential treatment with bepirovirsen followed by Pegylated Interferon
Alpha 2a in participants with chronic hepatitis B virus Q1 2021
NCT04676724
Data anticipated: H2 2023
bepirovirsen sequential combination therapy with targeted immunotherapy II A trial on the safety, efficacy and immune response following sequential Trial start: Active, not recruiting
treatment with an anti-sense oligonucleotide against chronic hepatitis B (CHB)
(chronic hepatitis B) and chronic hepatitis B targeted immunotherapy (CHB-TI) in CHB patients Q2 2022
receiving nucleos(t)ide analogue (NA) therapy
NCT05276297 Data anticipated: 2025+
gepotidacin (bacterial topoisomerase inhibitor)
Gepotidacin is an investigational bactericidal, first-in-class antibiotic with
a novel mechanism of action for the treatment of uncomplicated urinary tract
infections (uUTI).
In April 2023, GSK presented positive results from the pivotal EAGLE-2 and
EAGLE-3 phase III trials for gepotidacin in an oral presentation at the
European Congress of Clinical Microbiology and Infectious Diseases in
Copenhagen, Denmark. In the EAGLE-2 and EAGLE-3 trials, gepotidacin
demonstrated non-inferiority to nitrofurantoin, an existing first-line
treatment for uUTI, in patients with a confirmed uUTI and a uropathogen
susceptible to nitrofurantoin. Additionally, in the EAGLE-3 phase III trial,
gepotidacin demonstrated statistically significant superiority versus
nitrofurantoin.
Key phase III trials for gepotidacin:
Trial name (population) Phase Design Timeline Status
EAGLE-1 (uncomplicated urogenital gonorrhoea) III A randomised, multi-centre, open-label trial in adolescent and adult Trial start: Recruiting
participants comparing the efficacy and safety of gepotidacin to ceftriaxone
plus azithromycin in the treatment of uncomplicated urogenital gonorrhoea Q4 2019
caused by Neisseria gonorrhoeae
NCT04010539
Data anticipated: H1 2024
EAGLE-2 (females with uUTI / acute cystitis) III A randomised, multi-centre, parallel-group, double-blind, double-dummy trial Trial start: Complete; primary endpoint met
in adolescent and adult female participants comparing the efficacy and safety
of gepotidacin to nitrofurantoin in the treatment of uncomplicated urinary Q4 2019
tract infection (acute cystitis)
NCT04020341
Data reported:
Q2 2023
EAGLE-3 (females with uUTI / acute cystitis) III A randomised, multi-centre, parallel-group, double-blind, double-dummy trial Trial start: Complete; primary endpoint met
in adolescent and adult female participants comparing the efficacy and safety
of gepotidacin to nitrofurantoin in the treatment of uncomplicated urinary Q2 2020
tract infection (acute cystitis)
NCT04187144
Data reported:
Q2 2023
MenABCWY vaccine candidate
In May 2023, GSK presented preliminary positive results from the phase III
trial (NCT04502693) evaluating the immunological vaccine effectiveness and
safety of its MenABCWY combination vaccine candidate, administered as two
doses given six months apart in healthy individuals aged 10-25 years. The
preliminary data were disclosed at the 41st Annual Meeting of the European
Society for Paediatric Infectious Diseases (ESPID) in Lisbon, Portugal.
The vaccine candidate demonstrated non-inferiority in primary endpoints for
the five Neisseria meningitidis serogroups (A, B, C, W, and Y) compared to two
doses of Bexsero (meningococcal group B vaccine) and one dose of Menveo
(meningococcal group A, C, W, and Y conjugate vaccine). Furthermore, the
MenABCWY candidate showed immunological vaccine effectiveness against a panel
of 110 diverse meningococcal serogroup B (MenB) invasive strains, which
account for 95% of strains circulating in the US. The vaccine candidate was
generally well tolerated, with a safety profile consistent with Bexsero and
Menveo.
