Gsk Plc · LSE:GSK
Gsk — FY2013 Earnings Presentation
34 slides from Gsk's earnings presentation, Feb 5, 2014
Slide 1: Full Year Results, 2013
Full Year Results, 2013 5 February 2014
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: GSK strategy is delivering
GSK strategy is delivering Focus on innovation and portfolio optimisation to maximise returns Sales growth EPS leverage Innovation & Portfolio Optimisation Strong cash Changing generation Environment Returns to shareholders 4
Slide 5: Established Products Portfolio and new product approvals
6 new product approvals support GSK businesses 5 businesses account for ~70% of sales, +4% CER 3 businesses with global leadership Respiratory Consumer Vaccines 28% 20% 13% 2 ‘challenger’ businesses HIV Oncology 5% 4% Tumor New Blood Vessels Existing Blood Vessel + Established Products Portfolio 16%
Slide 6: £21bn global respiratory market
New respiratory portfolio provides platform for maintained market leadership to 2020 and beyond £21bn global respiratory market Oral Biological asthma Rescue ICS/LABA 7 additional products in Steroid late stage development Bronchodilator UMEC monotherapy FF monotherapy VI monotherapy 34% GSK share o
Slide 7: Good early progress in Breo Ellipta launch
Good early progress in Breo Ellipta launch Significant increase in managed care coverage in last 2 weeks1 Commercial Medicare Part D Other Split of COPD ~43% ~42% ~15% market % of Breo Ellipta 66% 25% coverage 90% physicians aware of Breo Ellipta2 ~1,070 TRx filled in 12th week3 TRx filled < TRx wri
Slide 8: Rapid market share gains for Mekinist and Tafinlar
Rapid market share gains for Mekinist and Tafinlar Exploring potential in adjuvant setting and other tumour types £800m global metastatic US 90% formulary coverage melanoma market3 50% V6004 ~50% physician coverage1 Adjuvant melanoma Ph III studies ongoing ~60% share of V600 TRx2 Exploring combinati
Slide 9: Rapid market share gains for Tivicay
Rapid market share gains for Tivicay with significant potential opportunity with single tablet regimen US 98% managed care coverage £12.3bn total HIV market4 +8% 90% physician reach ~1,740 TRx in week 23 on market1 STR (dolutegravir-Trii) filed in Oct 2013 8% share of dynamic market Rx2 Long-acting
Slide 10: Pipeline opportunity is significant for GSK
Pipeline opportunity is significant for GSK 6 Major approvals in 2013 5 Additional regulatory filings 4 Breakthrough Designations ~40 6 ~10 NMEs in Potential NME Potential NME Phase II/III Phase III Phase III starts development readouts in in 2014/2015 2014/15 13% Estimated rate of return Detailed I
Slide 11: Emerging portfolios in Immuno-inflammation and Cardiovascular & Metabolic
Emerging portfolios in Immuno-inflammation and Cardiovascular & Metabolic Immuno-inflammation Cardiovascular & Metabolic Marketed Benlysta Filed Eperzan (albiglutide) Phase III sirukumab darapladib Phase IIB losmapimod (p38) PHI Pattern recognition receptors (RIP-1) Early stage Epinova (BET-inhibito
Slide 12: £4.7bn Consumer business growing across all categories and regions
£4.7bn Consumer business growing across all categories and all regions Wellness Oral care 42% 40% Nutrition Skin health 12% 6% 2013 sales excluding Lucozade and Ribena divested in December 2013 12
Slide 13: Portfolio Optimisation to enhance growth, profitability and cash generation
Portfolio Optimisation to enhance growth, profitability and cash generation Invest capital behind our growth businesses Enhance: growth Optimise + Returns to cost base profitability shareholders + cash generation Shape portfolio to enhance scale & focus + realise profits Structure & Acquisition Dive
Slide 14: 2014 Priorities
2014 Priorities New product performance Emerging Markets performance Consumer innovation Sustained vaccines leadership (MAGE-A3 results) Innovation + R&D returns – pipeline and cost base Access Simplification ‘harvest’ + Changing Returns to Cashflow generation Environment shareholders Modernise comm
Slide 15: Simon Dingemans, Chief Financial Officer
Simon Dingemans Chief Financial Officer
Slide 16: Headline results
Headline results Growth % £m 2013 CER £ Turnover 26,505 1 - Core operating profit 8,015 - (3) Core EPS 112.2p 4 1 Adjusted net cash inflow from operations* 7,337 5 Adjusted FCF* 4,772 2 *Adjusted net cash inflow from operations and Adjusted FCF exclude legal 16
Slide 17: 2013 Sales growth
2013 Sales growth Ex 2012 CER divestments 2012 Sales 2012 Divestments US Pharma +4% Europe flat Japan +1% EMAP ex China +5% China (18%) Consumer +4% Viiv and Other +5% Sales 2013 at 2012 Fx +1% +3% Currency (1%) (1%) Reported Sales 2013 £26.5bn flat +2% 2012 Divestments primarily Vesicare & OTC 17
Slide 18: Further strengthening of business mix
Further strengthening of business mix 2013 Sales growth (ex 2012 divestments): +3%* (CER) Vaccines Pharmaceuticals Consumer 13% 67% 20% 2013 sales 2013 sales 2013 sales +2% +2%* +4%* Respiratory HIV Oncology 28% 5% 4% 2013 sales 2013 sales 2013 sales +4% flat +22% EPP 16% 2013 sales *CER growth rate
