Gsk Plc · LSE:GSK
Gsk — FY2014 Earnings Presentation
28 slides from Gsk's earnings presentation, Feb 4, 2015
Slide 1: Full Year Results, 2014
Full Year Results, 2014 4 February 2015
Slide 2: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements Under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, the company cautions investors that any forward-looking statements or projections made by the company, including those made in this document are subj
Slide 3: Andrew Witty, Chief Executive Officer
Andrew Witty Chief Executive Officer
Slide 4: Sharp focus on key strategic priorities
Sharp focus on key strategic priorities Changing environment Rebuild sales growth momentum • Product launch uptake • Supply bounce back opportunity R&D pipeline next waves • Advanced pipeline • Up to 10 Phase III Rx starts • 15 Phase II Rx NME starts Restructuring and cost reduction • ~ £5bn benefit
Slide 5: 2014 performance
2014 performance Financial efficiencies and cost reduction helped to mitigate 2014 sales reduction and supports shareholder return Core results Sales -3% Operating profit -6% EPS -1% Dividend +3% 4
Slide 6: Addressing challenges in US respiratory
Addressing challenges in US respiratory Improved formulary coverage expected to improve outlook 10% NRx growth (LABA / ICS) Medicare Part D coverage 5% Jan Jan Market 2014 2015 0% Advair + Breo Breo 2% 74% -5% -10% * Data presented for Advair removed due to restatement, please call GSK Investor Rela
Slide 7: Addressing challenges in US respiratory
Addressing challenges in US respiratory Improved formulary coverage expected to improve outlook Medicare Part D coverage Anoro share of market Market = LAMA containing April Jan (Anoro, Spiriva, Tudorza) 2014 2015 4% Anoro 0% 65% 3% NRx Positive head-to-head vs tiotropium in promotional materials Se
Slide 8: Encouraging early uptake of Relvar in Japan
Encouraging early uptake of Relvar in Japan Ryotan Ryotan New patients restriction Total patients restriction 70% 70% removed removed Total GSK 60% Total GSK 60% 50% 50% Adoair Adoair 40% 40% Symbicort 30% Symbicort 30% 20% Relvar 20% 10% 10% Relvar Flutiform Flutiform 0% 0% Sep-14 Sep-14 Feb-14 Feb
Slide 9: Respiratory expected to return to growth in 2016
Respiratory expected to return to growth in 2016* Key milestones Incruse Arnuity Relvar / Breo Launch Launch and Anoro in 2015 Ongoing global launches Breo Relvar / Breo mepolizumab Open triple Asthma PDUFA SUMMIT COPD Severe asthma (Incruse + Breo) April mortality study decision Expect to file Futu
Slide 10: ViiV launches
ViiV launches Sales of £339m in 2014 for Tivicay and Triumeq US TRx comparison: 70 weeks post Tivicay / DTG launch 9000 + 8000 7000 TRx Volume 6000 5000 4000 Other HIV 3000 launches 2000 1000 0 Japan Germany Australia Canada Source: IMS 10
Slide 11: Sustainable R&D pipeline to support future sales growth
Sustainable R&D pipeline to support future sales growth Today Newly launched products Significant late-stage assets Early / mid stage pipeline • Breo/Relvar (Phase II/III) • Immuno-oncology (OX-40, • Anoro • mepolizumab (asthma/COPD) ICOS, TLR-4, Adaptimmune • sirukumab (RA) technology) • Tivicay •
Slide 12: Reshaping GSK
Reshaping GSK Organic Final year Programme Scope Period benefits restructuring* OE programme Operating model 2008-14 £2.9bn Major Change R&D and manufacturing 2012-16 £1.0bn Global pharmaceutical Pharma: Commercial and R&D 2015-17 £1.0bn restructuring ~£5bn Novartis transaction** *Excludes structura
Slide 13: Reshaping GSK: Proposed Novartis transaction
Reshaping GSK: Proposed Novartis transaction Better balance, quality and durability of earnings Consumer Vaccines Pharma ~25%* ~14%* ~61%* Respiratory HIV 27%* 5%* #1 OTC globally #1 global position #1 global position #2 globally Total consumer ~$26bn market ~$29bn market ~$20bn market ~$73bn market
Slide 14: Modernising the business
