Gsk Plc · LSE:GSK
Gsk — GlaxoSmithKline — Merger or Acquisition (December 2018)
25 slides from Gsk's merger presentation, December 2018
Slide 1: Accelerating our IPT strategy
Accelerating our IPT strategy GlaxoSmithKline plc and Pfizer Inc to form new world-leading Consumer Healthcare Joint Venture Transaction lays foundation for separation of GSK to create two new UK-based global companies
Slide 2: Information regarding forward-looking statements and non IFRS measures
Information regarding forward-looking statements and non IFRS measures 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 rela
Slide 3: Agenda
Agenda –x Strategic Overview Emma Walmsley, Chief Executive Officer A new world-leading Brian McNamara, Consumer Healthcare Chief Executive Officer, Joint Venture GSK Consumer Healthcare Simon Dingemans, Transaction details Chief Financial Officer 3
Slide 4: Long-term priorities for sustainable growth: Innovation, Performance, Trust
3 long-term priorities for sustainable growth Innovation Performance Trust 4
Slide 5: Platform for improved operating performance and reshaped portfolio
Platform for improved operating performance and reshaped portfolio New leadership and R&D programme culture prioritisation Innovation Focus on launch Business Development execution Performance Restructuring Pharma Buy out of the Novartis business stake in Consumer JV Trust Divestment of non-core New
Slide 6: Creation of a new world-leading Consumer Healthcare Joint Venture
Creation of a new world-leading Consumer Healthcare Joint Venture All equity transaction All-equity transaction Separation – GSK 68%; Pfizer 32% – Intention to separate – Sales of approximately £9.8 billion ($12.7 billion)* and cost synergy Joint Venture via opportunity of £0.5 billion demerger – Ex
Slide 7: Improved performance and increased value for shareholders
Improved performance and increased value for shareholders • Creates new world leader in Consumer Healthcare • Offers significant opportunities for both cost synergies and growth • Separation creates a new global company and investment proposition 7
Slide 8: Supports our priority of strengthening Pharma
Supports our priority of strengthening Pharma Expected to be Visibility of separation New capital structure accretive to earnings supports capital post separation to fund and cashflows planning investment Vaccines HIV DTG+3TC CAB+RPV fostemsavir Respiratory GSK’916 TSR-042 Oncology (BCMA) (PD-1) GSK
Slide 9: Clear pathway for creation of two new UK-based global companies
Clear pathway for creation of two new UK-based global companies New global Continue to strengthen R&D Pharmaceuticals and Innovation pharma pipeline Vaccines company with R&D focused on science of the immune system, genetics and advanced technologies Integrate two highly Performance complementary CH
Slide 10: Brian McNamara
Brian McNamara Chief Executive Officer, GSK Consumer Healthcare
Slide 11: Positive consumer healthcare industry trends
Positive consumer healthcare industry trends Increasing health awareness and self care Ageing population 1 77% of consumers want to take 2 more control over decisions 1.4 billion aged 60+ by 2030, about their health an increase of 0.5 billion vs 2015 Emerging middle class Innovation 3 Almost 2.4 bil
Slide 12: Creation of a global leader in consumer healthcare
Creation of a global leader in consumer healthcare With scale and strong capabilities Strong geographic footprint Combined sales of • #1 in US, #2 in China3 approximately £9.8bn1 • 29% of sales in Emerging Markets1 #1 in OTC • Leadership positions in Pain Proven integration capability Relief, Respir
Slide 13: Pfizer has a strong portfolio of category leading brands
Pfizer has a strong portfolio of category leading brands Top 10 brands account for 80% of global sales Pain Relief VMS Respiratory Digestive Health Skin Health Strong portfolio Advil #1 in US and #1 in global OTC #8 in global Nexium #1 in US in OTC global pain relief VMS category respiratory indiges
Slide 14: Category leading positions of combined portfolio
Category leading positions of combined portfolio #2 #1 #1 #1 #1 #3 Digestive Therapeutic Pain Relief1 VMS1 Respiratory1 Skin Health1 Health1 Oral Health2 – vv – x 14 1. Nicholas Hall’s DB6 Global OTC Database, 2017. For Skin Health, share and ranking based on OTC dermscategory. 2. GSK analysis based
Slide 15: Creates OTC leadership positions in key geographies
Creates OTC leadership positions in key geographies Leadership OTC positions in some of the world’s most important markets: US #1, Germany #1, India #1 , Russia #2, China #2 Central & Eastern Western Europe #1 Europe #2 7.5% MS 5.8% MS USA #1 10.5% MS Middle East Africa #1 5.4% MS Asia #1 4.9% MS La
Slide 16: Proven integration capability through GSK-Novartis joint venture
Proven integration capability through GSK-Novartis joint venture Delivered average annual sales growth of ~4% through integration1 Over-delivered on cost synergy targets of £400m Improved operating margin 470bps 2015-20172 Built more efficient, scalable organisation model Leveraged both companies to
Slide 17: Leverage strengths of both companies to deliver sustained profitable growth
Leverage strengths of both companies to deliver sustained profitable growth • External innovation Innovation • Strong track record of delivery • Scientific excellence, Rx/OTC switch expertise • Digital transformation Performance • Strong sales, retail and expert capabilities • Global marketing/categ
Slide 18: Deliver an industry leading margin
Deliver an industry leading margin New guidance for new JV Mid to high 20s% by 2022 1 Guidance for existing GSK • Power brand mix Consumer Healthcare • Cost & cash discipline Approaching mid 20s% 20.3% by 2022 1 • Strategic resource allocation 17.7% • Supply chain efficiency 15.5% 15.5% + • £0.5bn s
Slide 19: Simon Dingemans
Simon Dingemans Chief Financial Officer
Slide 20: Proposed transaction: financial details
Proposed transaction: financial details Proposed all equity transaction New entity GSK will have a controlling equity interest of 68% and Pfizer 32% Expect transaction to close in the second half of 2019, pending shareholder and anti-trust approvals Timing Separation of Consumer JV expected within 3
Slide 21: Significant cost synergy potential for the JV
Significant cost synergy potential for the JV, with cash restructuring costs offset by divestments Total costs £1.2bn1 Targeting net Estimated annual divestment Network rationalisation synergies Cash £0.9bn1 proceeds of ~£1bn £0.5 bn1 Non-cash £0.3bn1 over 2019-20 period1 Logistics & infrastructure
Slide 22: Key financials
Key financials Standalone financials Geographic revenue split FY17 FY17 1 2 US 26% 33% 53% Revenues £7.1bn £2.7bn Europe 33% 28% Total £0.9bn £0.4bn 14% operating profit Adjusted International 41% 39% £1.3bn £0.5bn 33% operating profit Adjusted 17.6% 17.3% JV operating margin 1 Reported results of t
Slide 23: Path to separation
Path to separation Enhances financial flexibility and New consumer healthcare investment capacity company Presents a clear pathway forward for GSK Targeting investment grade balance sheet Creates a new global Pharmaceuticals and Leverage of 3.5-4.0x net debt/Adjusted vaccines company EBITDA at point
Slide 24: A clear pathway for improved performance across both businesses
A clear pathway for improved performance across both businesses Unique opportunity to accelerate our IPT New global Pharmaceuticals priorities and Vaccines company with R&D focused on science of the immune system, genetics and Supports capital planning and investment in advanced technologies the pip
Slide 25: Q&A
do more feel better live longer Q&A
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