Key trials for MenABCWY vaccine candidate:
Trial name (population) Phase Design Timeline Status
MenABCWY - 019 IIIb A randomised, controlled, observer-blind trial to evaluate safety and Trial start: Complete
immunogenicity of GSK's meningococcal ABCWY vaccine when administered in
healthy adolescents and adults, previously primed with meningococcal ACWY Q1 2021
vaccine
NCT04707391
Trial end:
Q2 2023
MenABCWY - V72 72 III A randomised, controlled, observer-blind trial to demonstrate effectiveness, Trial start: Complete; primary endpoints met
immunogenicity, and safety of GSK's meningococcal Group B and combined ABCWY
vaccines when administered to healthy adolescents and young adults Q3 2020
NCT04502693
Data reported:
Q1 2023
HIV
cabotegravir
In July 2023, ViiV Healthcare welcomed a positive opinion by the European
Medicines Agency's (EMA) CHMP recommending marketing authorisation for
cabotegravir long-acting (LA) injectable and tablets for HIV prevention.
Cabotegravir is recommended in combination with safer sex practices for
pre-exposure prophylaxis (PrEP) to reduce the risk of sexually acquired HIV-1
infection in high-risk adults and adolescents weighing at least 35 kg.
Cabotegravir is the first and only long-acting injectable option for PrEP to
reduce the risk of sexually acquired HIV-1. With approximately 100,000 people
in Europe newly diagnosed with HIV each year, this is an important step
towards expanding HIV prevention options in the region.
Also in July, ViiV Healthcare shared 12-month patient reported outcomes data
from SOLAR, a phase IIIb, randomised, open-label, multi-centre,
non-inferiority trial which assessed switching virologically suppressed adults
to cabotegravir + rilpivirine long-acting dosed every two months versus
continuing bictegravir/emtricitabine/tenofovir alafenamide at the
International AIDS Society 2023 Conference on HIV Science.
The results show that after 12 months of treatment most (90%) participants
preferred cabotegravir + rilpivirine long-acting versus
bictegravir/emtricitabine/tenofovir alafenamide (5%), Not having to worry
about taking daily HIV medicine (85%) was cited as a top reason for preferring
long-acting therapy. There were also emotional well-being benefits of
switching to cabotegravir + rilpivirine long-acting; over 70% of participants
who switched showed improvements in adherence anxiety and fear of disclosure
after 12 months of therapy. Previously presented findings showed that the
regimen of cabotegravir + rilpivirine long-acting dosed every two months
demonstrated non-inferior efficacy compared to continuation of daily oral
bictegravir/emtricitabine/tenofovir alafenamide.
Respiratory/Immunology
camlipixant (P2X2/P2X3 receptor antagonist)
In June 2023, GSK announced the completed acquisition of BELLUS Health Inc., a
biopharmaceutical company working to better the lives of patients suffering
from refractory chronic cough (RCC). The acquisition of Bellus included
camlipixant (BLU-5937), an investigational, highly selective oral P2X3
antagonist currently in development for first-line treatment of adult patients
with RCC. The CALM phase III development programme to evaluate the efficacy
and safety of camlipixant for use in adults with RCC is ongoing.
Trial name (population) Phase Design Timeline Status
CALM-1 (refractory chronic cough) III A 52-week, randomised, double-blind, placebo-controlled, parallel-arm efficacy Trial start: Recruiting
and safety trial with open-label extension of camlipixant in adult
participants with refractory chronic cough, including unexplained chronic Q4 2022
cough
NCT05599191
Data anticipated:
2025+
CALM-2 (refractory chronic cough) III A 24-week, randomised, double-blind, placebo-controlled, parallel-arm efficacy Trial start: Recruiting
and safety trial with open-label extension of camlipixant in adult
participants with refractory chronic cough, including unexplained chronic Q1 2023
cough
NCT05600777
Data anticipated:
2025+
Depemokimab (ultra-long acting anti-IL5)
Depemokimab is a unique and distinct monoclonal antibody developed
specifically for its affinity for IL-5 and long duration of inhibition. The
phase III programme for depemokimab continues to make progress across a range
of eosinophil-driven diseases.
