Slide 1: Q1 2018 Results
do more feel better live longer Q1 2018 Results 25 April 2018
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 Q1 2018 progress Emma Walmsley, Chief Executive Officer Pharma update Luke Miels, President, Global Pharmaceuticals David Redfern, Chief Strategy Officer, Chairman of ViiV Healthcare Q1 2018 financial results Simon Dingemans, Chief Financial Officer Summary Emma Walmsley, Chief Executive Offi
Slide 4: Q1 2018 progress
Q1 2018 progress Emma Walmsley, CEO 25 April 2018
Slide 5: Balanced business to deliver growth and returns to shareholders
Balanced business to deliver growth and returns to shareholders Common goal to improve health, from prevention to treatment Pharmaceuticals Vaccines Consumer Healthcare Therapeutic and category leadership Leading positions in Broadest portfolio Category leadership HIV and Respiratory with leading po
Slide 6: CER Sales growth in all businesses; improved Group operating margin
CER Sales growth in all 3 businesses; improved Group operating margin Pharmaceuticals Group sales growth +2% New Respiratory products +42% of +4% HIV sales +14%; dolutegravir +23% 130bp improvement in Group Adjusted Vaccines Shingrix reported sales of £110 million operating margin +13% Meningitis sa
Slide 7: Q1 progress made on our long-term priorities
Q1 progress made on our 3 long-term priorities Innovation Commercial Strong launches for Shringrix, Trelegy, Juluca execution Growth in Ellipta, Nucala and HIV New leadership appointments Strengthen Performance Continued prioritisation and focus on R&D development discipline Cost, cash Buyout of Nov
Slide 8: Pharma update
Pharma update Luke Miels, President, Global Pharmaceuticals David Redfern, Chief Strategy Officer, Chairman of ViiV Healthcare
Slide 9: Increasing focus and prioritisation
Increasing focus and prioritisation Focus resources on key Increase pace by simpler Clarify accountabilities for products and markets structures and processes decisions and execution Reallocating 20% of Emerging Markets structured Core services centralised non-customer facing spend into three new ca
Slide 10: Trelegy: driving continued leadership
Trelegy: driving continued leadership Strongest US Ellipta launch to date Significant exacerbation reduction with TRELEGY in COPD 6,000 5,000 4,000 15% 25% TRx reduction reduction vs Breo1 vs Anoro1 3,000 2,000 1,000 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Weeks post launch IMPACT publi
Slide 11: Nucala: a leading respiratory biologic with significant growth opportunity
Nucala: a leading respiratory biologic with significant growth opportunity Highly competitive profile Market continues to demonstrate strong growth Leading in science TRx for SEA market Consistent exacerbation reduction1 14,000 OCS reduction 50%, sustained up to 1.5 years2 12,000 Effective in SEA pa
Slide 12: Shingrix: encouraging launch performance
Shingrix: encouraging launch performance Strong uptake, rapidly surpassing Building a new standard competitor volumes of prevention Weekly Shingrix volume vs '17 competitor weekly Strong clinical profile (weekly pharmacy administered doses) >90% efficacy across identified age groups1,2 70,000 Sustai
Slide 13: Confident in HIV growth outlook
Confident in HIV growth outlook Leading core agent and a new treatment Dolutegravir maintaining leadership paradigm with 2 drug regimens position in STR/Core Agent market Leading position maintained Weekly TRx Shares by Product (STR+Core agent) Dolutegravir maintaining its leading position in STR/Co
Slide 14: Q1 2018 financial results
Q1 2018 financial results Simon Dingemans, CFO
Slide 15: Headline results
Headline results Sales growth and operating leverage offset by currency headwind Q1 2018 Reported growth % £m AER CER Turnover 7,222 (2) 4 Total operating profit 1,240 (28) (15) Total EPS 11.2 (48) (33) Adjusted operating profit 1,923 (3) 9 Adjusted EPS 24.6 (2) 11 Free cash flow 324 (50) n/a 15
Slide 16: Results reconciliation
Results reconciliation Q1 2018 results Disposals, Total Intangible Intangible Major Transaction significant Adjusted results amortisation impairment restructuring related legal and other results Turnover 7.2 7.2 (£bn) Operating 1.2 0.1 <0.1 0.1 0.4 - 1.9 profit (£bn) EPS 11.2 2.4 0.5 1.0 9.0 0.5 24.
