Gsk Plc · LSE:GSK
Gsk — GlaxoSmithKline — Q2 2007 Earnings Presentation
45 slides from Gsk's earnings presentation, Jul 25, 2007
Slide 1: 2Q Results 2007: Presentation to Analysts & Investors
PRIVILEGED & STRICTLY CONFIDENTIAL Full Year Results 2006 Presentation to Analysts & 8th February Investors2007 2Q Results 2007 Presentation to Analysts & Investors 25th July 2007
Slide 2: Strong Q2 performance – despite significant challenges
Strong Q2 performance – despite significant challenges EPS +11% Pharma sales level despite generics and Avandia – GSK stands firmly behind Avandia Consumer growth acceleration (+18%) Pipeline momentum remains strong Accelerating returns to shareholders 2 CER growth
Slide 3: Broad portfolio offsets impact from generics and Avandia
Broad portfolio offsets impact from generics and Avandia US -31% RoW +4% -53% Avandia Z,W,F +18% Consumer Pharma +10% (balance of portfolio) Zofran, Wellbutrin XL, Flonase 2Q07 sales £5.7 billion +3% Note: CER % growth 3
Slide 4: Broad portfolio offsets impact from generics and Avandia
Broad portfolio offsets impact from generics and Avandia +18% Consumer Note: CER % growth 4
Slide 5: Dynamic and expanding OTC market
Dynamic and expanding OTC market Healthcare increasingly “consumer-centric” - Growing patient knowledge and autonomy - OTC increasingly 1st destination for everyday health Healthcare financing issues - Cost shifting to consumer - Active de-reimbursement & switch OTC is foundation of healthcare in ne
Slide 6: Strong synergies between Consumer & Pharma
Strong synergies between Consumer & Pharma Innovation Patient / Pharmacist insight Regulatory expertise Complementary & transferable marketing Salesforce competencies Common distribution channels Shared services and infrastructure Procurement power 6
Slide 7: GSK CHC: Highly profitable and well positioned for growth
GSK CHC: Highly profitable and well positioned for growth Second most profitable in the CH industry Positioned for growth – Powerful brand portfolio – Strong pipeline – Global infrastructure – Market leadership in leading causes of preventable death: smoking and obesity – Leverage-able cost base: sy
Slide 8: Long term value creation
Continued focus on delivery Drive new launches to maximise portfolio Long term value creation 8
Slide 9: 6 launches so far this year…
6 launches so far this year... Tykerb’ COREG,CR extended-release (lapatinib) Veramyst’ Cervarix’ / . fluticasone furoat — Pee alli
Slide 10: Long term value creation
Continued focus on delivery Drive new launches to maximise portfolio Long term value creation Pipeline momentum with fast reloadability 10
Slide 11: Pipeline is delivering up to 25 potential launches 2007-2009
Pipeline is delivering 33 Phase III / Filed# Up to 25 potential launches 2007-2009* Phase II 10 NCEs 9 PLEs 6 Vaccines Phase I # Key projects in Phase III/Filed (MenACWY and MAGE-A3 entered Phase III in Q2) *Already launched: Altabax, Cervarix, Coreg CR, Tykerb, Veramyst 11
Slide 12: Long term value creation
Continued focus on delivery Drive new launches to maximise portfolio Long term value creation Accelerate returns to shareholders Pipeline momentum with fast reloadability 12
Slide 13: Julian Heslop, Chief Financial Officer
PRIVILEGED & STRICTLY CONFIDENTIAL Full Year Results 2006 Presentation to Analysts & 8th February Julian Heslop Investors2007 Chief Financial Officer 25th July 2007
Slide 14: Q2 performance summary
Q2 performance summary 2Q 07 2Q 06 % Change £m £m £ CER Turnover 5,674 5,811 (2) 3 Cost of goods (1,212) (1,209) – 3 21.4% 20.8% SG&A (1,841) (1,883) (2) 3 32.4% 32.4% R&D (789) (853) (8) (4) 13.9% 14.7% Other oper. income 97 45 Operating profit 1,929 1,911 1 9 34.0% 32.9% 14 % in Italics are % of T
Slide 15: Q2 performance summary
Q2 performance summary 2Q 07 2Q 06 % Change £m £m £ CER Operating profit 1,929 1,911 1 9 Interest (44) (26) Profit before tax 1.896 1,897 - 8 Earnings per share 24.0p 23.3p 3 11 Tax rate 28.5% 29.5% 15
Slide 16: Cash flow