Key phase III trials for depemokimab:
Trial name (population) Phase Design Timeline Status
SWIFT-1 (severe eosinophilic asthma; SEA) III A 52-week, randomised, double-blind, placebo-controlled, parallel-group, Trial start: Active, not recruiting
multi-centre trial of the efficacy and safety of depemokimab adjunctive
therapy in adult and adolescent participants with severe uncontrolled asthma Q1 2021
with an eosinophilic phenotype
NCT04719832
Data anticipated:
H2 2024
SWIFT-2 (SEA) III A 52-week, randomised, double-blind, placebo-controlled, parallel-group, Trial start: Active, not recruiting
multi-centre trial of the efficacy and safety of depemokimab adjunctive
therapy in adult and adolescent participants with severe uncontrolled asthma Q1 2021
with an eosinophilic phenotype
NCT04718103
Data anticipated:
H2 2024
AGILE (SEA) III A 52-week, open label extension phase of SWIFT-1 and SWIFT-2 to assess the Trial start: Recruiting
long-term safety and efficacy of depemokimab adjunctive therapy in adult and
(extension) adolescent participants with severe uncontrolled asthma with an eosinophilic Q1 2022
phenotype
NCT05243680
Data anticipated:
2025+
NIMBLE (SEA) III A 52-week, randomised, double-blind, double-dummy, parallel group, Trial start: Recruiting
multi-centre, non-inferiority trial assessing exacerbation rate, additional
measures of asthma control and safety in adult and adolescent severe asthmatic Q1 2021
participants with an eosinophilic phenotype treated with depemokimab compared
NCT04718389 with mepolizumab or benralizumab
Data anticipated:
2025+
ANCHOR-1 (chronic rhinosinusitis with nasal polyps; CRSwNP) III Efficacy and safety of depemokimab in participants with CRSwNP Trial start: Recruiting
Q2 2022
NCT05274750
Data anticipated:
H2 2024
ANCHOR-2 (CRSwNP) III Efficacy and safety of depemokimab in participants with CRSwNP Trial start: Recruiting
Q2 2022
NCT05281523
Data anticipated:
H2 2024
OCEAN (eosinophilic granulomatosis with polyangiitis) III Efficacy and safety of depemokimab compared with mepolizumab in adults with Trial start: Recruiting
relapsing or refractory EGPA
Q3 2022
NCT05263934
Data anticipated:
2025+
DESTINY (hyper-eosinophilic syndrome) III A 52-week, randomised, placebo-controlled, double-blind, parallel group, Trial start: Recruiting
multicentre trial of depemokimab in adults with uncontrolled HES receiving
standard of care (SoC) therapy Q3 2022
NCT05334368
Data anticipated:
2025+
Oncology
Blenrep (belantamab mafodotin)
Trials within the DREAMM (DRiving Excellence in Approaches to Multiple
Myeloma) clinical trial programme are ongoing, evaluating belantamab mafodotin
in earlier lines of therapy and in combination. We anticipate data from
DREAMM-7 and DREAMM-8 in the second-line setting in the second half of 2023.
Key phase III trials for Blenrep:
Trial name (population) Phase Design Timeline Status
DREAMM-7 (2L+ multiple myeloma; MM) III A multi-centre, open-label, randomised trial to evaluate the efficacy and Trial start: Active, not recruiting
safety of the combination of belantamab mafodotin, bortezomib, and
dexamethasone (B-Vd) compared with the combination of daratumumab, bortezomib Q2 2020
and dexamethasone (D-Vd) in participants with relapsed/refractory multiple
NCT04246047 myeloma
Data anticipated:
H2 2023
DREAMM-8 (2L+ MM) III A multi-centre, open-label, randomised trial to evaluate the efficacy and Trial start: Enrolment complete
safety of belantamab mafodotin in combination with pomalidomide and
dexamethasone (B-Pd) versus pomalidomide plus bortezomib and dexamethasone Q4 2020
(P-Vd) in participants with relapsed/refractory multiple myeloma
NCT04484623
Data anticipated:
H2 2023
Jemperli (dostarlimab)
In June 2023, the US FDA accepted the supplemental Biologics License
Application for Jemperli in combination with chemotherapy for the treatment of
adult patients with mismatch repair deficient (dMMR)/microsatellite
instability-high (MSI-H) primary advanced or recurrent endometrial cancer.
Endometrial cancer is one of the most common gynaecologic cancers in developed
countries. An estimated 20-29% of all endometrial cancers are dMMR/MSI-H.
In May 2023, GSK began recruiting for AZUR-2, a phase III trial to evaluate
the efficacy of perioperative dostarlimab compared with standard of care in
participants with untreated T4N0 or Stage III (resectable), defective mismatch
repair/ microsatellite instability high (dMMR/MSI-H) colon cancer.
We continue to study the full potential of Jemperli with other oncology
compounds, including our ongoing phase III COSTAR Lung trial, a randomised,
open label 3-arm trial comparing cobolimab, an investigational selective
anti-TIM-3 monoclonal antibody, plus dostarlimab plus docetaxel to dostarlimab
plus docetaxel to docetaxel alone in patients with advanced non-small cell
lung cancer who have progressed on prior anti-PD-(L)1 therapy and
chemotherapy.
