Gsk Plc · LSE:GSK
Gsk — GlaxoSmithKline — FY2002 Earnings Presentation
64 slides from Gsk's earnings presentation, Feb 12, 2003
Slide 1: Full Year Results 2002
Full Year Results 2002 Presentation to Investors/Analysts 12th February 2003
Slide 2: Financial Results
Financial Results John Coombe Chief Financial Officer
Slide 3: Strong Sales & EPS Performance in 2002
Strong Sales & EPS Performance in 2002 2002 % change Business Performance £bn CER Sterling Sales 21,212 7 4 - Pharma 17,995 8 5 - Consumer 3,217 2 (2) EPS 78.3p 13 8 3
Slide 4: Strong Sales & EPS Performance in 2002
Strong Sales & EPS Performance in 2002 2002 % change Business Performance £bn CER Sterling G oal cia l R) Sales 21,212 in a n7 ( CE4 K eyF t 10% 200 2 lea s f a t - Pharma o wt 17,995ho 8E D! 5 S gr H IE V EP AC - Consumer 3,217 2 (2) EPS 78.3p 13 8 4
Slide 5: Statutory Results
Statutory Results Business Exceptional Total Total Performance Items 2002 2001 £m £m £m £m Sales 21,212 - 21,212 20,489 Trading Profit 6,694 (1,032) 5,662 4,697 Profit Before Tax 6,517 (1,011) 5,506 4,517 EPS 78.3p (12.1p) 66.2p 50.3p 5
Slide 6: Q402 Business Performance P&L
Q402 Business Performance P&L 4Q02 4Q01 Change Change £m £m CER% £% Sales 5,668 5,616 7 1 Cost of Goods (1,075) (1,264) (13) (15) 19.0% 22.5% SG&A (2,041) (1,918) 14 6 36.0% 34.2% R&D (847) (708) 24 20 14.9% 12.6% Trading Profit 1,705 1,726 5 (1) Profit Before Tax 1,709 1,730 7 (1) Earnings Per Shar
Slide 7: 2002 Business Performance P&L
2002 Business Performance P&L 2002 2001 Change Change £m £m CER% £% Sales 21,212 20,489 7 4 Cost of Goods (4,243) (4,430) (2) (4) 20.0% 21.6% S,G&A (7,543) (7,451) 5 1 35.5% 36.4% R&D (2,732) (2,555) 9 7 12.9% 12.5% Trading Profit 6,694 6,053 15 11 31.6% 29.5% Profit Before Tax 6,517 6,169 11 6 Earn
Slide 8: Leveraging the Business
Leveraging the Business “£1.8bn Annual Cost Savings by 2003” 4 Being Delivered 8
Slide 9: Leveraging the Business
Leveraging the Business “£1.8bn Annual Cost 4 Being Delivered Savings by 2003” “Operational Excellence to 4 Continuous Improvement be implemented” 9
Slide 10: Leveraging the Business
Leveraging the Business “£1.8bn Annual Cost 4 Being Delivered Savings by 2003” “Operational Excellence to 4 Continuous Improvement be implemented” “Trading Profit Margin: +2%” 4 2001 = 29.5%; 2002 = 31.6% 10
Slide 11: Leveraging the Business
Leveraging the Business “£1.8bn Annual Cost 4 Being Delivered Savings by 2003” “Operational Excellence to 4 Continuous Improvement be implemented” “Trading Profit Margin: +2%” 4 2001 = 29.5%; 2002 = 31.6% “COGs should improve as a % of sales in 2002 4 2001 = 21.6%; 2002 = 20% 11
Slide 12: Exchange Rate Impact: Full Year 2003
Exchange Rate Impact: Full Year 2003 £/$ Movement EPS Impact • 5 Cent +/- 2.5% • 10 Cent +/- 5.0% £/Euro Movement EPS Impact • 5 Cent +/- 1.0% • 10 Cent +/- 2.0% If Exchange Rates hold as at 31/01/03 ($1.64/ €1.53): Expect 6% impact to 2003 EPS 12
Slide 13: Continued, Strong Cash Generation
Continued, Strong Cash Generation 2002/£m 2001/£m Net Operating Cash Flow 7,255 6,507 Interest (237) (191) Taxation (1,633) (1,717) Capital Expenditure (1,044) (1,115) Dividends (2,327) (2,325) Purchase of Own Shares (2,220) (2,069) Purchase of Block Drug Inc. 0 (742) Other (28) 162 (Increase) in Ne
