GlaxoSmithKline Pharmaceuticals Limited · NSE:GLAXO
GlaxoSmithKline Pharmaceuticals — Morgan Stanley Analysts Meet 2006
39 slides from GlaxoSmithKline Pharmaceuticals's conference presentation, Mar 10, 2006
Slide 1: GSK Pharmaceuticals 2005 Business Review
GSK Pharmaceuticals 2005 Business Review Morgan Stanley Analysts Meet 10th March 2006
Slide 2: The Healthcare environment is challenging
The Healthcare environment is challenging Heavily reliant on private sector Protectionist policies Government spends small relative to Price controls India’s needs ~ 1.5 % of GDP IPR protection yet to be tested Only 3.5% of population has health insurance Tariffs on imports - Stretch out WTO complia
Slide 3: Rx Market is $5b & growing at 4%
Rx Market is $5 b & growing at 4% Market Size Breakdown by TA Others Market Anti- Growth(%) 23% size ($M) infectives 17% 1999 2,529 15.2 Gastro Anti 11% Diabetic 4% Neuro / Anti- Inflamator 2005 5100 8.6 CNS y 5% 10% Cardiac Respirator Vitamins / 10% y Minerals 10% 10% * Large volume, low value but
Slide 4: Patent protection: Rewrites the rules of the game
Patent protection: Rewrites the rules of the game in the pharmaceutical market
Slide 5: Implication of change in IPR environment & shift in disease trends
Implication of change in IPR environment & shift in disease trends z Transition from undifferentiated to differentiated market z Simple price differentiation & superiority messages may no longer work z Acquiring abilities to develop & shape key market segments
Slide 6: But India will not become a high price market overnight
…But India will not become a high price market overnight z Indian consumer-a relentless value seeker z For over 30 years ,access to high quality medicines at low prices for all (including the wealthy) z Innovative healthcare solutions have to demonstrate added value
Slide 7: Patent protected products will gradually acquire significant M.S
Patent protected products will gradually acquire significant M.S CAGR % z100% = $ 5 billion $ 11.6 billion 10.2 Shift Shift in in disease disease Traditional trends trends 37 4.7 branded generics* 64 Patent protected products – Specialty branded 15.7 20 % M.S by 2015 37 generics** 21 Patent Patent 1
Slide 8: Following a poor Q1, GSK recovered and had a strong finish
Following a poor Q1, GSK successfully recovered (VAT) Sales loss and had a strong finish to the year 18.1 V A L 12.7 11.6 G 9.9 8.6 8.4 W T 5.3 H 3.7 % Qtr3 Qtr4 H1 FY'05 GSK Primary Pharma Mkt IMS which also includes Institutional & Vx Sales shows Industry growth at 5.3% Source: ORG SSA Retail Audi
Slide 9: GSK has de-risked its business by reducing reliance on price controlled products
GSK has progressively de-risked its business by reducing reliance on Price Controlled products Yr. 2001 Yr. 2002 Yr. 2003 Yr. 2004 Yr. 2005 71% 68% 65% 62% 60% 40% 38% 35% 32% 29% 2001 2002 2003 2004 2005 Price Controlled Priority
Slide 10: Building Great Brands...