Cash flow 2Q 07 2Q 06 £m £m Cash generated from operations 2,108 2,081 Taxation paid (723) (959) Capital Expenditure (401) (342) Interest and other items (81) (21) Free cash flow 903 759 Dividends (785) (791) Purchase of own shares (642) (305) Employee share option exercises 161 145 Other 82 (91) Ne
Slide 17: Share Repurchases
Share Repurchases Previous New £6bn £12bn Incremental Over 3yrs Over 2yrs H2 2007 0.8 2.5 1.7 2008 2.0 6.0 4.0 2009 (part year) 1.5* 3.5** 2.0 Total £4.3 £12.0 £7.7 *To October **To July £ billions 17
Slide 18: David Stout, President, Pharmaceutical Operations
PRIVILEGED & STRICTLY CONFIDENTIAL Full Year Results 2006 Presentation to Analysts & 8th February David Stout Investors2007 President, Pharmaceutical Operations
Slide 19: 2Q07 Pharma sales £4.8 billion, level with a year ago
2Q07 Pharma sales £4.8 billion, level with a year ago Growth drivers offset losses to generics and Avandia decline Sales Growth* £m Key Growth Products +348 Advair, Vaccines, Coreg, Lamictal, Valtrex, Requip, Avodart, Boniva + Tykerb,Veramyst, Altabax Zofran (173) Wellbutrin XL (84) Avandia (107) 19
Slide 20: Q2 Key growth products
Q2 Key growth products 2Q07 Sales Advair £871m +12% Vaccines £398m +6% Lamictal £271m +18% Valtrex £226m +14% Total £2.2bn Coreg + Coreg CR £202m +37% +16% Requip £84m +41% Avodart £67m +39% Boniva* £36m >100% Note: CER % growth *Total 2Q07 sales for Boniva in US and Europe were £78m. 20
Slide 21: Avandia products
Avandia products 2Q07 sales £349 million -22% Int’l £60m FDA Ad Com mtg – July 30th -9% GSK strongly supports Avandia Europe US £63m £226m Many US physicians waiting to +20% -31% hear from FDA before starting new patients Note: CER % growth 21
Slide 22: Avandia products: US market share
Avandia products: US market share US retail oral anti-diabetic weekly volume - market share meta-analysis 14% 11.7% 12% 11.5% 10% TRx 8% 7.4% 6% NRx 6.2% 4% 2% 0% 07 07 07 07 07 07 07 07 07 07 07 07 20 20 20 20 20 20 20 20 20 20 20 20 4/ 5/ 5/ 5/ 5/ 6/ 6/ 6/ 6/ 6/ 7/ 7/ /0 /0 /0 /0 /0 /0 /0 /0 /0 /0
Slide 23: Avandia: GSK's position
Avandia: GSK’s position Totality of evidence indicates Avandia’s CV safety profile is comparable to other OAD medicines -- apart from CHF which is a well known risk for TZDs Avandia is proven more effective than metformin or glyburide in long-term blood sugar control – In ADOPT, Avandia reduced the
Slide 24: Seretide/Advair
Seretide/Advair 2Q07 sales £871 million +12% Int’l £91m Japan launch began June ‘07 +25% Growth opportunity: COPD Europe US – EU label expanded for £313m £467m +8% +11% TORCH: July ’07 – Positive FDA Ad Com mtg; PDUFA August 10th 24 Note: CER % growth
Slide 25: Advair US new prescriptions trends
Advair US new prescriptions trends Advair 4-week rolling average US Retail New Rx volume 175,000 2006 2007 +7% 150,000 vs prior year 125,000 Seasonal upswing 100,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Verispan VONA – US Asthma/COPD controller weekly NRx (data through July 13, 2007) 25
Slide 26: 5 major product launches in 2007
5 major product launches in 2007 26
Slide 27: New NCE launches underway
3 New NCE launches underway Excellent managed care coverage; >7,200 TRx* in US (~16% 2nd line) Extensive clinical trial program 1st INS to treat both nasal and ocular symptoms in SAR; US INS market ~$3bn Excellent uptake (3.0 NRx share after 6 wks) 1st new class of topical antibacterial approved by
Slide 28: Coreg + Coreg CR
Coreg + Coreg CR 2Q07 sales £202m +37% Coreg + Coreg CR US Weekly Retail NRx market share 13% Coreg CR represents 21% of NRx and 13% of TRx 11.7% New sales force initiative 11% implemented in July Coreg CR launch interrupted by Avandia ~90% of cardiologists have 10.2% prescribed Coreg CR and 9% expe
Slide 29: Cervarix – Preparing for 2H07 launches
Cervarix – Preparing for 2H07 launches First major approval: Australia – Indicated for females 10-45 – Protection against persistent infections beyond HPV 16 and 18 Europe CHMP positive opinion – Proposed indication based on data in females 10-25 US approval expected 1Q08 29
