Slide 1: Full Year Results 2010
Sk a GlaxoSmithKline Full Year Results 2010 Presentation to Investors & Analysts 3™ February 2011
Slide 2: Andrew Witty, Chief Executive Officer
Sk) GlaxoSmithKline Andrew Witty Chief Executive Officer
Slide 3: GSK is built around portfolios that drive highest returns
GSK is built around portfolios that drive highest — returns in the current market environment Differentiated pharmaceutical products which meet payer and patient _ Criteria in developed //; markets 44” Broad vaccines portfolio which addresses the majority of the vaccines schedules globally Portfolio
Slide 4: Balanced and synergistic business with portfolio of growth engines
Slide 5: Change executed in 2.5 years
Change executed in 2.5 years —_\ £22.3bn Turnover (ex-pandemic) 40% Sales from_white pill/western market (excludes pandemic) 36% Proportion of SG&A in investment areas o (Emerging Markets, AP/Japan, Cx, Vx, Stiefel, ViiV) 103,500 Headcount 96,500 Local Support functions Central £272m Sales new produ
Slide 6: Investment shifts are delivering significant returns
Investment shifts are delivering significant returns Increased investment 4 2010 Sales ~6% proforma leads to step up in growth Differential returns drive >$200m savings delivered, ahead of plan capital allocation (incremental profit £0.50 to £1.80 per £1 investment) a Ee Projected IRR>14% 02-'06 07-
Slide 7: ~15 Priority Brands
~15 Priority Brands al 7 + Emerging markets business Non-core OTC brands in US and EU
Slide 8: Remodelled business drives sales growth of +4.5%
Remodelled business drives 20 sales growth of +4.5% 28,368 362 28,392 338 28,030 (-330) (-337) y 4.5% Underlying growth JEAOUIN} GO0Z oluuepued nj4 eIPUBAY soleueb Sf JEuIO ~SOUIDIE/, sjonpold men Spljeles/IEAPY Jeuunsuog S1I9Y}O [IV Yad Jeaowiny AduUaLIND JOAOUIN} OLOZ CER growth * Vaccines exclude
Slide 9: Global underlying pharmaceutical sales growth
Global underlying pharmaceutical sales growth All sales and growth are underlying (ex pandemic, Avandia, Valtrex) £7.1bn (+3%) Promoted products (~80% of total) grew 8% in 2010 Strong early launches for Arzerra, Jalyn and Votrient —~ =~ £5.9bn (flat); includes -2.5% price (50% EU austerity, 50% regu
Slide 10: >60% of global business is non-white pill
>60% of global business is “non-white pill” Derm: 4% of GSK +6% in 2010 Vx: 12% of GSK ~ +10% in 2010 +2% in 2009 Cx: 18% of GSK Resp: 27% of GSK +5% in 2010 +3% in 2010 +7% in 2009 +5% in 2009 CER growth rates % of GSK excluding pandemic vaccine; vaccines growth excludes pandemic vaccine, derm grow
Slide 11: Pipeline potential increasing new NCE / vaccine
Pipeline potential increasing 10 new NCE / vaccine Ph Ill starts 2010 / early 2011 ‘212 (MEK) ‘273 (Telethon) ‘436 (Braf) ‘786 (CCX282) ~ 15 assets with Phase IIl 966 (DMD) data by end 2012 Integrase / Integrase + Kivexa IPX066 LABA/ LAMA migalastat HCI Zoster
Slide 12: Committed to improving returns in R&D
Committed to improving returns in R&D GSK assessment of R&D IRR, Feb 2010 15 Industry historical’ GSK current GSK Aspiration late-stage portfolio? { Cost { Attrition 7 Sales ~28% decrease in Pharma R&D headcount since 2006 (15,600 to 11,300) 29% decrease in m2 since 2006 Late stage development accou
Slide 13: Driving shareholder returns
Driving shareholder returns Sales growth Operating and financial leverage Dividend Share buy back Underlying sales momentum to continue in 2011 and translate to reported growth in 2012 £1.7bn cost savings delivered; £2.2bn by end 2012 Strong cash generation (£8.8bn excluding legal) £1.3bn working ca
Slide 14: Driving shareholder returns
Driving shareholder returns Sales growth + Operating and Fl financial leverage “4 Total =e \ \ shareholder \ return Dividend : Share buy back
Slide 15: Julian Heslop, Chief Financial Officer
} GlaxoSmithKline Julian Heslop Chief Financial Officer
Slide 16: Results before restructuring costs
Before ». restructuring costs % Change CER Turnover EPS EPS excluding legal charges 120.7p Free Cash Flow (FCF) 4,486 FCF excl. legal settlements* 6,533 * Expenditures for legal were £2,047m in '10 and £254m in '09
