Gsk Plc · LSE:GSK
Gsk — GlaxoSmithKline — Q2 2008 Earnings Presentation
25 slides from Gsk's earnings presentation, Jul 23, 2008
Slide 1: Q2 Results 2008 Presentation to Investors & Analysts
Q2 Results 2008 Presentation to Investors & Analysts 23rd July Julian Heslop Chief Financial Officer 1
Slide 2: Business performance overview; Q2 pharmaceutical turnover analysis
Business performance* overview Q2 08 H1 08 £m £m Turnover 5,874 11,560 -2% -2% Operating profit 2,126 4,174 2% -4% EPS 27.2p 52.9p 5% -3% * Business performance results excluding restructuring costs relating to the new Operational Excellence program and significant acquisitions. % are CER growth rat
Slide 3: Q2 geographic pharmaceutical turnover and product growth drivers
Q2 geographic pharmaceutical turnover Emerging Markets £0.6bn (+15%) ROW £0.6bn (-4%) US Pharma Europe £2.1bn (-8%) Pharma £1.6bn (+4%) £4.9bn -2% CER growth rates US pharma excluding Avandia and products subject to generic competition +13% Q2 pharmaceutical product growth drivers Advair £964m +6% V
Slide 4: New products; Q2 Consumer Healthcare turnover
New products For POI Q2 sales £174m >100% CER growth rate Q2 Consumer Healthcare turnover Panadol £78m +11% Lucozade £107m +11% Nutritional Healthcare £210m (+11%) NRT Aquafresh franchise £65m -15% £107m -3% OTC Medicines Oral £443 (-9%) Healthcare £298m (+3%) alli Sensodyne franchise £18m -76% £87m
Slide 5: Q2 performance summary
Q2 performance summary Business performance 2008 2007 % Change £m £m £ CER Turnover 5,874 5,674 4 (2) Cost of goods (1,375) (1,212) 13 8 23.4% 21.4% SG&A (1,765) (1,841) (4) (8) 30.0% 32.4% R&D (802) (789) 2 (1) 13.7% 13.9% Other oper. income 194 97 Operating profit 2,126 1,929 10 2 36.2% 34.0% Busi
Slide 6: Q2 statutory results; Cash flow
Q2 statutory results Q2 2008 Q2 2007 Business Statutory Statutory performance Restructuring results results £m £m £m £m Turnover 5,874 - 5,874 5,674 Operating 2,126 (187) 1,939 1,929 profit EPS 27.2p (2.6)p 24.6p 24.0p Business performance results excluding restructuring costs relating to the new Op
Slide 7: Financial strategy; Conclusion
Financial strategy • Commitment to progressive dividend: Q2 13p (Q2 ’07 12p) • Further available free cash flow and debt capacity used for: Investment to support new strategic growth priorities Other cash returns to shareholders • £12 bn share repurchase programme: To date: £5.5 bn Future: £6.5 bn (
Slide 8: GSK's new strategic priorities
Andrew Witty Chief Executive Officer GSK’s new strategic priorities 1. Grow a diversified global business 2. Deliver more products of value 3. Simplify the operating model 8
Slide 9: Grow a diversified global business
Grow a diversified global business Prophylactic vaccines Drive & diversify small molecule Rx business Therapeutic vaccines Vaccines Globalise & innovate consumer brands Biopharm Leverage current & future vaccines portfolio Pharma Pharma Deliver Biopharm R&D pipeline Emerging Consumer market OTC bran
Slide 10: Maximise current and emerging portfolio; Implement changes to the business model
Maximise current and emerging portfolio Implement changes to the business model Today’s model Future model • High concentration in a • More diversified few products portfolio • Blockbuster “dependent” • Blockbuster “ready” • Rep intensive selling • Multiple selling models • Single clinical • Flexibl
Slide 11: Multiple drivers of Consumer Healthcare growth
Grow a diversified global business Prophylactic vaccines Drive & diversify small molecule Rx business Therapeutic vaccines Vaccines Globalise & innovate consumer brands Biopharm Leverage current & future vaccines portfolio Pharma Pharma Deliver Biopharm R&D pipeline Emerging Consumer market OTC bran
Slide 12: Build on great track record in innovation and globalisation
Build on great track record in innovation and globalisation • Modest innovation budget • 2006: acquired in 8 markets • Launched in 40 markets • end 2007: 27 markets since mid 2006 • end 2008: 43 markets Q2’08 +72% Q2’08 +42% Rapid return on R&D investment Cum. Sales Sales per £ R&D £m Cost Launch of
Slide 13: GSK is an established leader in high growth vaccines market
Grow a diversified global business Prophylactic vaccines Drive & diversify small molecule Rx business Therapeutic vaccines Vaccines Globalise & innovate consumer brands Biopharm Leverage current & future vaccines portfolio Pharma Pharma Deliver Biopharm R&D pipeline Emerging Consumer market OTC bran