Building Great Brands... GSK Top 20 Brands – Evolution ’01 To ‘05 Rs. Mn Brand 2001 2005 CAGR Sales of TOP 20 Brands 6,611 8,850 9% "Priority" Total 3,744 6,156 13% Count of "P" 14 16 Share of "P" 57% 70%
Slide 11: GSK successfully managed its Vx Portfolio
GSK successfully managed its Vx Portfolio substituting Eng-B with other New age Vx 128 112 100 Indexed Value 86 68 69 57 Yr. 1999 Yr. 2000 Yr. 2001 Yr. 2002 Yr. 2003 Yr. 2004 Yr. 2005 Yr. 1999 Yr. 2005 Varilix Engx-B Havrix 17% 71% 26% Hiberix Engx-B 26% 7% Others 20% Havrix Varilix 12% 21% New Vx g
Slide 12: Key Highlights & Achievements
Key Highlights & Achievements New product contribution ~ Rs 98 Cr in 2005 978 ( In INR Mn ) 726 402 245 65 2001 2002 2003 2004 2005 NOTE: Launches in 2001 & beyond considered
Slide 13: Continued emphasis on Field Force Productivity yielding dividends
Continued emphasis on Field Force Productivity yielding dividends 198 SFE INITIATIVES T Productivity P Productivity 178 z Integrated ETMS - Call Plan, 163 Sales Performance Track 156 151 z Territory Performance Mgmt 137 139 126 z Increasing Rx Value 112112 z Optimising Product Coverage 100 100 z Fie
Slide 14: Key Highlights & Achievements: Business Development Initiatives
Key Highlights & Achievements 2005 Business Development Initiatives INLICENSING AGREEMENTS CONCLUDED in ‘05 z Organon – Oral Contraceptives – Deal concluded and product launched z Eisai – Parit (Rabaprazole)- Deal concluded and product launched in Sep’05 z Albion – Ferronine (Chelated Iron supplemen
Slide 15: Key Highlights & Achievements
Key Highlights & Achievements OPERATIONAL z Entry into Diabetes with launch of Windia / Windamet z Number of People Development programs initiated z New Front-end IT initiatives z Stockist Connect z Customer targeting software STRATEGIC z GSK India firmly establishes a Global R&D Centre z Mulund Sit
Slide 16: Financial Results 2005
> sk Financial Results 2005
Slide 17: Strong financial performance
Strong financial performance EPS and Book Value per share 120.0 35.7 40.0 35.0 100.0 30.5 30.0 80.0 24.4 25.0 Book value 60.0 17.3 20.0 ` 105.8 112.0 EPS 89.6 15.0 40.0 77.8 10.0 20.0 5.0 0.0 0.0 2002 2003 2004 2005 25.0% PAT % to Sales Return on Net Worth % 35.0% 32.3% 20.0% 20.6% 30.0% 19.3% 28.8%
Slide 18: Improvement in profitability year on year
Improvement in profitability year on year Trading Profit Margins 28.4% 29.9% 25.7% 17.2% 10.2% 2001 2002 2003* 2004* 2005* * GSK & BW
Slide 19: GSK Financials
GSK Financials 2004 2005 Change Rs. L. % to Rs. L. % to Rs. L. % Sales Sales 1479,59 Sales 1575,89 103,70 Less: Excise Duty on Sales 90,59 1375,89 100.0 Net Sales 1485,30 100.0 109,41 8.0 24,75 Other Income 32,19 7,44 1,90 Treasury Income 10,00 8,10 26,68 Interest income 23,45 (3,23) 1429,22 Total I
Slide 20: Segmental Performance
Segmental Performance Sales 1257 121 80 27 1485 Rs.crs Growth % 8.6 9.9 0.2 -3.7 8.0 35.00% PBT margins 32% 31% 30% 30% 30.00% 25% 24% 25.00% 23% 20% 22% 20.00% 19% 15.00% 10.00% 5.00% 0.00% Pharma AFC QFC Exports Overall 2005 2004
Slide 21: Exceptional Items
Exceptional Items In INR Mn 2005 2004 Govt. demand / provision for Pricing (176) (43) (Salbutamol formulations & Zevit) Share Buyback (19) - Other Sundry (Site closure) (25) (442) Compulsory deductible under flood loss policy (4) - Property Sale 2166 1042 Total 1942 557 Tax 16 113 1958 670
Slide 22: Cash flow 2005
Cash flow 2005 INR Mn Cash from Operations 4562 Treasury income (Net) 332 Working Capital 477 Capex (net) (225) Tax Paid (1458) Dividends 2004 encashed (2087) Dividend Distribution Tax (274) Increase in Cash / Investments 1327 Sale of property 2180 Share buy back (2073) Other items (124) Net increas
Slide 23: Indexed price
Indexed price 75 100 125 150 175 200 225 250 275 300 325 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 GSK May-04 Jun-04 Jul-04 Aug-04 Sep-04 Sensex Oct-04 Nov-04 Dec-04 Jan-05 GSK Feb-05 Mar-05 Apr-05 May-05 Jun-05 SENSEX Jul-05 GSK
