Gsk Plc · LSE:GSK
Gsk — GlaxoSmithKline — Q2 2009 Earnings Presentation
74 slides from Gsk's earnings presentation, Jul 22, 2009
Slide 1: Q2 Results 2009 Presentation to Investors & Analysts
Q2 Results 2009 Presentation to Investors & Analysts 22nd July 2009 1
Slide 2: Andrew Witty, Chief Executive Officer
Andrew Witty Chief Executive Officer 2
Slide 3: GSK Strategy
GSK Strategy Grow a diversified global business Deliver more products of value Simplify the operating model 3
Slide 4: GSK Strategy – one year on
GSK Strategy – one year on ~31% of Q2 group sales from New products contribute 60% US / EU small molecules £642m YTD 800 700 40% 600 500 400 20% 300 200 100 0% 0 2007 2008 2009 YTD 2007 2008 1H 2009 Expanded ~30 assets Transactions restructuring maintained in announced will programme on late-stage d
Slide 5: Julian Heslop, Chief Financial Officer
Julian Heslop Chief Financial Officer 5
Slide 6: Performance overview
Before Performance overview restructuring costs Q2 09 H1 09 £m £m Turnover 6,747 13,516 -2% -3% Operating profit 2,381 4,357 -6% -18% EPS 31.0p 57.3p -4% -16% CER growth rates 6
Slide 7: Q2 geographic pharmaceutical turnover
Q2 geographic pharmaceutical turnover ROW Japan £0.5bn £0.4bn (+6%) (+7%) Emerging Markets £0.7bn (+14%) US Pharma £2.3bn (-15%) Europe Pharma £1.7bn (+1%) £5.6bn -4% CER growth rates US pharma excluding products subject to generic competition +10% 7
Slide 8: Q2 pharmaceutical turnover analysis
Q2 pharmaceutical turnover analysis Q2 09 Q2 08 % Change £ million £ million CER Core 4,769 3,769 +7% Influenza* 105 42 +121% Avandia 198 194 -14% Products impacted by generics** 510 918 -53% Total 5,582 4,923 -4% * Influenza includes Relenza and vaccines related to annual influenza and pre-pandemic
Slide 9: Q2 Pharmaceutical key growth drivers
Q2 09 Pharmaceutical key growth drivers Advair £1,245m +9% Vaccines* £711m +15% Valtrex £379m +9% Avodart £134m +21% Ventolin £112m +23% Lovaza £104m +22% Arixtra £61m +39% Veramyst £47m >100% Tykerb £41m +64% Total £2,834m +14% CER growth rates * Excludes £45m of annual and pre-pandemic influenza v
Slide 10: H2 generic impact in US to be lower
H2 09 generic impact in US to be lower US reported sales of products impacted by generics* 1400 1251 1200 1000 800 757 £m 600 437 400 200 0 H1 08 H1 09 H2 08 * US Products impacted by generics include Coreg, Flonase, Imitrex, Lamictal, Paxil, Requip, Wellbutrin and Zofran. 10
Slide 11: US + Europe small molecule portion of total turnover getting smaller
US + Europe small molecule portion of total turnover getting smaller Q2 08 Q2 09 US + Europe US + Europe Rx Rx small molecule small molecule 37.6% 31.3% 11
Slide 12: New Products ('07 - '09 launches)
New Products (’07 - ’09 launches) 2Q09 sales £377m +81% CER growth rates 12
Slide 13: Q2 Consumer Healthcare turnover
Q2 Consumer Healthcare turnover Horlicks £61m +17% Panadol £94m +8% Lucozade £106m -4% Nutritional Healthcare £226m (+2%) NRT Aquafresh franchise £88m +12% £121m -1% OTC Medicines Oral £573 (+13%) Healthcare £366m (+7%) Sensodyne franchise £113m +14% alli £82m >100% (Europe sales of alli = £56m) £1,
Slide 14: Q2 performance summary
Before Q2 performance summary restructuring costs 2009 2008 % Change £m £m CER £ Turnover 6,747 5,874 (2) 15 Cost of goods (1,621) (1,375) 6 18 24.0% 23.4% % in italics are % of turnover 14
Slide 15: Q2 performance summary
Before Q2 performance summary restructuring costs 2009 2008 % Change £m £m CER £ Turnover 6,747 5,874 (2) 15 Cost of goods (1,621) (1,375) 6 18 24.0% 23.4% SG&A: Core (2,142) (1,768) (1) 21 31.7% 30.1% % in italics are % of turnover 15
Slide 16: Q2 SG&A analysis excl. legal
Before Q2 09 SG&A analysis excl. legal restructuring costs SG&A excluding Legal as % of Turnover -0.1% +1.4% -1.4% +1.7% 31.7% 30.1% Q2 08 Restructuring Strategic Exchange Other Q2 09 benefit investment* losses *Represents increase in investment in strategic areas including Consumer, EMs and Japan.
