Gsk Plc · LSE:GSK

Gsk — GlaxoSmithKline — Merger or Acquisition (April 2014)

24 slides from Gsk's merger presentation, Apr 22, 2014

  1. Slide 1: Major 3-part Transaction with Novartis

    Major 3-part Transaction with Novartis Investor Presentation 22nd April 2014

  2. Slide 2: Andrew Witty, Chief Executive Officer

    Andrew Witty Chief Executive Officer

  3. Slide 3: Transaction highlights

    Transaction highlights Major 3-part transaction with Novartis to drive sustainable sales growth, improve long-term earnings and deliver increasing returns to shareholders GSK and Novartis will create a new world-leading Consumer Healthcare business with 2013 Consumer pro forma revenues of £6.5bn Hea

  4. Slide 4: Delivering on our strategic objectives

    Delivering on our strategic objectives Major step accelerating our strategy to generate sustainable, broadly sourced sales growth and improve long term earnings  Unique opportunity to substantially strengthen two of our core businesses  Opportunities to build scale and combine high quality assets

  5. Slide 5: Major step towards sustainable, broadly sourced revenue growth

    Major step towards sustainable, broadly sourced revenue growth 2007 2013 Pro Forma Oncology 2% EPP Respiratory 14% Other 22% Pharma Respiratory 46% 27% Other Pharma 16% Vaccines 9% ViiV Vaccines 5% 14% Consumer 15% Consumer 24% HIV 6% Revenues from our key 52% 70% franchises in Respiratory, Consumer

  6. Slide 6: Strengthening our leadership positions around key franchises

    Strengthening our leadership positions around 4 key franchises Vaccines Respiratory HIV Consumer 14% 27% 5% 24%  #1 global position  #1 global position  #2 globally  #1 OTC globally  ~$25bn market  ~$34bn market growing  ~$20bn market growing  ~$73bn market growing at ~10% p.a. at 4% p.a. at

  7. Slide 7: Supported by our strong R&D and innovation platforms

    Supported by our strong R&D and innovation platforms Vaccines Pharma Consumer £0.7bn R&D spend £2.7bn R&D in 2013 £0.3bn pro forma in 2013 balanced across R&D in 2013 innovative pipeline Focus on science & Leading R&D expertise 7 major approvals in clinically proven products in virology and last 12

  8. Slide 8: Creating a new global-leading Consumer Healthcare company

    Creating a new global-leading Consumer Healthcare company Consumer Healthcare Revenue FY2013 (£bn) 8.9 6.5 Non-JV(1) 4.8 Non-JV(1) 3.2 2.6 2.5 2.0 1.8 1.1 Pro Forma + Source: Individual company accounts. Notes: (1) The JV excludes GSK’s Indian and Nigerian businesses. Note: GSK Consumer Healthcare r

  9. Slide 9: New GSK Consumer Healthcare focused on key categories

    New GSK Consumer Healthcare focused on 4 key categories  Highly complementary brand portfolios, with #1 or #2 positions in core categories  Leveraging Pharmaceutical R&D and broader OTC/FMCG capabilities FY2013 Pro Forma Revenue(1) Wellness £3.4bn Oral care £1.9bn Nutrition £0.6bn Skin Health £0.6

  10. Slide 10: Creating the #1 Wellness OTC franchise with £3.4bn sales

    Creating the #1 Wellness OTC franchise with £3.4bn sales Pro Forma Category Market Category Size(1) Growth(1) Position(2) Pain Management £15bn 6% #1 Respiratory Health £21bn 2% #1 Smoking Cessation £2bn 1% #1 Gastro Intestinal £10bn 4% #2 Source: (1) Internal and external data. (2) based on Euromon

  11. Slide 11: Combination takes us from being #1 in markets to #1 in markets

    Combination takes us from being #1 in 14 markets to #1 in 36 markets  Geographically well matched  Significant opportunities to develop new brand footprints and extend distribution Current 14 #1 Market Positions Post Transaction 36 Countries Current 43 Top 5 Market Positions Post Transaction 67 Co

