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.”