Slide 17: Q2 performance summary
Before Q2 performance summary restructuring costs 2009 2008 % Change £m £m CER £ Turnover 6,747 5,874 (2) 15 Cost of goods (1,621) (1,375) 6 18 24.0% 23.4% SG&A: Core (2,142) (1,768) (1) 21 31.7% 30.1% Legal costs (85) 3 Total SG&A (2,227) (1,765) 3 26 33.0% 30.0% % in italics are % of turnover 17
Slide 18: Q2 performance summary
Before Q2 performance summary restructuring costs 2009 2008 % Change £m £m CER £ Turnover 6,747 5,874 (2) 15 Cost of goods (1,621) (1,375) 6 18 24.0% 23.4% SG&A (2,227) (1,765) 3 26 33.0% 30.0% (923) (802) - 15 R&D 13.7% 13.7% Other oper. income 405 194 Operating profit 2,381 2,126 (6) 12 35.3% 36.2
Slide 19: Q2 performance summary
Before Q2 performance summary restructuring costs 2009 2008 % Change £m £m CER £ Operating profit 2,381 2,126 (6) 12 Interest 148 118 Profit before tax 2,250 2,023 (6) 11 Tax rate 29.0% 28.5% EPS 31.0p 27.2p (4) 14 19
Slide 20: Q2 results after restructuring
Q2 results after restructuring Q2 2009 Q2 2008 Results before Total Total restructuring Restructuring results results £m £m £m £m Turnover 6,747 - 6,747 5,874 Operating 2,381 (186) 2,195 1,939 profit EPS 31.0p (2.7)p 28.3p 24.6p Results before restructuring exclude charges relating to the Operationa
Slide 21: Free cash flow
Free cash flow H1 09 H1 08 £m £m Total operating profit 3,907 3,902 Depreciation & other non-cash items 767 598 Decrease / (incr.) in working capital 228 (13) Increase / (decr.) in other net liabilities (488) (274) Cash generated from operations 4,414 4,213 Taxation paid (915) (1,039) Capital expend
Slide 22: Free cash flow to net debt reconciliation
Free cash flow to net debt reconciliation H1 09 H1 08 £m £m Free cash flow 2,252 2,236 Dividends (1,586) (1,567) Share repurchases - (2,376) Purchase of businesses / equities (717) (341) Sale of intangibles / equities 533 16 Employee share option exercises 19 43 Exchange 1,337 (301) Other (281) (13)
Slide 23: Conclusion
Conclusion • 1st half performance significantly impacted by generics in the US • Impact of generics expected to be significantly lower during 2nd half • Contributions from new products and pandemic also expected to be higher in 2nd half of ’09 • Strong cash flow generation continued in 1H09 with £4.
