GSK delivers sales growth, improved cash flow and sustained pipeline progression in Q3

Summary

  • Group sales £7.5 billion, +8% CER, with continued growth across all three businesses
    • Pharmaceuticals £4.1 billion, +6%; Vaccines £1.6 billion, +20%; Consumer Healthcare £1.9 billion, +5%
  • New product sales £1.21 billion +79% (Q1 2016: £821 million; Q2 2016: £1.05 billion) driven by HIV (Tivicay,Triumeq), Respiratory (Relvar/Breo, Anoro, Incruse, Nucala) and Meningitis vaccines (Bexsero, Menveo)
    • New Pharmaceutical product sales represent 25% of total Pharmaceutical sales (Q3 2015: 14%)
  • Improved operating leverage driven by sales growth, delivery of restructuring and integration benefits and continued tight control of costs including targeted reinvestments
    • Q3 Group core operating profit margin 30.7% (Q3 2015: 28%)
    • Incremental cost savings of £0.2 billion in Q3 2016, with total annual cost savings now at £2.5 billion and on track to deliver target of £3 billion in total
  • Q3 total earnings per share 16.6p, -1% CER, impacted by charges resulting from increases in valuations of Consumer Healthcare and HIV businesses
  • Q3 core earnings per share 32p, +12% CER
  • Continue to expect 2016 core EPS percentage growth to be 11-12% CER
    • If FX rates held at Q3 period end levels, estimated impact of +21% on 2016 Sterling core EPS growth
  • Q3 net cash inflow from operations of £1.8 billion (Q3 2015: £0.5 billion)
  • 19p dividend declared for Q3. Continue to expect 80p for FY 2016 and 2017
  • Sustained delivery in R&D pipeline:
    • H2 2016 filings: Shingrix filed in US and on track to be filed in EU in Q4; Closed Triple for COPD on track to be filed in US and EU in Q4; Benlysta subcutaneous for lupus and sirukumab for RA both filed in US and EU
    • Veramyst Rx to OTC switch approved by FDA (expected launch Q1 2017)
    • Phase III trials started for two-drug regimen in HIV (dolutegravir and lamivudine) in Q3; four Phase III trial starts for assets in HIV, respiratory and anaemia expected in Q4
    • Key data points expected on between 20-30 potential assets by end 2018

 Sir Andrew Witty, Chief Executive Officer, GSK said:

“Our third quarter results reflect strong performances across the Group and the sustained progress we have made over the course of 2016 to deliver sales growth of new products,   maintain effective cost control and execute on our restructuring and integration   plans. With this positive momentum, we are confident in achieving our   earnings guidance for the year for core EPS growth of 11-12% on a CER basis.

“Our most recent review of the Group's pipeline reinforces our confidence in the near-term portfolio and   the options we have in early-to-mid stage development. With the filing of Shingrix   in the US this week, we have completed three of the four regulatory   filings targeted for the second half of 2016, and we expect to start four   Phase III trials for assets in HIV, respiratory and anaemia before the end of   the year. In earlier development, five assets have started Phase II trials so far this year. In the remainder of this year and over the course of 2017/18,   we expect to see important data for between 20-30 assets in clinical   development and in core therapy areas including oncology and   immuno-inflammation.”