Key trials for Jemperli:
Trial name (population) Phase Design Timeline Status
RUBY III A randomised, double-blind, multi-centre trial of dostarlimab plus Trial start: Active, not recruiting; primary endpoint met in RUBY Part 1
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)
Part 1 data reported:
NCT03981796 Q4 2022
Part 2 data anticipated: H1 2024
PERLA (1L metastatic non-small cell lung cancer) II A randomised, double-blind trial to evaluate the efficacy of dostarlimab plus Trial start: Active, not recruiting; primary endpoint met
chemotherapy versus pembrolizumab plus chemotherapy in metastatic non-squamous
non-small cell lung cancer Q4 2020
NCT04581824
Primary data reported:
Q4 2022
GARNET (advanced solid tumours) I/II A multi-centre, open-label, first-in-human trial evaluating dostarlimab in Trial start: Recruiting
participants with advanced solid tumours who have limited available treatment
options Q1 2016
NCT02715284
Primary data reported:
Q1 2019
AZUR-1 (locally advanced rectal cancer) II A single-arm, open-label trial with dostarlimab monotherapy in participants Trial start: Recruiting
with untreated stage II/III dMMR/MSI-H locally advanced rectal cancer
Q1 2023
NCT05723562
Data anticipated: 2025+
AZUR-2 (untreated perioperative T4N0 or stage III colon cancer) III An open-label, randomised trial of perioperative dostarlimab monotherapy Trial start: Active, not yet recruiting
versus standard of care in participants with untreated T4N0 or stage III
dMMR/MSI-H resectable colon cancer Q2 2023
NCT05855200
Data anticipated: 2025+
COSTAR Lung (advanced non-small cell lung cancer that has progressed on prior II/III A multi-centre, randomised, parallel group treatment, open label trial Trial start: Recruiting
PD-(L)1 therapy and chemotherapy) comparing cobolimab + dostarlimab + docetaxel to dostarlimab + docetaxel to
docetaxel alone in participants with advanced non-small cell lung cancer who Q4 2020
have progressed on prior anti-PD-(L)1 therapy and chemotherapy
NCT04655976
Data anticipated: H2 2024
momelotinib (JAK1/2 and ACVR1/ALK2 inhibitor)
In June 2023, GSK announced that the US FDA has extended the review period of
the new drug application (NDA) for momelotinib by three months to provide time
to review recently submitted data. The extended action date is 16 September
2023. GSK is confident in the momelotinib NDA and looks forward to working
with the FDA as they finalise their review.
Key phase III trial for momelotinib:
Trial name (population) Phase Design Timeline Status
MOMENTUM (myelofibrosis) III A randomised, double-blind, active control phase III trial intended to confirm Trial start: Active, not recruiting; primary endpoint met
the differentiated clinical benefits of the investigational drug momelotinib
(MMB) versus danazol (DAN) in symptomatic and anaemic subjects who have Q1 2020
previously received an approved Janus kinase inhibitor (JAKi) therapy for
NCT04173494 myelofibrosis (MF)
Primary data reported:
Q1 2022
Zejula (niraparib)
GSK is building a robust clinical development programme by assessing activity
across multiple tumour types and evaluating several potential combinations of
Zejula with other therapeutics. The ongoing development programme includes
several combination studies, including the FIRST phase III trial assessing
niraparib in combination with dostarlimab, a programmed death receptor-1
(PD-1)-blocking antibody, as a potential treatment for first-line ovarian
cancer maintenance; RUBY Part II, the phase III trial of niraparib and
dostarlimab in recurrent or primary advanced (stage III or IV) endometrial
cancer; and the ZEAL phase III trial assessing niraparib in combination with
standard of care for the maintenance treatment of first line advanced
non-small cell lung cancer.