Slide 17: Sales growth
Sales growth Q1 2018 Growth in all three businesses Q1 2017 sales at '17 rates 7,384 Pharma up 2% CER £82m Vaccines up 13% CER £146m Consumer up 2% CER £42m CER +4% 7,654 FX -6% £432m AER -2% 7,222 17
Slide 18: Adjusted operating margin
Adjusted operating margin Continued margin progression in Q1 2018 Sales up 4% CER Q1 2017 Adjusted operating margin 26.8% COGS flat CER 0.9% SG&A up 2% CER 0.6% +1.3% R&D up 2% CER 0.2% improvement at CER Royalties down 34% CER -0.4% Q1 2018 margin at 17 FX 28.1% Currency -1.5% Q1 2018 margin at 18
Slide 19: Operating profit to net income
Operating profit to net income Continued delivery of financial efficiency Q1 17 Q1 18 Adjusted results £m £m Operating profit 1,979 1,923 Net finance expense (169) (139) Share of associates 5 9 Tax (399) (362) Tax rate 22.0% 20.2% Minorities (199) (224) Net income 1,217 1,207 19
Slide 20: Free cash flow analysis
Free cash flow analysis Cash flow improvements offset by milestone payment and currency £m Q1 17 free cash flow 650 Higher CCL (incl. £317m milestone) 357 Higher distributions to minorities 80 Lower net operating cash (incl. negative currency)* 83 Lower restructuring payments 109 Lower net Capex 61
Slide 21: 2018 guidance and 2020 outlook expectations
2018 guidance and 2020 outlook expectations 2020 outlook* 2018 US Advair scenarios unchanged Assuming no Adjusted EPS Group sales substitutable generic, CAGR expect US Advair sales Up 4 to 7% Low-to-mid to decline around 30% CER CER single digit % Assuming July Adjusted EPS Adjusted EPS substitutabl
Slide 22: Summary
do more feel better live longer Summary Emma Walmsley, CEO
Slide 23: Confident in 2020 outlook
Confident in 2020 outlook Innovation Group sales 5 year CAGR low to mid single digit* Performance Adjusted EPS mid to high single digit* 5 year CAGR Trust *All 2020 outlook statements are at CER using 2015 exchange rates as the base. The CAGRs are 5 years to 2020. 23
Slide 24: Q&A
do more feel better live longer Q&A
Slide 25: Appendix
Appendix
Slide 26: Capital allocation framework
Capital allocation framework Key priorities for capital Invest 1. Pharma pipeline including BD Innovation in the 2. Consumer put business 3. Vaccines capacity Improved 80p per share expected for 2018 Performance cash Shareholder Focus on rebuilding free cash flow cover over time generation returns T
Slide 27: Data on key assets in next 3 years to inform investment in Pharma pipeline
Data on key assets in next 3 years to inform investment in Pharma pipeline, organically or inorganically 2018 2019 2020 Closed triple 2894512 (tapinarof) Closed triple Regulatory Asthma topical NSAID in atopic dermatitis, psoriasis Asthma US/EU submissions US/EU submissions US/EU approvals cabotegra
Slide 28: Good progress on restructuring
Good progress on restructuring Main programme mostly completed, so lower incremental savings going forwards Annual savings at 2015 FX £bn Costs of up to £5.7bn £4.1bn cash £1.6bn non cash 4.0 3.7 3.3 3.5 £4.8bn expensed to date (up to Q1 2018) 2.8 £3.5bn cash, £3.2bn paid £1.3bn non cash 2016 2017 2
Slide 29: Currency
Currency 2017 currency sales exposure 2018 Adjusted EPS ready reckoner US $ 37 % US $ 10 cents movement in average exchange rate for full year Euro € 19 % impacts EPS by approx. +/- 4.0% Japanese ¥ 7% Other* 37 % Euro € 10 cents movement in average exchange rate for full year impacts EPS by approx.