Slide 24: Future Initiatives
sk Future Initiatives
Slide 25: GSK India Initiatives: In-licensing Opportunities
GSK India Initiatives In-licensing Opportunities GSK India – a partner of choice z Target companies not present in India -Japanese companies -American Biotech companies z Target MNCs operating in India with products in mass markets -Two brands strategy works: Cetzine/Zyrtec Vozet/Xyzal Zimig/Lamicil
Slide 26: Focus on upgrading quality of product portfolio by entering high growth segments
Focus on upgrading quality of product portfolio by entering high growth segments Mkt Growth % CODE 50 GSK India ED Drugs No GSK Presence 45 GSK Group Presence 40 9 35 Rabeprazole 9 Metformin Comb Glimepiride 30 A2A Thyroid Prep 25 Anti Osteoporosis Statins 9 Hypotensives 9 20 Oral Anti diabetes Amox
Slide 27: GSK India Initiatives: Vx Portfolio Growth
GSK India Initiatives (contd.) Vx Portfolio Growth Post 2007 New Launches – Rotarix, Infanrix, Cervarix, Streptorix z Robust pipeline will accelerate growth – NCE Filing Year India launch Key Differentiation Rotavirus - biggest Rotarix 2005 2007 cause of diarrhoea Cervical cancer vaccine Cervarix 20
Slide 28: GSK India Initiatives: New Patented Molecules
GSK India Initiatives (contd.) New Patented Molecules 2008 Launches : GSK’s “Wall “- Oncology, Metabolic NCE Filing Year India launch Key Differentiation 1st in Class. Dual mechanism to cut of Lapatinib 2006 /7 2008 blood supply to the tumor Allermist 2006 2008 New Glucocorticoid agonist for allergi
Slide 29: New Patented Molecules: Implication of change in IPR environment
GSK India Initiatives (contd.) New Patented Molecules 2008 Launches : GSK’s “Wall “- Oncology, Metabolic Implication of change in IPR environment & shift in disease trends z Sales volumes & value generation will be substantially higher z High resource investment – initial market development spend en
Slide 30: Summarising the way forward...
Summarising the way forward... Organic Growth In-licensing Opportunities GSK India – a partner of choice Vx Portfolio Growth Post 2007 New Launches – Rotarix, Infanrix, Cervarix, Streptorix New Patented Molecules 2008 Launches : GSK’s “Wall “- Oncology, Metabolic Brand Acquisitions
Slide 31: GSK New Product Pipeline
> sk GSK New Product Pipeline
Slide 32: GSK has one of the most promising R&D pipeline
GSK has one of the most promising R & D pipeline
Slide 33: R&D Productivity Increase – Phase I Starts
R&D Productivity Increase – Phase I Starts (NCEs Only) +100% +80% +70% 2001 2002 2003 2004
Slide 34: R&D Productivity Increase – Phase II Starts
R&D Productivity Increase – Phase II Starts (NCEs Only) +150% +150% +66% 2001 2002 2003 2004
Slide 35: NCE and Vaccine Pipeline Increased 76%
NCE and Vaccine Pipeline Increased 76% 120) 111 100+ ano +76% 0" |] Phase III/Filed 80 4 a Phase Il 63 * 50 Phase | Number of NCEs and vaccines =>) So 40 25 ; 45 20 n 0 2001 2005
Slide 36: Projects in Clinical Development
146 Projects in Clinical Development 150 5 Number of Projects 100 - 50 + 146 16 50 2005 Phase III/Filed Phase II Phase | [ ]PLEs
Slide 37: Pharma - Total Pipeline NPV Estimates
Pharma - Total Pipeline NPV Estimates Source: Adapted from Lehman Brothers PharmaPipelines™ analysis September 2005 40000 30000 $ millions 20000 10000 0 r is e ck t is J S ill y a th tt SK iz e nt h er r J& M ec ye o gh G f ve oc a B i L en bb o u P A R M ov El Z W A Pl fi- N st ra g an o A e ri n S
Slide 38: Launch Schedule for Patent Protected NMEs / Big Bets
Launch Schedule for Patent Protected NME’s/Big NME’s/Big Bets NCE Filing Year India launch Key Differentiation 1st in Class. Dual mechanism to cut of Lapatinib 2006 2008 blood supply to the tumor Allermist 2006 2008 New Glucocorticoid agonist for allergic rhinitis Alvimopan 2005 2008 1st in Class. S
Slide 39: End of presentation
End of presentation OSK 27 7 GlaxoSmithKline
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