GSK delivers continued momentum in 2016 through broadly-based sales growth, improved cash flow and further pipeline progression


  • Group sales £27.9 billion, +6% CER on a reported basis , +5% CER pro-forma

    -      Pharmaceuticals £16.1 billion, +3% (+4 % pro-forma); Vaccines £4.6 billion, +14% (+12% pro-forma); Consumer Healthcare £7.2 billion, +9% (+5% pro-forma)

  • New product sales more than doubled to £4.5 billion; Q4 £1.4 billion, +71% CER. Driven by HIV (Tivicay,

    Triumeq),Respiratory(Relvar/Breo,Anoro, Incruse, Nucala) andMeningitis vaccines(Bexsero, Menveo)

    -      New Pharmaceutical products sales represented 24% of 2016 Pharmaceuticals sales; 27% of Q4 sales

  • Improved core operating leverage across all three businesses

    -      Group core operating profit margin 27.9%; Pharmaceuticals 34.1%; Vaccines 31.7%; Consumer 15.5%

    -      Incremental annual cost savings of £1.4 billion delivered in 2016, with total annual cost savings now at

    £3.0 billion including currency benefit of £0.2 billion

  • 2016 core EPS 102.4p, +12% CER
  • 2016 total EPS 18.8p, -99% CER, primarily reflecting comparison with £9.2 billion profit in 2015 from disposal of marketed Oncology assets
  • 2016 net cash flow from operations of £6.5 billion (2015: £2.6 billion), reflecting improved operating performance and the net benefit of exchange rate movements
  • GSK and Shionogi have agreed to remove the Shionogi put option and first two exercise windows of GSK’s call option in relation to ViiV Healthcare.  Liability for put option of £1.2 billion de-recognised to equity
  • 23p dividend declared for Q4 delivering total dividend for 2016 of 80p.  Continue to expect 80p dividend for 2017
  • Continued progress by the Group expected in 2017 although core EPS growth subject to uncertainty of timing and impact of possible generic competition to Advair in the US

    -      In the event of no generic competition to Advair in the US, expect 2017 core EPS growth to be 5-7% CER

    -      In the event of a mid-year introduction of a substitutable generic competitor to Advair in the US, expect full year 2017 US Advair sales of ~£1 billion at CER (US$1.36/£1) with core EPS flat to a slight decline in percentage terms at CER

    -      January 2017 average exchange rates, if applied to whole of 2017, would benefit Sterling turnover by around 6% and core EPS by around 9%

  • Sustained pipeline progress with multiple milestones expected in 2017/18:

    -      Filed 4 assets with regulators in H2 2016 (Shingrix; Closed Triple; Benlysta SC; sirukumab), with regulatory decisions expected by end 2017

    -      4 key phase III starts in Q4 for assets in HIV, respiratory and anaemia

    -      Continue to expect key data on between 20-30 assets by end 2018 in areas including HIV, respiratory, immuno-inflammation, oncology and vaccines

Sir Andrew Witty, Chief Executive Officer, GSK said:

“2016 has seen GSK perform strongly with good sales growth across all three businesses, excellent new product momentum, disciplined cost control and further pipeline progress. Core EPS for the year was 102.4p, up 12% CER and we have announced a dividend of 23 pence for the quarter, making a total dividend for shareholders of 80 pence for 2016.

“Our performance reflects the investments we have made to build new scale and sustainability in the Group and to develop new products. We expect the sales momentum of our new products to continue and, with regulatory decisions on other major product opportunities also expected this year, like Shingrix and Closed Triple, we remain confident in the financial outlook we have previously set out for investors.

“Clearly, this year we face some uncertainty as to the level of our earnings performance, given the possibility of substitutable generic competition to Advair in the US, and this is reflected in the guidance we have issued today. This event is something we have anticipated and prepared for, and whilst there will be an inevitable financial impact to absorb, we fully expect to maintain leadership in this therapy area given our new product portfolio and the innovation we have in our pipeline.

“The next 24 months will be significant for GSK’s pipeline and it marks the start of another intense period of R&D activity for the company, as we expect important data read-outs on around 20-30 assets in HIV, respiratory, immuno-inflammation, oncology and vaccines.

“This quarter marks the last I will report to shareholders after nearly 10 years as CEO and more than 30 years as an employee. GSK is a very special company that touches people’s lives across the world and I feel enormously privileged to have had the opportunity to lead it. I would like to thank all of GSK’s employees, partners and shareholders for their support to build a company that delivers strong financial performance and meaningful contributions to society.”

Thomas Willemsen, General Manager, GSK China Pharmaceuticals and Vaccines said:

Overall, China market performance is improving. A 23% decline of ex-GSK sales in Q4 was the result of an unwinding of wholesaler stocking that occurred in Q3 prior to an IT system change, it does not reflect our market performance. When we look at the in-market performance of Q4 we see a continuation of our improved delivery that started from Q3, with a 10% growth of our promoted pharmaceutical products, driven by double-digit growths of our key brands in Respiratory and Hepatitis due to successful execution of our new operating model and implementation of national price negotiation results. 

We remain optimistic about our short to mid-term business growth opportunities, which will be driven by the launch of our new cervical cancer prevention vaccine in 2017 and robust pipeline of respiratory and HIV products in the next 18 months.