Slide 24: Andrew Witty, Chief Executive Officer
Andrew Witty Chief Executive Officer 24
Slide 25: Engines of growth
Engines of growth US Europe Japan / Asia Pac Emerging markets Rx Cx Vx 25
Slide 26: Evolving US product portfolio
Evolving US product portfolio Flonase Zofran Coreg IR Wellbutrin XL Requip IR Paxil CR Lamictal IR Imitrex Valtrex 2007 2008 2009 2010 26
Slide 27: Reshaping US Pharma
Reshaping US Pharma Product Capabilities portfolio Environment 27
Slide 28: Advair – US growth driven by unique exacerbation claim in COPD
Advair – US growth driven by unique exacerbation claim in COPD US: £648m (+7%) latest 4 wk TRx average +2.3% Q2 sales; CER growth IMS NPA US Asthma/COPD controller weekly TRx (data through w/e July 10th 2009) 28
Slide 29: Advair – an increasingly global brand
Advair – an increasingly global brand Global Q2 sales £1.24bn +9% Europe: £401m (+3%) Increased use of combinations in asthma & COPD AP/Japan: £80m (+51%) Share growth; SoV via Mitsubishi Tanabe Emerging Mkts: £73m (+17%) Market growth; investment in A&P/salesforce Q2 sales; CER growth. ROW sales no
Slide 30: Re-energising GSK's dermatology business – Stiefel acquisition
Re-energising GSK’s dermatology business – Stiefel acquisition • #7 dermatology company • #4 dermatology company • $550m revenues in 2008 • $900m revenues in 2008 • Global footprint • Highly regarded sales force • Fragmented approach • Fragmented back office • No R&D pipeline • 15 projects in late-s
Slide 31: Re-energising GSK's dermatology business – Stiefel acquisition
Re-energising GSK’s dermatology business – Stiefel acquisition • Strong brand • Global presence • Combined 2008 global sales $1.5bn • #1 dermatology company • Expert management team in place • Cost synergies from manufacturing and admin • R&D and lifecycle management 31
Slide 32: Japan new products contribute >£100m YTD
Japan new products contribute >£100m YTD Xyzal Volibris Promacta / Revolade Veramyst / Advair / Adoair Amerge Allermist Cervarix £83m £2m £7m Requip Lamictal Tykerb Avodart / Avolve £14m £2m £2m Approved July ‘09 2007 2008 2009 Next 2 years Requip launched December 2006 32
Slide 33: Focus on accessing the wealth pyramid in Emerging Markets
Focus on accessing the wealth pyramid in Emerging Markets • Building the right portfolio – therapeutics and vaccines – diseases HAVE – price points • Expanding the footprint • Unlocking price elasticity HAVE LESS HAVE NOT 33
Slide 34: Building the right portfolio
Building the right portfolio Tykerb Plus access to over 1,200 Aspen brands and 100 Dr Reddy’s brands 34
Slide 35: Leveraging the vaccines portfolio in Emerging Markets
Leveraging the vaccines portfolio in Emerging Markets GSK 28% market share… • Established global player with > 60 growing faster than the market years experience in vaccine manufacture • Broad portfolio of established paediatric vaccines GSK £462m • New vaccines to prevent rotavirus, (+32%) pneumoco
Slide 36: Leveraging the vaccines portfolio in Emerging Markets
Leveraging the vaccines portfolio in Emerging Markets Establish & strengthen local partnerships to maximise vaccine capacity & supply in key markets Grow base vaccines business Maximise opportunity from new vaccines 36
Slide 37: Unlocking price elasticity
Unlocking price elasticity Philippines; 60% price cut on Cervarix drives 14 fold 16 volume increase in 8 months Fold volume increase vs baseline 14 12 10 8 6 4 2 0 Mth 0 Mth 1 Mth 2 Mth 3 Mth 4 Mth 5 Mth 6 Mth 7 Mth 8 Month from price reduction Baseline: Mean Volume in doses 3 months prior to price
Slide 38: Executing against each aspect of the strategy in MENA
