Slide 1: 2018 Full Year Results
2018 Full Year Results 6 February 2019
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements This presentation may contain 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 t
Slide 3: Agenda
Agenda 2018 progress Emma Walmsley, Chief Executive Officer 2018 results and 2019 guidance Simon Dingemans, Chief Financial Officer R&D update Hal Barron, Chief Scientific Officer, President R&D 2019 focus Emma Walmsley, Chief Executive Officer Q&A: David Redfern, Chief Strategy Officer, Chairman of
Slide 4: Emma Walmsley, CEO
Emma Walmsley, CEO 6 February 2019
Slide 5: Sales growth at CER in all businesses; improved Group margin and cashflow generation
Sales growth at CER in all 3 businesses; improved Group margin and cashflow generation Pharmaceuticals New Respiratory products +38%* Group sales growth +2% CER of +5% HIV sales +11%; dolutegravir +16% Benlysta sales of +29% 0.5pp improvement in Group Adjusted Vaccines Shingrix sales of £784 million
Slide 6: Delivered improved operating performance and reshaped portfolio
Delivered improved operating performance and reshaped portfolio Pipeline strengthening New leadership and with increased oncology Innovation culture focus Business Development – Focus on launch Tesaro, 23andMe, execution Merck† alliance Performance Restructuring Pharma Divestment of non-core busines
Slide 7: Shingrix: driving market growth
Shingrix: driving market growth Strong uptake continues Investing in additional capacity Cumulative US TRx volume* US CDC recommendations expanding market 6m o ~35% under age 65 5m o ~35% previously vaccinated o ~60% doses administered in pharmacies 4m o >75% completing second dose in series 3m Sale
Slide 8: Respiratory: continued strong growth from new products
Respiratory: continued strong growth from new products Trelegy: strong launch execution Nucala: growth in a competitive market US TRx volume since launch* Total US sales $ (retail & non-retail) 25k 20k $12m Nucala 15k $10m $8m Competitor W * 10k $6m Competitor X 5k $4m Competitor Y k $2m $0m Competi
Slide 9: HIV: performance strong across DTG portfolio and momentum building for the 2DRs
HIV: performance strong across DTG portfolio and momentum building for the 2DRs Dolutegravir maintaining share of 2DRs: new options for patients to reduce STR/Core agent market drug burden 30% dolutegravir + lamivudine 27.1% Oral 2DR for naive & switch patients 25% Q2 2019 Anticipated US approval 20
Slide 10: Focus on delivering business priorities
Focus on delivering business priorities 2019 priorities New global Innovation Pharmaceuticals and • Strengthen pipeline • Execution of launches Vaccines company with R&D focused on science of the immune system, genetics and – Drive operating advanced technologies performance Performance • Driving gr
Slide 11: 2018 results and 2019 guidance
2018 results and 2019 guidance Simon Dingemans, CFO
Slide 12: Headline results
Headline results Continued sales growth and investment in the future FY 2018 Reported growth % £m AER CER Turnover 30,821 2 5 Total operating profit 5,483 34 43 Total EPS 73.7p >100 >100 Adjusted operating profit 8,745 2 6 Adjusted EPS 119.4p 7 12 Free cash flow 5,692 63 n/a 12
Slide 13: Results reconciliation
Results reconciliation 2018 full year results Disposals, Total Intangible Intangible Major Transaction significant US Tax Adjusted results amortisation impairment restructuring related legal and other reform results Turnover 30.8 30.8 (£bn) Operating 5.5 0.6 0.1 0.8 2.0 (0.2) - 8.7 profit (£bn) EPS
Slide 14: Sales growth
Sales growth Growth at CER across all three businesses 2018 All figures £m 2017 sales at '17 rates 30,186 Pharma up 2% CER 403 Vaccines up 16% CER 830 Consumer up 2% CER 161 CER +5% 31,580 FX -3% 759 AER +2% 30,821 14
Slide 15: Adjusted operating margin
Adjusted operating margin Investment in new products, funded by R&D portfolio rationalisation & cost efficiencies Sales up 5% CER 2018 at actual rates 2017 Adjusted operating margin 28.4% 33.3% COGS up 6% CER 0.4% Pharma (-90 bps CER) SG&A up 4% CER 0.3% +0.5% CER R&D down 2% CER 0.8% 33.0% Royaltie