Slide 30: Vaccines – Growth drivers
Vaccines – Growth drivers 2H07+Beyond 2008 – 2010 +Beyond Kinrix (DTaP-IPV combination) Synflorix (EU) (adult) New generation Flu H5N1 pre-pandemic Hib-MenCY 30
Slide 31: Key milestones for 2H07
Key milestones for 2H07 Avandia AdCom meeting Trexima PDUFA August 1st TORCH label decision Cervarix launches Gepirone ER – PDUFA date Nov. 2nd Synflorix file by year-end in EU Promacta – potential first file (end ’07/early ’08) 31
Slide 32: John Clarke, President, Consumer Healthcare
PRIVILEGED & STRICTLY CONFIDENTIAL Full Year Results 2006 Presentation to Analysts & 8th February John Clarke Investors2007 President, Consumer Healthcare 25th July 2007
Slide 33: Q2 strong growth momentum
Q2 strong growth momentum 18% sales growth New product innovation and International markets drive base business alli weight reduction product successfully launched 33 CER sales growth, as reported.
Slide 34: Accelerating Cx sales growth
Accelerating Cx sales growth 14% 15% 12% 9% 8% Base business (excluding alli) 6% 6% 3% 2% 0% 2005 2006 H1 2007 34 CER % growth
Slide 35: Q2 Key growth products
Q2 Key growth products Q2 2007 Sales Lucozade £94m +17% Aquafresh £80m +20% alli £76m > 100% Total CHC Sensodyne £74m +13% £899m +18% Panadol £65m +14% Horlicks £42m +14% Note: CER % growth 35
Slide 36: alli strategy: transforming a pill into a programme
alli strategy: transforming a pill into a programme Only FDA approved OTC weight loss aid Works with diet to deliver 50% more weight loss Education and behavioural support offered on-line (myalli.com) and in pack Challenges people with straight talk to decide whether they are ready for alli 36
Slide 37: Communication offers straight talk
Communication offers straight talk 37
Slide 38: what is alli?
Communication offers straight talk what is alli? it’s a unique combination of a pill with a plan to help you lose weight in a healthy and gradual way when you commit to a reduced calorie, low fat diet. 38
Slide 39: how does it work?
Communication offers straight talk how does it work? it prevents the absorption of some of the fat in the foods you eat. if you eat too much fat, you may experience treatment effects, including loose or more frequent stools, an urgent need to go to the bathroom or gas with an oily discharge. 39
Slide 40: alli online
search | sign in alli alli overview what is alli? | TOday, feel different about weight loss. Forget the fad diets and gimmicks. The miracle offers, the empty promises. If you're serious about weight loss, am I ready? alli may be right for you. alli is the only FDA approved, over-the-counter weight l
Slide 41: Users report that education is key
Users report that education is key “During the two months I have been taking Alli I have experienced none of the treatment effects that the press likes to latch onto when discussing Alli. …I did have to change my lifestyle a bit...” Posted: June 11, 2007 at 02:54 PM by T.W. Source: alliConnect.com 4
Slide 42: Users report that education is key
Users report that education is key “Since partnering with alli, I have “During the two months I lost 16 lbs. I experienced some have been taking Alli I have treatment effects in the experienced none of the beginning, but only when I treatment effects that the wasn't informed about foods I press like
Slide 43: Users report that education is key
Users report that education is key “Since partnering with alli, I have “During the two months I lost 16 lbs. I experienced some have been taking Alli I have treatment effects in the experienced none of the beginning, but only when I treatment effects that the wasn't informed about foods I press like
Slide 44: alli results to date
alli results to date Over 2.4 billion media impressions since approval - eclipsing recent OTC launches User experience group - 84% continued usage at week 10 Initial sales exceeding expectations, but still early Early consumer satisfaction is positive 44
Slide 45: GlaxoSmithKline
GlaxoSmithKline