Executing against each aspect of the strategy in MENA Broadening portfolio via acquisition Increased footprint • increasing presence in hard to access markets (eg Syria, Libya, Iraq) via partners • ~160 reps added in Saudi, Turkey, Gulf & Near East • a further ~340 added via acquisition (Egypt, Paki
Slide 39: New vaccines contribute ~£200m in Q2
New vaccines contribute ~£200m in Q2 MenHibrix (HibMenCY) US / Japan Hiberix (monovalent Hib) EU / EM / AP New adult indication Phase III complete Filed First launches Launched Includes Rotarix, Cervarix, Synflorix, Boostrix US and pandemic flu (adjuvant, H5N1, H1N1 in development) 39
Slide 40: Integrated GSK response to flu pandemic
Integrated GSK response to flu pandemic • Adjuvanted vaccine offers potential for antigen sparing and increased immune response • Production started June ’09; first deliveries planned September onwards • Contracts for 195m doses; in discussions with >50 governments • Contracts to supply Relenza to >
Slide 41: Biopharm R&D unit established and starting to deliver
Biopharm R&D unit established and starting to deliver 1 year old 900 staff 3 sites 5 late-stage assets 4 Biopharm Discovery units • Arzerra – filed in US and EU; positive ODAC • Benlysta – positive results from first Phase III study in Lupus • Syncria – 5 Phase III studies up and running • Bosatria
Slide 42: Delivering growth in Consumer Healthcare
Delivering growth in Consumer Healthcare Q2 Sales +9% CER Market share gains in OTC and Oral Care Strong growth in all regions Marketing Geographic Innovation Acquisition Switch Excellence expansion 42
Slide 43: A truly global Consumer Healthcare business
A truly global Consumer Healthcare business 88 markets 80 markets 57 markets 26 markets getting started 43
Slide 44: alli – 1st pan-European launch of an OTC medicine
alli – 1st pan-European launch of an OTC medicine • Reached consumers in 24 markets in 8 weeks “Driving interested consumers into well-prepared pharmacies” • From zero sales to No1 OTC in France and UK in its first month • 28 TV ads produced • 24 websites launched; • Boots: “Most Innovative Product
Slide 45: Incremental investment in Consumer Healthcare A&P funded by restructuring
Incremental investment in Consumer Healthcare A&P funded by restructuring £m 150 Advertising +32% 100 50 0 2005 2006 2007 2008 Incremental Advertising* Savings * Incremental Base Business Advertising (excludes alli & CNS) 45
Slide 46: Innovation contributes >£100m in Q2 (excluding alli)
Innovation contributes >£100m in Q2 (excluding alli) • Roll-out of Iso-Active Lucozade Sports Nutrition technology continues, helping drive growth in launched April Aquafresh & Sensodyne • Extending Lucozade Sport beyond carbohydrate drinks into a wider area of • Rollout of Sensodyne Sport and Exerc
Slide 47: 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 48: Increasing diversity adds complexity
Increasing diversity adds complexity Prophylactic vaccines Therapeutic vaccines Biopharm Crucial that we Pharma simplify our operating model Emerging market OTC brands Oral care/ nutritionals 48
Slide 49: GSK Operating Model
GSK Operating Model Management Company Performance Units 49
Slide 50: GSK Operating Model
GSK Operating Model Management Company R&D GMS Support Function CoEs & Shared Services Aspen Vaccines Common AP / Stiefel Core Japan Emerging HIV – Markets JV Consumer Pharma Healthcare NA Europe Pharma Commercial Performance Units 50
Slide 51: Moncef Slaoui, Chairman R&D
Moncef Slaoui Chairman R&D 51
Slide 52: 2Q Progress on Late Stage Assets
2Q Progress on Late Stage Assets Horizon (COPD) Avodart (prostate cancer) Cervarix (cervical cancer, US) ~30 assets MenHibrix (meningitis, US) Arzerra* (cancer) Benlysta* (lupus) * Partnered assets: Arzerra with Genmab; Benlysta with HGS 52