Slide 14: Financial Highlights
Financial Highlights • 2002 Earnings Guidance Achieved • Maximising Profitability • Strong Cashflow & New £4bn Share Buyback • Expect to deliver 2003 EPS growth of high single digits* * Earnings guidance represents growth at constant exchange rates and excludes merger, restructuring costs and dispos
Slide 15: Pharmaceutical Sales
Pharmaceutical Sales David Stout President Pharmaceutical Operations
Slide 16: 2002 Sales Performance
2002 Sales Performance Europe £4.7bn (+2%) USA £9.8bn International (+13%) £3.5bn (+4%) Total Pharma Sales £18bn +8% 16 % growth – 12 months ended 31st December 2002
Slide 17: 2002 US Sales Performance
2002 US Sales Performance Europe £4.7bn (+2%) USA £9.8bn International (+13%) £3.5bn (+4%) 17 % growth – 12 months ended 31st December 2002
Slide 18: 2002 Europe Performance
2002 Europe Performance Europe £4.7bn (+2%) USA £9.8bn International (+13%) £3.5bn (+4%) 18
Slide 19: 2002 International Performance
2002 International Performance Europe £4.7bn (+2%) USA £9.8bn International (+13%) £3.5bn (+4%) 19
Slide 20: 2002: Sales By Therapy Area
2002: Sales By Therapy Area Diverse Portfolio Delivers Strong Growth Other £0.9bn (-17%) Oncology & CV £1.6bn (+18%) CNS Vaccines £4.5bn (+17%) £1.1bn (+16%) Metabolic & GI £1.4bn (+1%) Respiratory £4.0bn (+16%) Anti-Bacterials Anti-Bacterials £2.2bn (-12%) Total Pharma Sales Anti Virals £2.3bn (+12
Slide 21: Driving Pharmaceutical Growth
Driving Pharmaceutical Growth Fast-Growing Life Cycle New Products Franchises Management 21
Slide 22: Fast-Growing Franchises
Fast-Growing Franchises Advair/Seretide £1,631m + 96% HIV £1,465m + 13% Vaccines £1,080m + 16% Avandia/Avandamet £809m + 19% Zofran £708m + 22% Lamictal £438m + 27% Valtrex £425m + 26% Coreg £306m + 27% 22
Slide 23: Seretide: Europe
Seretide: Europe • No. 1 Product in Europe • £608m sales +36% • Fastest growing product in Europe’s top 10 pharmaceuticals* • COPD expected 1H2003 23 * IMS Sept 2002 MAT by value
Slide 24: Outstanding US Performance
Outstanding US Performance • No. 2 product in US 25% US Share of NRx • £876m sales +179% Advair • No. 1 in asthma NRx Singular • Future opportunities: 20% – Asthma Guidelines – COPD – Paediatric 15% 02 02 02 -02 2 -02 02 02 01 02 02 02 02 Jul-0 Oct- Apr- Mar- Feb- Jun- Dec- Sep- Dec- Jan- Nov- May A
Slide 25: Avandia Franchise
Avandia Franchise 9.8 US Share of NRx 9.6 • No. 5 product Avandamet Launch 9.4 • £809m sales +19%; US +15% % 9.2 • 4m+ patients 9.0 8.8 8.6 • One pill targets insulin 8.4 resistance and glucose 2 02 2 2 02 2 2 reduction t-0 l-0 c-0 g-0 v-0 n- p- Ju Oc De Ju Au No Se 25 Source: Scott Levin OAD NRx Ma
Slide 26: US Type 2 Diabetes Market: Growth Opportunity
US Type 2 Diabetes Market: Growth Opportunity Type 2 diabetes estimated patient population 6.6m Undiagnosed Potentially 13 4m million patients at ADA Goal that need better 6.4m control to manage On therapy NOT at ADA goal type 2 diabetes Total: 17m 26 Source: Harris MI et al. Diabetes Care. 1999:22:
Slide 27: £1bn+ and growing fast!