Slide 17: Diversified global business
Diversified global business 2010 Turnover: £28.4bn (-1%) Consumer US £5.0bn (+5%) Dharma £7.6bn (-11%) AP/Japan £3.1bn (+9%) Europe Pharma Emerging £6.5bn (-6%) Markets £3.6bn (+22%) CER growth rates
Slide 18: 2010 Total turnover analysis
2010 Total turnover analysis 2010 2009 Change £m £m CER Total reported 28,392 28,368 -1% Pandemic* 1,313 1,603 -21% Valtrex 532 1,294 -60% Avandia 440 TAA -44% Total excl. pandemic, Valtrex 0 and Avandia** 26,107 24,700 +4,5% * Pandemic includes Relenza and vaccines related to HSN1 pre-pandemic and
Slide 19: Subtotal
Subtotal £12,566m +10% - Total excl. pandemic, Valtrex and Avandia x £21,097m +4%
Slide 20: Creating a broader portfolio of potential high value assets
Creating a broader portfolio of potential high value assets as generic exposure declines New products contributions in 2010 ° £1.73bn (+36%) * Pandemic vaccine also added £1.2bn G tg Te COREG ¢ ae Gee tog (futcasone aed Noxal Spray Tykerb aor CER growth rate Treximet nya ENTERSS Volibris aiROMA MACH
Slide 21: Regional turnover | Category turnover
Regional turnover | Category turnover USA £1,037m +19 Oral Care — Rie £1,602m (+6%) CER growth rates
Slide 22: Results before restructuring costs
Before restructuring costs % Change CER Turnover Cost of goods (7,405) 26.1% (7,095) 25.0% SG&A: Core (8,387) 29.5% (8,609) 30.3% Legal costs (4,001) (591) Total SG&A (12,388) 43.6% (9,200) 32.4% % in italics are % of turnover
Slide 23: SG&A before restructuring costs
Before restructuring costs +£176m £8,609m £8,387m
Slide 24: 2010 Performance summary
2010 Performance summary % Change £m CER £ 222 Turnover 28,39: 28,368 (1) Cost of goods (7,408 (7,095) 4 25.0% SG&A ee (9,200) 35 32.4% (3,951) 13.9% Other oper. income 1,135 Operating profit 9,257 Operating profit 9,848 excluding legal 34.7% % in italics are % of turnover
Slide 25: 2010 Performance summary
2010 Performance summary % Change CER Operating profit 5,128 25 (48) Operating margin excl. legal and OOI Interest Profit of disposal of interest in associate Share of associates and JV profits Profit before tax
Slide 26: 2010 Performance summary
2010 Performance summary Before restructuring costs % Change CER £ Profit before tax 4,505 (52) (48) Tax rate 34.3% EPS 53.9p 121.2p (59) (56)
Slide 27: Full year results after restructuring
Full year results after restructuring 2010 2009 Results before Restructuring Total Total restructuring results results £m £m Turnover ‘ ; 28,368 Operating profit (1,345) : 8,425 EPS (21.8)p 32.1p 109.1p
Slide 28: Restructuring Programme
Restructuring Programme Restructuring Costs* 2007- 2010 cumulative cost £3.4bn Remaining costs £1.1bn Total programme £4.5bn Annual Pre-tax Savings 2010 = £1.7bn On track to deliver £2.2bn by 2012 * Excludes integration costs related to business acquisitions which totalled £0.2bn for 2008-2010.
Slide 29: Free cash flow
Free cash flow Total operating profit Depreciation & other non-cash items Decrease in working capital Increase / (decr.) in other net liabilities Cash generated from operations* Taxation paid (1,834) (1,704) Capital expenditure: Fixed assets Intangible assets (1,077) (558) (1,418) (455) Interest and
Slide 30: Working capital movements
YE'09 Trade receivables Inventory Trade payables Other* * ‘Other’ primarily includes impact of exchange and net impact of acquisitions and disposals.
Slide 31: Free cash flow to net debt reconciliation
Free cash flow to net debt reconciliation 2010 2009 £m £m Free cash flow 4,486 5,254 Dividends (3,205) (3,003) Purchase of businesses / equities (633) (2,946) Sale of intangibles / equities 126 356 Employee share option exercises / ESOT 63 (1) Exchange 61 1,041 Other (313) 28 Decrease in net debt 58
Slide 32: Annual dividends (p)
Annual dividends (p)
Slide 33: Driving shareholder returns
Driving shareholder returns Sales growth + Operating and Fl financial leverage “4 Total =e \ \ shareholder \ return Dividend : Share buy back
Slide 34: GlaxoSmithKline
GlaxoSmithKline