Key phase III trials for Zejula:
Trial name (population) Phase Design Timeline Status
ZEAL-1L (1L advanced non-small cell lung cancer maintenance ) III A randomised, double-blind, placebo-controlled, multi-centre trial comparing Trial start: Active, not recruiting
niraparib plus pembrolizumab versus placebo plus pembrolizumab as maintenance
therapy in participants whose disease has remained stable or responded to Q4 2020
first-line platinum-based chemotherapy with pembrolizumab for Stage IIIB/IIIC
NCT04475939 or IV non-small cell lung cancer
Data anticipated:
H2 2024
FIRST (1L ovarian cancer maintenance) III A randomised, double-blind, comparison of platinum-based therapy with Trial start: Active, not recruiting
dostarlimab (TSR-042) and niraparib versus standard of care platinum-based
therapy as first-line treatment of stage III or IV non-mucinous epithelial Q4 2018
ovarian cancer
NCT03602859
Data anticipated:
H1 2024
Opportunity driven
Jesduvroq (daprodustat)
Following the positive CHMP opinion for daprodustat for symptomatic anaemia
associated with chronic kidney disease in adults on chronic maintenance
dialysis, due to the significant reduction in the size of the opportunity and
the exclusion of the non-dialysis population, as well as the availability in
Europe of other medicines for patients living with anaemia of chronic kidney
disease (CKD), the decision has been made to not commercialise in Europe, to
withdraw the file for EU and to cease filing in further markets.
The application withdrawal in the EU does not include the US, where Jesduvroq
is currently approved for the treatment of anaemia due to CKD in adults who
have been receiving dialysis for at least four months. In February 2023, the
US FDA approved Jesduvroq tablets for the once-a-day treatment of anaemia due
to CKD in adults who have been receiving dialysis for at least four months. In
June 2020, Duvroq (daprodustat) tablets were approved by Japan's Ministry of
Health, Labour and Welfare for the treatment of patients with anaemia of CKD
not on dialysis and on dialysis. Duvroq is the market leading and preferred
hypoxia-inducible factor-prolyl hydroxylase inhibitor (HIF-PHI) in Japan.
Principal risks and uncertainties
The principal risks and uncertainties affecting the Group for 2023 are those
described under the headings below. These are not listed in order of
significance. In our December 2022 annual risk review, the Audit & Risk
Committee agreed our principal risks for 2023, which remain largely unchanged.
We identified a new principal risk, Legal Matters, which brings into greater
focus a range of legal risks. As a result, Anti-bribery and Corruption will no
longer be a stand-alone principal risk in 2023. Additionally, we expanded our
Information Security principal risk to explicitly include cyber risks.
We describe our risk management process on page 51-52 of our 2022 Annual
Report, along with more detailed information on our risks, including
definitions, trends, potential impact, context and mitigation activities as
set out on pages 53-54 and pages 285-295 of our 2022 Annual Report.
Other risks, not at the level of principal risk, and opportunities, related to
Environmental, Social, and Governance (ESG), including environmental
sustainability and climate change, are managed through our six focus areas, as
described in our 2022 ESG Performance Report. Additional information on
climate related risk management is in our climate related financial disclosure
on pages 55-63 of our 2022 Annual Report.
2023 Principal Risks
Enterprise Risk Title Definition
Patient safety The risk that GSK, including our third parties, fails to appropriately
collect, assess, follow up, or report human safety information, including
adverse events, from all potential sources or that GSK potentially fails to
appropriately act on any relevant findings that may affect the benefit-risk
profile of a medicine or vaccine in a timely manner.
Product quality The risk that GSK or our third parties potentially fail to ensure appropriate
controls and governance of quality for development and commercial products are
in place; compliance with industry practices and regulations in manufacturing
and distribution activities; and terms of GSK product licenses and supporting
regulatory activities are met.
Financial controls and reporting The risk that GSK fails to comply with current tax laws; fails to report
accurate financial information in compliance with accounting standards and
applicable legislation; or incurs significant losses due to treasury
activities.
Legal matters The risk that GSK or our third parties potentially fail to comply with certain
legal requirements for the development, supply and commercialisation of our
products and operation of business, and specifically in relation to
requirements for competition law, anti-bribery and corruption, and sanctions.
Any failure to meet compliance and legal standards for these particular areas
could lead to increasing scrutiny and enforcement from government agencies.
Commercial practices The risk that GSK or our third parties potentially engage in commercial
activities that fail to comply with laws, regulations, industry codes, and
internal controls and requirements.
Scientific and patient engagement The risk that GSK or our third parties potentially fail to engage externally
to gain insights, educate and communicate on the science of our medicines and
associated disease areas, and provide grants and donations in a legitimate and
transparent manner compliant with laws, regulations, industry codes and
internal controls and requirements.
