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 deliveryacross 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 associatedwith 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


Sir Andrew Witty, Chief Executive Officer, GSK said:

“This second quarter's performance reflects further strong execution of the Group's strategy and our ability to allocate capital effectively across our three businesses to improve returns. Momentum across the Group is  being driven by growth in new product sales, continued cost control and delivery of restructuring and transaction benefits. We have also made good progress in research and development, and in the second half of 2016, expect to complete key regulatory filings for Shingrix, Closed Triple, Benlysta SC and sirukumab.”