£1bn+ and growing fast! £0.4bn +27% – US Paediatric approval Jan. 2003 – Bipolar indication filed £0.4bn +26% – First ever indication to reduce transmission risk filed – Once Daily treatment of Cold Sores £0.3bn +27% – Positive FDA Adcom Adcom.. for Post MI - Jan. 2003 27
Slide 28: Driving Pharmaceutical Growth
Driving Pharmaceutical Growth Fast-Growing Life Cycle New Products Franchises Management 28
Slide 29: Augmentin Paediatric Conversion Since Launch
Conversion Since Launch TRx Share of Augmentin Paediatric Market 50% 49% Generic Entry 40% 30% (%) 20% 10% 0% k6 k1 1 6 6 6 1 1 1 1 6 1 6 6 k1 k4 k1 k2 k3 k4 k5 k6 k6 k2 k5 k3 ee ee ee ee ee ee ee ee ee ee ee ee ee ee W W W W W W W W W W W W W W Since Launch Source: Verispan, Scott-Levin SPA 29 Conv
Slide 30: Augmentin Adult Conversion Since Launch
Conversion Since Launch TRx Share Augmentin Adult Market % 14% 14% 7% Christmas & New Year 0% k1 k2 k3 k4 k5 k6 k8 k9 k7 3 0 5 1 4 2 k1 k1 k1 k1 k1 k1 ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee W W W W W W W W W W W W W W W Source: Verispan, Scott-Levin SPA 30 Conversion includes Augmentin non-bra
Slide 31: Total US Augmentin Market: TRxs
Total US Augmentin Market: TRxs Wk Ended Jan 31 Augmentin Reg. Generic 10% 61% 21% Augmentin ES 8% Augmentin XR 31
Slide 32: Paxil NRx: % share converted to Paxil CR
Paxil NRx: % share converted to Paxil CR 0% 5% 10% 15% 20% 25% 30% 35% 19- Apr 26- -02 A 03- pr-02 Ma y-0 10- 2 Ma 17- y -0 Ma 2 24- y-02 Ma 31- y-02 Ma y 07- -02 Jun 14- -02 Ju 21- n-02 Jun 28- -02 Jun 05- -02 Jul 12- -02 Jul 19- -02 Jul 26- -02 Ju 02- l-02 Aug 09- -0 Aug 2 -0 Source: Scott Levin P
Slide 33: Driving Pharmaceutical Growth
Driving Pharmaceutical Growth Fast-Growing Life Cycle New Products Franchises Management 33
Slide 34: Avodart: DHT Blocker
“DHT Blocker” • First and only dual 5 alpha- reductase inhibitor • Rapid and consistent DHT inhibition: – 90% at 2 weeks – 93% at 2 years • MTOPS Study • Phase III initiated for prevention of prostate cancer 34
Slide 35: Levitra launch status and US ED market
US ED Market Launch Status Diagnosed 19% Undiagnosed 81% • EU: March Onwards • US: Expected 2H03 30m Total (US Male 40+ with ED) 35 Source: Decision Resources Adaptation of MMAS study 2001
Slide 36: Pediarix: first 5-in-1 vaccine
TIME “This has been in • First 5-in-1 vaccine in development for USA 10 years and meets every • Launched Jan 2003 single standard of safety and effectiveness.” — Dr. Joel Ward Time Magazine 36
Slide 37: Wellbutrin XL
First & only once-daily antidepressant with a low incidence of sexual dysfunction and weight gain - Filed August 2002- 37
Slide 38: Driving Pharmaceutical Growth
Driving Pharmaceutical Growth Fast-Growing Life Cycle New Products Franchises Management Advair/Seretide Avandamet HIV Augmentin ES Avodart Vaccines Avandia/Avandamet Augmentin XR Levitra Zofran Lamictal Paxil CR Pediarix Valtrex Coreg Wellbutrin XL 38
Slide 39: Strategies for Growth
Strategies for Growth Jean-Pierre Garnier Chief Executive Officer
Slide 40: GSK Strategies For Growth
GSK Strategies For Growth Launch New Products Grow Key 2003 Franchises Patent Risk 40
Slide 41: Evolution of Business
Evolution of Business Q401 Q402 New Other Other New 21% 19% 23% 27% Patent Risk* Patent 14% Franchise Risk* 37% 19% Franchise 40% * Q401 Patent Risk = US Paxil IR; US Wellbutrin; US Augmentin IR; US Ceftin 41 Q402 Patent Risk = US Paxil IR; US Wellbutrin; US Augmentin IR
Slide 42: GSK Strategies For Growth
GSK Strategies For Growth Leveraging the Business Launch New Products Grow Key 2003 Franchises Patent Risk 42
Slide 43: GSK Savings Progress
GSK Savings Progress • Original synergy target achieved 1 year ahead of schedule 4 43
Slide 44: GSK Strategies For Growth
GSK Strategies For Growth Build BEST Pipeline in the Industry Leveraging the Business Launch New Products Grow Key 2003 Franchises Patent Risk 44
Slide 45: Building the BEST Pipeline In the Industry