Data ethics and privacy The risk that GSK or our third parties potentially fail to ethically collect;
use; re-use through artificial intelligence, data analytics or automation;
secure; share and destroy personal information in accordance with laws,
regulations, and internal controls and requirements.
Research practices The risk that GSK or our third parties potentially fail to adequately conduct
ethical and credible pre-clinical and clinical research, collaborate in
research activities compliant with laws, regulations, and internal controls
and requirements.
Environment, health and safety (EHS) The risk that GSK or our third parties potentially fail to ensure appropriate
controls and governance of the organisation's assets, facilities,
infrastructure, and business activities, including execution of hazardous
activities, handling of hazardous materials, or release of substances harmful
to the environment that disrupts supply or harms employees, third parties or
the environment.
Information and cyber security The risk that GSK or our third parties potentially fail to ensure appropriate
controls and governance to identify, protect, detect, respond, and recover
from cyber incidents through unauthorised access, disclosure, theft,
unavailability or corruption of GSK's information, key systems, or technology
infrastructure in accordance with applicable laws, regulations, industry
standards, internal controls and requirements.
Supply continuity The risk that GSK or our third parties potentially fail to deliver a
continuous supply of compliant finished product or respond effectively to a
crisis incident in a timely manner to recover and sustain critical supply
operations.
Reporting definitions
Total, Continuing and Adjusted results
Total reported results represent the Group's overall performance including
discontinued operations. Continuing results represents performance excluding
discontinued operations.
GSK also uses a number of adjusted, non-IFRS, measures to report the
performance of its business. Adjusted results and other non-IFRS measures may
be considered in addition to, but not as a substitute for or superior to,
information presented in accordance with IFRS. Adjusted results are defined on
page 17 and other non-IFRS measures are defined below and are based on
continuing operations.
Free cash flow from continuing operations
Free cash flow is defined as the net cash inflow/outflow from continuing
operating activities less capital expenditure on property, plant and equipment
and intangible assets, contingent consideration payments, net finance costs,
and dividends paid to non-controlling interests, contributions from
non-controlling interests plus proceeds from the sale of property, plant and
equipment and intangible assets, and dividends received from joint ventures
and associates (all attributable to continuing operations). It is used by
management for planning and reporting purposes and in discussions with and
presentations to investment analysts and rating agencies. Free cash flow
growth is calculated on a reported basis. A reconciliation of net cash inflow
from continuing operations to free cash flow from continuing operations is set
out on page 44.
Free cash flow conversion
Free cash flow conversion is free cash flow from continuing operations as a
percentage of profit attributable to shareholders from continuing operations.
Working capital
Working capital represents inventory and trade receivables less trade
payables.
CER and AER growth
In order to illustrate underlying performance, it is the Group's practice to
discuss its results in terms of constant exchange rate (CER) growth. This
represents growth calculated as if the exchange rates used to determine the
results of overseas companies in Sterling had remained unchanged from those
used in the comparative period. CER% represents growth at constant exchange
rates. £% or AER% represents growth at actual exchange rates.
Total Net debt
Net debt is defined as total borrowings less cash, cash equivalents, liquid
investments, and short-term loans to third parties that are subject to an
insignificant risk of change in value.
Discontinued operations
Consumer Healthcare was presented as a discontinued operation from Q2 2022.
The demerger of Consumer Healthcare was completed on 18 July 2022. The Group
Income Statement and Group Cash Flow Statement distinguish discontinued
operations from continuing operations.
Share Consolidation
Following completion of the Consumer Healthcare business demerger on 18 July
2022, GSK plc Ordinary shares were consolidated to maintain share price
comparability before and after demerger. Shareholders received 4 new Ordinary
shares with a nominal value of 31¼ pence each for every 5 existing Ordinary
shares which had a nominal value of 25 pence each. Earnings per share, diluted
earnings per share, adjusted earnings per share and dividends per share were
retrospectively adjusted to reflect the Share Consolidation in all the periods
presented.
Earnings per share
Earnings per share has been retrospectively adjusted for the Share
Consolidation on 18 July 2022, applying a ratio of 4 new Ordinary shares for
every 5 existing Ordinary shares.
Total Earnings per share
Unless otherwise stated, Total earnings per share refers to Total basic
earnings per share.
Total Operating Margin
Total Operating margin is Total operating profit divided by turnover.