Slide 14: Strong GSK presence across all market segments
Strong GSK presence across all market segments HibMenCY Paediatric Malaria Adolescent/ New generation flu Adult Therapeutic MAGE-A3 ASCI PRAME ASCI Opportunity to create incremental value through geographic expansion Russia 1.5m Japan 1.2m China 17.4m India Latina 27.1m 11.5m Africa 26.5m Numbers qu
Slide 15: Rapid impact of Rotarix mass vaccination in Brazil
Rapid impact of Rotarix mass vaccination in Brazil 2005 2007 0 doses in EPI 5 million doses in EPI >60% coverage 85% reduction in rotavirus related hospitalisations in children <1yr Source: Adapted From Hospital Inforamtions System, Secretaria de Vigilancia em Saude, Brazil EPI = Expanded Programme
Slide 16: Significantly increased GSK Biopharm capability
Grow a diversified global business Prophylactic vaccines Drive & diversify small molecule Rx business Therapeutic vaccines Vaccines Globalise & innovate consumer brands Biopharm Leverage current & future vaccines portfolio Pharma Pharma Deliver Biopharm R&D pipeline Emerging Consumer market OTC bran
Slide 17: dAbs offer an opportunity to transform this market
dAbs offer an opportunity to transform this market Conventional mAb Domantis dAb (MW 150,000) (MW 11,000) 13x smaller than mAbs • Activity at most mAb validated targets with improved delivery (eg inhaled, ocular) • Activity at targets which mAbs may not reach • Lower cost manufacture Grow a diversif
Slide 18: Expand in Japan
Expand in Japan Pharma £39bn 9% of global market GSK rank 9th, 3% share Vaccines £0.4bn 4% of global market No GSK presence Consumer £6.4bn 13% of global market OTC: GSK rank 35th, <0.5% share Oral Care: GSK rank 4th, 13% share Source: IMS Market size May 2008 MAT; share of global market Dec 2007; C
Slide 19: Growth from emerging markets
Grow a diversified global business Prophylactic vaccines Drive & diversify small molecule Rx business Therapeutic vaccines Vaccines Globalise & innovate consumer brands Biopharm Leverage current & future vaccines portfolio Pharma Pharma Deliver Biopharm R&D pipeline Emerging Consumer market OTC bran
Slide 20: Leadership position in India with 5% market share
Leadership position in India with 5% market share • ~25% of all GSK product volume sold in India • 1,800 reps contact ~170,000 doctors • Appropriate product portfolio • >90% manufactured locally • 2nd fastest growing consumer healthcare business Focus on replicating current successes across the regi
Slide 21: Broadly represented across top TAs; Aspen transformational opportunity
Broadly represented across top 10 TAs with considerable scope to grow 1. Alimentary & Metab 2. Anti-infectives 3. Cardiovascular 4. CNS 5. Respiratory 6. Musculoskeletal 7. GU/sex hormones 8. Dermatology 9. Oncology/Immuno 10. Blood/Blood products 0% 2% 4% 6% 8% 10% GSK Market share Source: IMS MAT
Slide 22: GSK's new strategic priorities; FDA approvals
GSK’s new strategic priorities 1. Grow a diversified global business 2. Deliver more products of value 3. Simplify the operating model GSK accounts for considerable share of FDA approvals US approvals NCE and New Vaccines 5 21 GSK All other companies NCE and new vaccine approvals 2007 & 1H 2008. Sou
Slide 23: R&D focus on patients and shareholder value
R&D focus on patients and shareholder value Target Early Full Preclinical File to lead development development Maximally diversified Focussed Entrepreneurial Empowered Accountable Highly cost-effective “Ruthless” gateway to full development External input increases rigour across the R&D lifecycle Ta
Slide 24: Creating diversity through externalisation
Creating diversity through externalisation Academic Technology networks platforms Corporate CEEDD Venture Fund CEDDs DPUs GSK’s new strategic priorities 1. Grow a diversified global business 2. Deliver more products of value 3. Simplify the operating model 24
Slide 25: Creating the right operating model for the future
Creating the right operating model for the future Prophylactic Emerging vaccines Oral care/ market nutritionals brands Biopharm Pharma Therapeutic OTC vaccines Simplified processes Lower overheads Reduced working capital Competitively sourced products Cross-business cost cutting 25