Building the BEST Pipeline In the Industry • Harvesting New Technologies 45
Slide 46: Investment in integrated platform technologies
Investment in integrated platform technologies High High High Throughput Throughput Throughput Gene Chemistry Screening Sequencing • HGS, 1993 • Affymax, 1995 • Evotec, 1997 • Incyte, 1997 • Technology • Aurora, 1999 Partnership, 1996 46
Slide 47: GSK: From Gene Cloning to Candidate Selection
GSK: From Gene Cloning to Candidate Selection Years Industry Average 5-6 HCV polymerase 2.25 inhibitor Urotensin-II 3.25 receptor antagonist Vanilloid 3.0 receptor antagonist 47
Slide 48: Building the BEST Pipeline In the Industry
Building the BEST Pipeline In the Industry • Harvesting New Technologies • Optimising the Organisation 48
Slide 49: CEDD Network
CV Me tab Vir olic al Mi cr ob ial Ne ur olo gy Ps yc hia CEDD Network try Re sp ira to ry Va cc ine s 49
Slide 50: CEDD Network
CV TANABE Me tab Vir olic al Mi cr ob ial EXELIXIS Ne ur olo gy Ps yc hia CEDD Network try CYTOKINETICS Re sp ira tor y Va cc ine SHIONOGI s 50
Slide 51: CEDD Productivity: NCE Phase I Starts
CEDD Productivity: NCE Phase I Starts 35 fGW + fSB 1999 achieved 30 2000 achieved 25 20 15 15 14 10 5 0 Note: *2003 projections are adjusted for attrition 51
Slide 52: CEDD Productivity: NCE Phase I Starts
CEDD Productivity: NCE Phase I Starts 35 fGW + fSB 1999 achieved 30 2000 achieved GSK 25 2001 achieved 20 15 15 15 14 10 5 0 Note: *2003 projections are adjusted for attrition 52
Slide 53: CEDD Productivity: NCE Phase I Starts
CEDD Productivity: NCE Phase I Starts 35 fGW + fSB 1999 achieved 30 2000 achieved 25 GSK 25 2001 achieved 2002 achieved 20 15 15 15 14 10 5 0 Note: *2003 projections are adjusted for attrition 53
Slide 54: CEDD Productivity: NCE Phase I Starts
CEDD Productivity: NCE Phase I Starts 35 32* fGW + fSB 1999 achieved 30 2000 achieved 25 GSK 25 2001 achieved 2002 achieved 20 2003 projections 15 15 15 14 10 5 0 Note: *2003 projections are adjusted for attrition 54
Slide 55: CEDD Productivity: NCEs Phase II Starts
CEDD Productivity: NCEs Phase II Starts 14 fGW + fSB 1999 achieved 12 2000 achieved 10 8 6 5 4 4 2 0 Note: *2003 projections are adjusted for attrition 55
Slide 56: CEDD Productivity: NCEs Phase II Starts
CEDD Productivity: NCEs Phase II Starts 14 fGW + fSB 1999 achieved 12 2000 achieved GSK 10 2001 achieved 8 6 6 5 4 4 2 0 Note: *2003 projections are adjusted for attrition 56
Slide 57: CEDD Productivity: NCEs Phase II Starts
CEDD Productivity: NCEs Phase II Starts 14 fGW + fSB 1999 achieved 12 2000 achieved 10 GSK 10 2001 achieved 2002 achieved 8 6 6 5 4 4 2 0 Note: *2003 projections are adjusted for attrition 57
Slide 58: CEDD Productivity: NCEs Phase II Starts
CEDD Productivity: NCEs Phase II Starts 14 13* fGW + fSB 1999 achieved 12 2000 achieved 10 GSK 10 2001 achieved 2002 achieved 8 2003 projections 6 6 5 4 4 2 0 Note: *2003 projections are adjusted for attrition 58
Slide 59: Building the BEST Pipeline: Partner of Choice
Building the BEST Pipeline In the Industry • Harvesting New Technologies • Optimizing the Organization • Becoming “Partner of Choice” 59
Slide 60: Alliances and in-licensed compounds by phase
Biovail Wellbutrin once daily Depression Filed Bayer Levitra Male erectile dysfunction Filed Scios nesiritide (in EU) Acute heart failure Filed Adolor Alvimopan Postoperative ileus Phase III Gilead adefovir dipivoxil (in RoW) Hepatitis B Phase III Roche Ibandronate Osteoporosis Phase III Elbion PDE
Slide 61: Partner Of Choice
“Partner Of Choice” 20 fGW + fSB: 1999 -2000 achieved 15 10 7 6 5 99-00 01-02 99-00 01-02 Pre-Clinical In-Clinic 61
Slide 62: Partner Of Choice
“Partner Of Choice” 20 fGW + fSB: GSK: 1999 -2000 achieved 2001-2002 achieved 16 15 10 8 7 6 5 99-00 01-02 99-00 01-02 Pre-Clinical In-Clinic 62
Slide 63: GSK Scorecard
GSK Scorecard • Commercial Strength • Partner of Choice • Financial Strength • Operational Excellence • Best Pipeline TRACK ON 63
Slide 64: GlaxoSmithKline
~ / GlaxoSmithKline