Slide 53: Horizon Programme progress
Decision to Horizon Programme progress A combination of an inhaled corticosteroid and a long acting beta to Ph III agonist for the treatment of asthma and COPD in COPD Ph IIB studies in ~3,000 patients support efficacy, safety and once-daily dosing for 444 and 5698 in asthma and COPD Successful end
Slide 54: REDUCE: REduction by DUtasteride of prostate Cancer Events
Positive REDUCE results at AUA A dual 5α-reductase inhibitor (dutasteride) for the treatment of moderate to severe symptoms of benign prostatic hyperplasia (BPH) REduction by DUtasteride of prostate Cancer Events an 8,231 patient study Highly significant 23% risk reduction in biopsy-detectable prost
Slide 55: REDUCE: Highly significant 23% risk reduction in prostate cancer
REDUCE: Highly significant 23% risk reduction in biopsy-detectable prostate cancer overall Relative risk reduction (95% C.I.) Favours placebo Favours dutasteride Overall 22.8% Age (years) <65 ≥65 Family history of prostate cancer Yes No Baseline IPSS Mild Moderate/severe Baseline prostate volume ter
Slide 56: REDUCE: AE profile
REDUCE: AE profile Drug-related adverse events occurring in ≥1% subjects in either treatment group Placebo Dutasteride (n=4126) (n=4105) Decreased libido* 1.6% 3.3% Loss of libido* 1.3% 1.9% Erectile dysfunction* 5.7% 9.0% Decreased semen volume* 0.2% 1.4% Gynecomastia* 1.0% 1.9% Cardiovascular AEs
Slide 57: Cervarix: significant new data presented and published
Significant new data presented and published Vaccine for the prevention of cervical cancer caused by infections by the Human Papillomavirus (HPV) types 16 and 18 High efficacy against HPV-16/18 confirmed IPvC, May 09 Study-008 The Lancet, July 09 & significant protection beyond HPV-16/18 IPvC, May 0
Slide 58: Cervarix: Superior immune profile and long-term data
Superior immune profile and long-term data HPV-010: HPV 16 & 18 neutralizing HPV-007: 100% protection confirmed year after antibody responses 2 to 9-fold higher for year against HPV 16/18 CIN2+ Cervarix than quadrivalent vaccine …so far up to 6.4 years Cervarix® Control Vaccine efficacy HPV 16/18 Ag
Slide 59: HPV-008: Efficacy against HPV-16/18 and beyond
HPV-008: Efficacy against HPV-16/18 and beyond CIN 2+ efficacy in ATP-E 100% 80% 60% 40% 20% 0% HPV-16/18 HPV-31 HPV-33 HPV-45 HPV-52 HPV-58 ATP-E = According to Protocol Efficacy population Source: The Lancet July 7, 2009 59
Slide 60: HPV-008: Efficacy against HPV-16/18 and beyond
HPV-008: Efficacy against HPV-16/18 and beyond CIN 2+ protection regardless of HPV type 70.2% 30.4% in TVC naive in TVC This cohort approximated young girls This cohort approximated a general prior to sexual debut population of sexually active young women The total vaccinated naϊve cohort (TVC-naϊve
Slide 61: MenHibrix (HibMenCY)
MenHibrix (HibMenCY) Positive An investigational combination vaccine for early protection against pivotal Ph III Haemophilus influenzae type b (Hib) and Meningococcal C&Y diseases results Meningococcal disease causes permanent disability or death – Fatality rate 9-12% Protection for infants, where t
Slide 62: We can uniquely address where the risk is greatest…in infants
We can uniquely address where the risk is greatest…in infants US Incidence of Culture Confirmed Meningococcal Disease 20 18 Cases per 100,000 population 16 14 12 10 84% of infant cases* 8 are <8 months of age 6 4 2 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13-24 2-4 5-10 11-17 18-22 23-64 Months Years MenHibri
Slide 63: …with no additional shots