  12. Slide 12: Strengthening global leadership in Vaccines

    Strengthening global leadership in Vaccines  Acquisition of Novartis’ Vaccines Business $25bn global vaccines market (excl. influenza) further consolidates GSK’s growing at ~10% p.a. for next 10 leading global position years  Clear strategic rationale  Strengthen the breadth of GSK’s portfolio an

  13. Slide 13: Strength in combined Vaccines portfolio, notably in the US

    Strength in combined Vaccines portfolio, notably in the US Recommended Immunizations by US CDC Diphtheria, tetanus, & acellular Pertussis (DTaP) (pediatric)   Haemophilus influenzae type b (Hib) (pediatric and adult)    Hepatitis A (pediatric and adult)   Hepatitis B (pediatric and adult)  

  14. Slide 14: Realising significant value for Oncology

    Realising significant value for Oncology  Sale of GSK’s currently marketed Oncology assets  Novartis will acquire all currently marketed portfolio, and Oncology  Assume ongoing responsibility for commercialisation and further development of these brands  Obtain rights to AKT inhibitor; currently

  15. Slide 15: Simon Dingemans, Chief Financial Officer

    Simon Dingemans Chief Financial Officer

  16. Slide 16: Proposed Transaction delivers against financial architecture

    Proposed Transaction delivers against financial architecture Sales growth EPS Operating leverage Focus Focus Returns to on on shareholders returns returns Financial Free Cash efficiency Flow Cash flow growth 13

  17. Slide 17: A better balance of revenues, profits and earnings

    A better balance of revenues, profits and earnings Sales growth Operating leverage  Accretive from year 1 to Core:  Revenue  Operating profit Financial efficiency  EPS Cash flow growth 14

  18. Slide 18: Transaction provides opportunities for significant cost savings

    Transaction provides opportunities for significant cost savings Sales growth  Total annual cost savings of ~£1bn by year 5  50% to be delivered by year 3  Contribution of approximately: Operating  40% from Consumer Healthcare leverage  40% from Vaccines  20% from divestment of currently market

  19. Slide 19: Cost savings driven from all parts of the transaction

    Cost savings driven from all 3 parts of the transaction Sales  Consumer growth  Overlapping commercial presence  Complementary geographic positions  Supply chain simplification o Reduction in 3rd party volumes Operating leverage o Enhanced procurement o Network planning  Vaccines  Overlapping

  20. Slide 20: Financial strength delivering continued returns to shareholders

    Financial strength delivering continued returns to shareholders  Return of capital of £4.0bn following completion Sales growth  Implemented through B share scheme  Core EPS accretion from Year 1  Growing contribution thereafter Operating  Particularly from 2017 as synergies deliver leverage  S

  21. Slide 21: Cash flow

    Cash flow Sales  More balanced cash flow profile growth  Working capital efficiency opportunities  Attractive returns on initial restructuring spend Operating  Contribution from cost savings and other growth drivers leverage Revenue 2007 Revenue 2013 Pro Forma Oncology 2% EPP Respiratory 14% Oth

  22. Slide 22: Transaction structure

    Transaction structure  Oncology  $1.5bn contingency  COMBI-d trial results  Vaccine milestones  Up to $1.8bn in milestones  Tied to new product approvals and threshold sales of Bexsero, MenABCWY and GBS  10% royalty payable on sales triggered by milestones  Consumer option for Novartis to pu

  23. Slide 23: Timetable and approvals

    Timetable and approvals Expected Timetable Q4 2014 – shareholder approval H1 2015 – Regulatory approvals H1 2015 – Expected transaction closing Following closing – B share scheme return of capital and share consolidation Conditions  GSK shareholder approval  Regulatory approvals  Standard closing

  24. Slide 24: Information regarding forward-looking statements

    Information regarding forward-looking statements This announcement includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward- looking terminology, including the terms “believes”, “estimates”, “plans”,

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