Slide 19: GSK Financial Architecture ensuring focus on returns
GSK Financial Architecture ensuring focus on returns Sales growth Operating EPS leverage Focus Focus Returns to on on shareholders returns returns Financial Free Cash efficiency Flow Cash flow growth 19
Slide 20: Operating profit margin breakdown
Operating profit margin breakdown Operating margin down 0.5%, excluding currency % Sales growth 2012 Op margin 31.2% Currency (0.5%) Operating leverage COGS (1.3%) SG&A - Financial efficiency R&D 0.6% Royalties 0.2% Cash flow growth 2013 Op margin 30.2% 20
Slide 21: COGS
COGS % Sales growth 2012 COGS 26.9% Currency 0.3% Divestments / 0.3% Operating Royalty Settlement leverage 27.5% Deferrals & 1.3% one offs Financial efficiency Restructuring (1.1%) Investments 0.9% Cash flow Mix/Price (0.1%) growth 2013 COGS 28.5% 21
Slide 22: SG&A
SG&A % Sales growth SG&A 2012 29.9% Operating leverage Increase in (0.4%) Sales Cost & (1.2%) restructuring Financial efficiency Investments 1.6% Cash flow growth 2013 SG&A 29.9% 22
Slide 23: Continued delivery of restructuring benefits
Continued delivery of restructuring benefits Sales ~£400m incremental savings delivered in 2013 growth § Manufacturing efficiencies § Supply chain simplification and alignment Operating § New technologies leverage § Operational simplification § Centralisation of support functions § Improved capabili
Slide 24: Further financial efficiency gains
Further financial efficiency gains Sales Operating profit growth § Net funding rate reduced by 3% (vs 2010) Operating § Target debt rating maintained: A1/P1 leverage § Effective core tax rate 23.0% in 2013 § Core tax rate around 22% expected in 2014 § Patent box and other benefits to come Financial
Slide 25: Continued strong cash generation
Continued strong cash generation £4.7bn Free cash flow Sales 2013 (£m) growth 46 8,767 115 199 8,499 1,277 Operating 7,222 690 leverage 1,655 220 4,657 Financial efficiency Cash flow EBITDA Working Legal Other Cash Tax Net cash Interest Capex Minorities FCF growth cap from Ops from ops EBITDA as rep
Slide 26: Net debt reduced to £12.6bn
Net debt reduced to £12.6bn £2.5bn proceeds from divestments Sales 2013 (£m) growth 5,600 18,245 Operating 14,037 4,657 412 leverage 968 12,645 1,504 3,680 2,475 Financial efficiency Cash flow growth Net Debt FCF Disposals Dividends* Share Bolt-ons Other Net Debt Cash and Gross Debt 31/12/2012 buyba
Slide 27: Returns to shareholders
Returns to shareholders £5.2bn Cash returned to shareholders 2013 £3.7bn £1.5bn Dividends Buybacks 2013: 78p (+5%) 27
Slide 28: Guidance for 2014
Guidance for 2014 § Multiple drivers of sales growth in place Core EPS growth 4% to 8% CER § Contribution from new product launches (ex divestments) § Continued restructuring of operating costs on § Further financial efficiency gains Turnover growth § Strong cash generation and around 2% CER returns
Slide 29: Thank you
do more feel better live longer
Slide 30: New product launches underway across respiratory, HIV, oncology and vaccines
New product launches underway across respiratory, HIV, oncology and vaccines Market Respiratory Respiratory Metastatic Melanoma V600 HIV total Seasonal Flu definition Controller: Controller: Vaccines ICS/LABA Bronchodilator Current £8.5 bn £4.8 bn £0.4 bn £12.3 bn £2.0 bn global market size Current
Slide 31: Ongoing innovation in R&D delivering new products to patients
Ongoing innovation in R&D delivering new products to patients across key disease areas Recently Filed Expected Ph III data Potential Ph III starts approved 2014/15 2014/15 Respiratory Relvar/Breo Ellipta Anoro Ellipta mepolizumab mepolizumab (US, EU, J) (EU, J) asthma COPD Anoro Ellipta UMEC mono An
Slide 32: Assumptions for 2014 Core results ex divestments
Assumptions for 2014 Core results ex divestments Guidance Core EPS growth 4% to 8% CER (ex divestments) (from adjusted EPS ex divestments of 108.4p) Turnover growth Around 2% CER (ex divestments) (from adjusted turnover ex divestments of £25.6bn) Assumptions Net finance expense Broadly in line with
Slide 33: Currency exposure and Core EPS ready reckoner
Currency 2013 currency sales exposure Core EPS ready reckoner US $ 33 % US $ Euro € 19 % 10 cents movement in average exchange rate Japanese ¥ 7% for full year impacts EPS by approx. +/- 3.5% Other* 41 % Euro € 10 cents movement in average exchange rate * The other currencies that each represent for
Slide 34: Reference Slide: Methodology to estimate the IRR of GSK R&D's late-stage pipeline
Reference Slide: Methodology to estimate the IRR of GSK R&D’s late-stage pipeline Estimated Sales R&D Costs • Late-stage pipeline includes pharma NCEs, additional • R&D costs associated with the development of our current late-stage pipeline projects indications, and vaccines launched from 2011 onwa