…with no additional shots MenCY combined with monovalent Hib means no additional shots 2 mos. 4 mos. 6 mos. 12-15 mos. MenHibrix MenHibrix MenHibrix MenHibrix and complements Pediarix and Rotarix to create a full GSK infant portfolio 63
Slide 64: Arzerra
Positive Arzerra ODAC A fully human anti-CD20 mAb with potential in haematological and autoimmune diseases May 2009 Demonstrated strong efficacy in hard to treat patients Refractory CLL (including those previously treated with Rituxan) CLL PDUFA date end Oct 09 Partnership with Genmab 64
Slide 65: Arzerra in CLL: Two reasons to believe
Arzerra in CLL: Two reasons to believe Ofatumumab efficiently kills cells Fludarabine refractory patients historically with low CD20 expression have the lowest overall survival outcomes CLL normal B cell 100 100 Overall survival (%) by line of therapy ofatumumab 80 80 Initial diagnosis % specific ly
Slide 66: Fludarabine-refractory CLL studies
Fludarabine-refractory CLL studies Salvage therapy Arzerra Hx-CD20-406 Tam et al Published data DR (N=54) BFR DR (N=59) BFR (N=79) Response Response 42% 35% 20% 8-26% rate rate (58%1) (47%1) Major Major 60% 45% 32% 23% infections infections Median Median Overall Overall 8 9 - 14 13.7 15.4 Survival,
Slide 67: Arzerra
Positive Arzerra ODAC A fully human anti-CD20 mAb with potential in haematological and autoimmune diseases May 2009 Demonstrated strong efficacy in hard to treat patients Refractory CLL (including those previously treated with Rituxan) Front-line CLL Ph III study vs comparator ongoing NHL Ph II/III
Slide 68: Benlysta (belimumab)
Benlysta (belimumab) A fully human mAb that specifically recognises and inhibits the biological activity of B-lymphocyte stimulator (BLyS) for the treatment of Systemic Lupus Erythematosus (SLE) Potential first new treatment for SLE in 50 years SLE Affects Multiple Organ Systems Central Nervous Eyes
Slide 69: By binding to BLyS, Benlysta inhibits B-Cell survival and induces apoptosis
By binding to BLyS, Benlysta inhibits B-Cell survival and induces apoptosis Autoimmune Disease BENLYSTATM Binds BLyS Autoreactive B-cell survival Autoreactive B-cell apoptosis BLyS TACI, BCMA, BAFF-R BENLYSTATM Do RKG et al. J Exp Med. 2000;192:953-964; Ammana et al. J Immunol. 2003;170:4593-4600. P
Slide 70: BLISS-52 Study Design
BLISS-52 Study Design • 52 week, double blind placebo controlled SLE study conducted in Eastern Europe (11%), Latin America (50%), Asia Pacific (39%) • Largest, successfully completed Phase 3 study in SLE to date • Key entry criterion: seropositive with moderate to severe SLE activity • Patients nee
Slide 71: BLISS-52: Primary endpoint met
BLISS-52: Primary endpoint met Primary endpoint: 70 Patient response at Week 52 as p=0.0006 defined by: 60 p=0.0106 ≥ 4 point reduction from baseline 57.59 57.59 in SELENA-SLEDAI score % Responders 50 51.74 51.74 AND 40 43.55 43.55 No worsening (increase of <0.30 points from baseline) in Physician 3
Slide 72: BLISS-52: major secondary endpoints
BLISS-52: 3 of 4 major secondary endpoints met SELENA SLEDAI PGA >= 4 point decrease from baseline at Week 52 change from baseline at Week 24 (LOCF) 70 0 p=0.0024 -5 60 p=0.0189 -10 58.28 % change in PGA % Responders 50 53.13 -15 40 45.99 -22.44 -20 30 -25 -29.50 -30 20 -35 p=0.0342 -36.75 10 -40 p<
Slide 73: Benlysta (belimumab) Phase III results
Benlysta (belimumab) Positive Phase III A fully human mAb that specifically recognises and inhibits the biological activity of B-lymphocyte strimulator (BLyS) for the treatment of Systemic results Lupus Erythematosus just in Potential first new treatment for SLE in 50 years BLISS-52 PIII study met p
Slide 74: GlaxoSmithKline
GlaxoSmithKline