Modernising the business Sales force US sales force voted #1 HCP engagement compensation Fundamental change in Ranked 1st amongst Leveraging medical our business model peers by HCPs in 2014 and multichannel communication opportunities 14
Slide 15: Innovation and access
Innovation and access Malaria Ebola Access to Medicines Index 30 years and counting Responding to a crisis Number 1 for the fourth consecutive time Regulatory decision Phase III trials started in 2015 February 2015 15
Slide 16: What to expect in 2015
What to expect in 2015 Regulatory Closure of Return of £4 billion Dividend of 80p decision for RTS,S Novartis to shareholders per share malaria vaccines transaction** following Novartis (same level as 2014) transaction close* Results from the Investor Day File GSK’s first cell Combi-d trial (post No
Slide 17: Simon Dingemans, Chief Financial Officer
Simon Dingemans Chief Financial Officer
Slide 18: Headline results
Headline results Core EPS -1% despite top line pressure Growth % £m 2014 CER £ Turnover 23,006 (3) (10) Core operating profit 6,594 (6) (15) Core EPS 95.4p (1) (12) Adjusted net cash inflow from operations* 5,878 (20) Adjusted FCF* 3,322 (30) *Adjusted net cash inflow from operations and adjusted FC
Slide 19: Sales growth
Sales growth Most significant headwinds from US Advair, Lovaza and Consumer supply 2013 Sales, ex div £25.6bn 2013 divestments CER US -10% Europe flat Japan +1% Emerging Markets +5% ViiV +15% EPP and other -13% Consumer -1% 2014 Sales at 2013 FX £24.7bn -3% Currency -7% 2014 Reported Sales £23.0bn -
Slide 20: Operating profit margin breakdown
Operating profit margin breakdown Reduced margin primarily reflects FX, lower sales, mix and investments 2013 OP (ex divestments) 30.4% Currency 0.9% 29.5% COGS 0.2% SG&A 0.5% R&D 0.1% Royalties 0.2% 2014 OP 28.7% 20
Slide 21: COGS
COGS Mix and investments largely offset by restructuring & cost savings 2013 COGS (ex divestments) 27.6% Currency 0.6% 28.2% Mix / Price 0.6% Investments 0.9% Restructuring & cost management 1.3% 2014 COGS 28.4% 21
Slide 22: SG&A
SG&A Cost control offsetting investments and reducing impact of lower sales 2013 SG&A (ex divestments) 30.3% Currency 0.1% 30.2% Lower sales 1.0% Investments 0.6% Restructuring & cost management 1.1% 2014 SG&A 30.7% 22
Slide 23: Continued delivery of restructuring and structural benefits
Continued delivery of restructuring and structural benefits Delivered ~£400m of incremental savings in 2014 £bn +0.4 3.7 0.2 +0.4 3.3 0.3 0.6 2.9 0.3 0.4 2.9 2.7 2.5 2012 2013 2014 OE Programme Major Change Structural savings 23
Slide 24: Further financial efficiency gains
Further financial efficiency gains Reduced finance costs and a lower tax rate Operating profit Net finance costs £646m in 2014 vs. £692m in 2013 Net funding rate below 5% - down 3% since 2010 Consistent short term debt rating target: A1/P1 Effective core tax rate in 2014: 19.6% £238m share
Slide 25: Cash generation and net debt
Cash generation and net debt Net debt increased to £14.4bn £m Working capital days 4,407 Reported Ex divest. 166 238 866 702 761 2010 221 221 3,322 3,843 2011 210 210 18,784 2012 194 194 14,377 2013 176 190 12,645 2014 209 211 Net Debt Free cash Dividends Share Disposals Bolt-ons Legal Other Net Deb
Slide 26: Novartis transaction supports sustainable growth and improving returns
Novartis transaction* supports sustainable growth and improving returns Better balanced and Sales broader range of growth growth drivers Significant synergy Operating and operating EPS leverage leverage efficiencies Returns to shareholders Continued financial Financial Free cash efficiencies efficie
Slide 27: Thank you
Thank you
Slide 28: New product launches underway across respiratory, HIV, oncology, vaccines and diabetes
New product launches* underway across respiratory, HIV, oncology, vaccines and diabetes Market Respiratory Respiratory Metastatic HIV total Seasonal Flu Vaccines Type 2 Diabetes definition Controller: Controller: Melanoma V600 GLP-1 ICS/LABA Bronchodilator Global market ~£8.4 bn ~£4.8 bn >£0.4 bn ~£