COVID-19 solutions
COVID-19 solutions include the sales of pandemic adjuvant and other COVID-19
solutions including vaccine manufacturing and Xevudy and the associated costs
but does not include reinvestment in R&D. This categorisation is used by
management and we believe is helpful to investors through providing clarity on
the results of the Group by showing the contribution to growth from COVID-19
solutions.
Turnover excluding COVID-19 solutions
Turnover excluding COVID-19 solutions excludes the impact of sales of pandemic
adjuvant within Vaccines and Xevudy within Specialty Medicines related to the
COVID-19 pandemic. Management believes that the exclusion of the impact of
these COVID-19 solutions sales aids comparability in the reporting periods and
understanding of GSK's growth including by region versus prior periods and
also 2023 Guidance which excludes any contributions from COVID-19 solutions.
General Medicines
General Medicines are usually prescribed in the primary care or community
settings by general healthcare practitioners. For GSK, this includes medicines
in inhaled respiratory, dermatology, antibiotics and other diseases.
Specialty Medicines
Specialty Medicines are typically prescription medicines used to treat complex
or rare chronic conditions. For GSK, this comprises medicines in infectious
diseases, HIV, Oncology, Respiratory/Immunology and Other.
Percentage points
Percentage points of growth which is abbreviated to ppts.
Year-to-date
Year-to-date is the six-month period in the year to 30 June 2023 or the same
prior period in 2022 as appropriate.
Brand names and partner acknowledgements
Brand names appearing in italics throughout this document are trademarks of
GSK or associated companies or used under licence by the Group.
Guidance, assumptions and cautionary statements
2023 guidance
GSK now expects 2023 turnover to increase between 8 to 10 per cent, Adjusted
operating profit to increase between 11 to 13 per cent and Adjusted earnings
per share to increase between 14 to 17 per cent. This guidance is provided at
CER and excludes any contributions from COVID-19 solutions.
Assumptions related to 2023 guidance
In outlining the guidance for 2023, the Group has made certain assumptions
about the healthcare sector, the different markets in which the Group operates
and the delivery of revenues and financial benefits from its current
portfolio, pipeline and restructuring programmes. In the second half of 2023,
GSK expects continued strong performance across all three product areas but
with lower growth reflecting a tough comparison to the second half of 2022,
particularly in HIV and General Medicines. For full year sales, Vaccines is
expected to increase by mid-teens per cent, Specialty Medicines, including
HIV, is now expected to grow high single-digit per cent, and General Medicines
is now expected to grow low single digit per cent. GSK still expects Adjusted
operating profit growth to be higher in the second half of 2023 relative to
full-year expectations, with growth of investment reducing in the second half,
particularly in the fourth quarter.
These planning assumptions as well as operating profit guidance and dividend
expectations assume no material interruptions to supply of the Group's
products, no material mergers, acquisitions or disposals, no material
litigation or investigation costs for the Company (save for those that are
already recognised or for which provisions have been made) and no change in
the Group's shareholdings in ViiV Healthcare. The assumptions also assume no
material changes in the healthcare environment or unexpected significant
changes in pricing as a result of government or competitor action. The 2023
guidance factors in all divestments and product exits announced to date.
The Group's guidance assumes successful delivery of the Group's integration
and restructuring plans. Material costs for investment in new product launches
and R&D have been factored into the expectations given. Given the
potential development options in the Group's pipeline, the outlook may be
affected by additional data-driven R&D investment decisions. The guidance
is given on a constant currency basis.
Assumptions and cautionary statement regarding forward-looking statements
The Group's management believes that the assumptions outlined above are
reasonable, and that the guidance, outlooks, ambitions and expectations
described in this report are achievable based on those assumptions. However,
given the forward-looking nature of these guidance, outlooks, ambitions and
expectations, they are subject to greater uncertainty, including potential
material impacts if the above assumptions are not realised, and other material
impacts related to foreign exchange fluctuations, macro-economic activity, the
impact of outbreaks, epidemics or pandemics, such as the COVID-19 pandemic and
ongoing challenges and uncertainties posed by the COVID-19 pandemic for
businesses and governments around the world, changes in legislation,
regulation, government actions or intellectual property protection, product
development and approvals, actions by our competitors, and other risks
inherent to the industries in which we operate.