Slide 16: Operating profit to net income
Operating profit to net income 2017 2018 Adjusted results £m £m 2019 Outlook* Operating profit 8,568 8,745 Net finance expense (657) (698) Around £900-950m** Share of associates 13 31 Tax (1,667) (1,535) Around 19% Tax rate 21.0% 19.0% Minorities (793) (674) Net income 5,464 5,869 • All expectations
Slide 17: Improved cash generation to £5.7bn
Improved cash generation to £5.7bn Clearer prioritisation and tighter control £m 2017 free cash flow 3,485 Higher net operating cash (incl. negative currency)* 1,722 Lower net Capex** 293 Lower restructuring payments 18 Lower distributions to minorities 209 Proceeds from sale of intangible assets 20
Slide 18: 2019 guidance and 2020 outlook expectations
2019 guidance and 2020 outlook expectations 2019 guidance Approval of a substitutable generic competitor to US Advair CH India disposal completed by end of 2019 Adjusted EPS CH JV closed in H2 2019 Down 5 to 9% CER Expect full year dividend of 80p 2020 outlook* Group sales CAGR Adjusted EPS CAGR Low
Slide 19: R&D update
R&D update Dr Hal Barron, Chief Scientific Officer
Slide 20: Science X Technology: significant progress since July 2018
Innovation Significant progress delivered since July 2018 Pipeline is advancing well Science – 8 assets have made encouraging progress: Krintafel (tafenoquine), DTG+3TC, CAB+RPV, GSK’916 (BCMA), GSK’165 (aGM-CSF), GSK’609 (ICOS), GSK’794 (NYESO-1) X and the TB vaccine – Accelerated 3 GSK immuno-onco
Slide 21: Broad portfolio with a growing focus on immunology
Innovation Broad portfolio with a growing focus on immunology At Q2 2018: 43 medicines, 27 immuno-modulators and 13 vaccines Phase 1 Phase 2 Pivotal/Registration Vaccines 2831781* (LAG3) ulcerative colitis 3196165* (GM-CSF inhibitor) RA Benlysta + Rituxan SLE** Rotavirus – Phase 3 3008348 (aVb6 inte
Slide 22: Disciplined decision making has accelerated progression of key assets
Innovation Disciplined decision making has accelerated progression of key assets Progressed Added Krintafel (tafenoquine) malaria Approved Q3 2018 Zejula (niraparib) PARP inhibitor cancer DTG+3TC HIV Filed in US and EU TSR-042 (dostarlimab) Anti-PD-1 cancer CAB+RPV HIV Positive FLAIR and ATLAS studi
Slide 23: Pipeline is advancing well
Innovation Pipeline is advancing well Today: 46† medicines (+3), 33† immunomodulators (+6), and 15 vaccines Phase 1 Phase 2 Pivotal/Registration Vaccines 2831781* (LAG3) ulcerative colitis 3196165* (GM-CSF inhibitor) RA Benlysta + Rituxan SLE** Rotavirus – Phase 3 3358699* (BET targeted inhibitor) R
Slide 24: Increased oncology focus via BD and governance
Innovation Increased oncology focus via BD and governance 16* assets in clinical development; potential for 3 launches in 2020 Phase II Phase I Phase III Mechanism (dose (FTIH) (pivotal) expansion) † PARP inhibitor (Zejula, niraparib) First line maintenance ovarian, other solid tumours under investi
Slide 25: M7824: a first-in-class TGF-β / anti-PDL1 therapy
Innovation M7824: a first-in-class TGF-β / anti-PDL1 therapy Unique design offers potential for superiority against the competitive landscape ̶ PD-L1 and TGF-β are key pathways with independent and complementary immunosuppressive functions The target ̶ Blocking TGF-β signalling may sensitize tumours
Slide 26: New alliance with Merck is an opportunity to accelerate oncology strategy
Innovation New alliance with Merck* is an opportunity to further accelerate our oncology strategy Current clinical status Complements existing assets Immuno-modulatory biological Encouraging NSCLC data presented mechanism fits with our new R&D approach Phase II underway versus pembrolizumab as 1L in
Slide 27: PARP inhibitors: wider application than has been appreciated
Innovation PARP inhibitors: wider application than has been appreciated High grade serous ovarian cancer* – PARP inhibitors have transformed the treatment of ovarian cancer gBRCA (15%) – Prior to the publication of TESARO’s NOVA study, PARP inhibitors were thought to only non-gBRCA HRD- benefit pati
