GSK delivers further progress against strategy with strong Q2 performance
Group sales £6.5 billion, +4% CER, with growth across all three businesses
-Pharmaceuticals £3.9 billion, +2%; Vaccines £960 million, +11%; Consumer Healthcare, £1.7 billion, +7%
New product sales £1.05 billion (Q2 2015, £446 million; Q1 2016, £821 million) driven by HIV (Tivicay,Triumeq), Respiratory (Relvar/Breo, Anoro, Incruse, Nucala) and Meningitis vaccines (Bexsero, Menveo)
-New Pharmaceutical product sales represent 23% of total Pharmaceutical sales (Q2 2015: 11%)
– Sales growth of new respiratory products more than offset decline in sales of Seretide/Advair
New product sales and transaction & restructuring benefits drive improved operating leverage and margin delivery across all three businesses
– Incremental cost savings of £0.3 billion in Q2 2016, with total annual cost savings now at £2.3 billion against end 2017 target of £3 billion
– Q2 core operating margins: Pharmaceuticals 35%, Vaccines 28%, Consumer Healthcare 14%
Q2 core earnings per share 24.5p, +16% CER
Q2 total loss per share reflects impact of significant Sterling currency adjustment to valuations of liabilities associated with Consumer Healthcare and HIV businesses
– Sterling forecasts for sales and cash flows increased for majority-owned Consumer Healthcare and HIV businesses
– Sterling forecasts for liabilities attributable to minority interests therefore also increased, resulting in charges of £1.8 billion in Q2 2016
2016 core EPS percentage growth now expected to be 11-12% CER
– If FX rates held at Q2 period end rates estimated impact of +19% on 2016 Sterling core EPS growth
Q2 Net cash inflow from operations of £1.2 billion (Q2 2015: £0.2 billion)
19p dividend declared for Q2. Continue to expect 80p for FY 2016 and 2017
R&D pipeline development continues in core therapy areas:
– EU approval received for Strimvelis first gene-therapy for ADA-SCID
– Four significant filings expected in H2 2016: Closed Triple for COPD, Shingrix vaccine for shingles; Benlysta subcutaneous for lupus; sirukumab for RA
– Novel anti-IL33R monoclonal antibody for severe asthma licensed from Janssen
– First in class ICOS agonist antibody in Oncology enters clinical development