This document contains statements that are, or may be deemed to be,
"forward-looking statements". Forward-looking statements give the Group's
current expectations or forecasts of future events. An investor can identify
these statements by the fact that they do not relate strictly to historical or
current facts. They use words such as 'anticipate', 'estimate', 'expect',
'intend', 'will', 'project', 'plan', 'believe', 'target' and other words and
terms of similar meaning in connection with any discussion of future operating
or financial performance. In particular, these include statements relating to
future actions, prospective products or product approvals, future performance
or results of current and anticipated products, sales efforts, expenses, the
outcome of contingencies such as legal proceedings, dividend payments and
financial results. Other than in accordance with its legal or regulatory
obligations (including under the Market Abuse Regulation, the UK Listing Rules
and the Disclosure and Transparency Rules of the Financial Conduct Authority),
the Group undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise. The reader
should, however, consult any additional disclosures that the Group may make in
any documents which it publishes and/or files with the SEC. All readers,
wherever located, should take note of these disclosures. Accordingly, no
assurance can be given that any particular expectation will be met and
investors are cautioned not to place undue reliance on the forward-looking
statements.
All guidance, outlooks, ambitions and expectations should be read together
with the guidance, assumptions and cautionary statements in this Q2 2023
earnings release and the 2022 Annual Report.
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 2022. 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.
Directors' responsibility statement
The Board of Directors approved this Half-yearly Financial Report on 26 July
2023.
The Directors confirm that to the best of their knowledge the unaudited
condensed financial information has been prepared in accordance with IAS 34 as
contained in UK-adopted International Financial Reporting Standards (IFRS) and
that the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8.
After making enquiries, the Directors considered it appropriate to adopt the
going concern basis in preparing this Half-yearly Financial Report.
The Directors of GSK plc are as follows:
Sir Jonathan Symonds Non-Executive Chair, Nominations & Corporate Governance Committee Chair
Dame Emma Walmsley Chief Executive Officer (Executive Director)
Julie Brown Chief Financial Officer (Executive Director)
Elizabeth McKee Anderson Independent Non-Executive Director
Charles Bancroft Senior Independent Non-Executive Director, Audit & Risk Committee Chair
Dr Hal Barron Non-Executive Director
Dr Anne Beal Independent Non-Executive Director, Corporate Responsibility Committee Chair
Dr Harry (Hal) Dietz Independent Non-Executive Director, Science Committee Chair
Dr Jesse Goodman Independent Non-Executive Director
Urs Rohner Independent Non-Executive Director, Remuneration Committee Chair
Dr Vishal Sikka Independent Non-Executive Director
By order of the Board
Emma Walmsley Julie Brown
Chief Executive Officer Chief Financial Officer
26 July 2023
Independent review report to GSK plc
Conclusion
We have been engaged by GSK plc ("the Company") to review the condensed
financial information in the Results Announcement of the Company for the three
and six months ended 30 June 2023.
The condensed financial information comprises:
· the income statement and statement of comprehensive income for the three and
six month periods ended 30 June 2023 on pages 25 to 26;
· the balance sheet as at 30 June 2023 on page 27;
· the statement of changes in equity for the six month period then ended on page
28;
· the cash flow statement for the six month period then ended on page 29; and
· the accounting policies and basis of preparation and the explanatory notes to
the condensed financial information on pages 30 to 44 that have been prepared
applying consistent accounting policies to those applied by GSK plc and its
subsidiaries ("the Group") in the Annual Report 2022, 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 30 to 44 and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed financial information.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed financial information in the Results Announcement
for the three and six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE(UK)2410). 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.
As disclosed on page 37, the annual financial statements of the Company are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this Results
Announcement have been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Results Announcement of the
Company in accordance with the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
In preparing the Results Announcement, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the Results Announcement, our responsibility is to express to the
Company a conclusion on the condensed financial information in the Results
Announcement based on our review. Our Conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis of Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with ISRE (UK) 2410.
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.
Deloitte LLP
Statutory Auditor
London, United Kingdom
26 July 2023
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BIGDRXXDDGXURecent news on GSK
See all newsREG - GSK PLC - Filing of GSK plc 2025 Annual Report on Form 20-F
AnnouncementREG - GSK PLC - Transaction in Own Shares
AnnouncementREG - GSK PLC - GSK publishes Annual Report 2025
AnnouncementREG - GSK PLC - Transaction in Own Shares
AnnouncementREG - GSK PLC - Director/PDMR Shareholding
Announcement