Slide 28: NOVA study shows efficacy beyond gBRCA
Innovation NOVA study shows efficacy beyond gBRCA Activity in HRD negative patients suggests tests do not currently recognise all HRD positive patients or additional mechanisms are at play gBRCA mutation Non-gBRCA mutation HR: HR: 0.27 0.45 Non-gBRCA mutation, HRD positive HRD negative HR: HR: 0.38
Slide 29: GSK'916 (BCMA ADC): aggressive development plan in multiple myeloma
Innovation GSK‘916 (BCMA ADC): aggressive development plan in multiple myeloma advancing rapidly July 2018 February 2019 – Initiated DREAMM-2 4L monotherapy – DREAMM-2 enrolled faster than expected pivotal study – Planned 130 patients enrolled by Oct 2018 –1st subject dosed early July – High study s
Slide 30: GSK'916 (BCMA ADC): upcoming 2019 milestones
Innovation GSK‘916 (BCMA ADC): upcoming 2019 milestones include 4L MM filing and 4 pivotal study starts Study start Est launch Development strategy for use in: DREAMM-1 pilot relapsed/ refractory patients ‘916 monotherapy, single arm, n=73 2014 ✓ --- DREAMM-2 pivotal daratumumab failures ‘916 monoth
Slide 31: GSK'165 (GM-CSF antagonist): phase III programme in rheumatoid arthritis
Innovation GSK’165 (GM-CSF antagonist): phase III programme in rheumatoid arthritis to start in 2H 2019 Encouraging Ph II data presented at Three pivotal studies to start in 2H 2019 to support file end 2023 ACR October 2018 demonstrating marked clinical response Study 201790: Innovative design inclu
Slide 32: R&D priorities for 2019
Innovation R&D priorities for 2019 Optimising the pipeline Key data read outs Strengthening oncology 1H 2019 – Invest and leverage the potential of Zejula (PRIMA study) – Updated PFS data from DREAMM-1 to be published in – Invest in GSK’916 (BCMA), submit pivotal DREAMM-2 data leading journal – Opti
Slide 33: Focus on delivering business priorities
Focus on delivering business priorities 2019 focus New global Innovation Pharmaceuticals and • Strengthen pipeline • Execution of launches Vaccines company with R&D focused on science of the immune system, genetics and – Drive operating advanced technologies performance Performance • Driving growth
Slide 34: Q&A
do more feel better live longer Q&A
Slide 35: Appendix
Appendix
Slide 36: Upcoming milestones that will inform our progress
Innovation Upcoming milestones that will inform our progress 2H 2018 1H 2019 2H 2019 1H 2020 2H 2020 Submission dolutegravir+lamivudine (D3) HIV ✓ cabotegravir+rilpivirine LA HIV treatment2 fostemsavir (attachment inhibitor) HIV mepolizumab HES mepolizumab NP Zejula 4L ovarian cancer sNDA Trelegy as
Slide 37: Changes in portfolio since Q3
Innovation Changes in portfolio since Q3 New to Phase I New to Phase II New to Pivotal New to Registration FTIH start: New acquisition/alliance New acquisition GSK ‘095 (RIP1k inhibitor) pancreatic cancer TSR-022 (TIM-3 antagonist) cancer Zejula (PARP inhibitor) ovarian cancer GSK ‘715 (PRMT1 inhibi
Slide 38: M7824: impressive durable responses across all PD-L1 expression levels in 2L NSCLC
M7824 : impressive durable responses across all PD-L1 expression levels in 2L NSCLC Pembrolizumab response rates in KEYNOTE M7824 response rates in 2L NSCLC 010 and KEYNOTE 001 studies in 2L NSCLC 1200mg (data cut off 23 July 2018) 50% 44% 100% 86% 40% 80% (6/7) 29% ORR (%) 27% ORR (%) 30% 60% 20% 1
Slide 39: Currency
Currency 2018 currency sales exposure 2019 Adjusted EPS ready reckoner US $ 39 % US $ 10 cents movement in average exchange rate for full year Euro € 20 % impacts Adjusted EPS by approx. +/- 4.5% Japanese ¥ 6% Other* 35 % Euro € 10 cents movement in average exchange rate for full year impacts Adjust
Slide 40: Expected costs and savings under Major Restructuring Programmes
Expected costs and savings under Major Restructuring Programmes £bn 2018 2019 2020 2021 2022 Date Announced 2018 Average Rates Actuals Projected* Savings** 3.9 4.2 4.4 Integration & Restructuring 2015 Total charges 0.4 0.4 0.1 Programme Cash payments 0.5 0.3 0.2 Savings** 0.2 0.3 0.4 2018 Restructur