2018 Full Year Results 6 February 2019
Cautionary statement regarding forward-looking statements This presentation may contain forward-looking statements. Forward- looking statements give the Group’s current expectations or fo recasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as ‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’, ‘plan’, ‘believe’, ‘target’ and other words and terms of similar meaning i n connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulations, UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, consult any additional disclosures that the Group may make in any documents which it publishes and/or files with the US Securities and Exchange Commission (SEC). All investors, wherever located, should take note of these disclosures. Accordingly, no assurance can be given that any particular expectation will be met and investors are cautioned not to place undue reliance on the forward-looking statements. Forward-looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that ar e beyond the Group’s control or precise estimate. The Group cautions investors that a number of important factors, including those in this presentation, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors include, but are not limited to, those discussed under Item 3.D ‘Risk factors’ in the Group’s Annual Report on Form 20 -F for FY 2017. Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors on the date of this presentation. A number of adjusted measures are used to report the performance of our business, which are non-IFRS measures. These measures are defined and reconciliations to the nearest IFRS measure are available in our Q4/FY 2018 earnings release and Annual Report on Form 20-F for FY 2017. All expectations and targets regarding future performance and the dividend should be read together with “Assumptions related to 2019 guidance and 2016- 2020 outlook” on page 45 of our full year and fourth quarter 2018 earnings release. 2
Agenda 2018 progress Emma Walmsley, Chief Executive Officer 2018 results and 2019 guidance Simon Dingemans, Chief Financial Officer Hal Barron, R&D update Chief Scientific Officer, President R&D Emma Walmsley, 2019 focus Chief Executive Officer Q&A: David Redfern, Chief Strategy Officer, Chairman of ViiV Luke Miels, President Global Pharmaceuticals Brian McNamara, CEO GSK Consumer Healthcare Roger Connor, President Global Vaccines 3
Emma Walmsley, CEO 6 February 2019
Sales growth at CER in all 3 businesses; improved Group margin and cashflow generation Pharmaceuticals New Respiratory products +38%* Group sales growth +2% CER of +5% HIV sales +11%; dolutegravir +16% Benlysta sales of +29% 0.5pp improvement in Group Adjusted operating margin Shingrix sales of £784 million Vaccines +16% CER US vaccines sales +48% Total EPS of 73.7p, Meningitis sales +2% + >100%; Adjusted EPS of 119.4p, +12% Consumer Wellness sales +1%; Oral health sales +4%; Healthcare Nutrition sales +1%; Skin sales -1% +2% CER FCF of £5.7 billion 5 All growth rates and margin changes at CER. The definitions and reconciliations for non-IFRS measures are set out on page 44 of our FY 2018 earnings release *New Respiratory includes the Ellipta portfolio and Nucala
Delivered improved operating performance and reshaped portfolio Pipeline strengthening New leadership and with increased oncology Innovation culture focus Business Development – Focus on launch Tesaro, 23andMe, execution Merck † alliance Performance Divestment of non-core Restructuring Pharma business assets New R&D approach with Buy out of Novartis Trust a focus on immunology, stake; proposed new genetics and technology Consumer JV with Pfizer* 6 † Transaction with Merck KGaA, Darmstadt, Germany expected to close Q1 2019 * Transaction to create the JV is expected to close in the second half of 2019, subject to approvals
Shingrix: driving market growth Strong uptake continues Investing in additional capacity Cumulative US TRx volume* US CDC recommendations expanding market 6m o ~35% under age 65 o ~35% previously vaccinated 5m o ~60% doses administered in pharmacies 4m o >75% completing second dose in series 3m Sales of £784 million for 2018 2m More than 9 million doses administered globally 1m since launch m Expect high teens millions annual dose capacity over next 2-3 years; continued investment in expanding capacity for the longer term * IQVIA data represents ~60% of market 7
Respiratory: continued strong growth from new products Trelegy: strong launch execution Nucala: growth in a competitive market US TRx volume since launch* Total US sales $ (retail & non-retail) 25k 20k $12m Nucala $10m 15k Competitor W * $8m 10k $6m Competitor X 5k $4m Competitor Y k $2m Competitor Z * $0m Continued strong growth, with sales of £563 million, +66% CER Strong launch in COPD with first full year sales of £156 million Maintained market leading position IMPACT data demonstrates differentiation o US label updated April 2018 Only biologic for SEA with long-term efficacy and safety data o EU label updated Nov 2018 up to 4.5 years (COLUMBA) Launched in 26 markets to date HCP policy changes and brand repositioning improved US new patient growth CAPTAIN study in asthma reports 1H 2019 At-home self-administration approval expected in 2019 * Source: TRx data from IQVIA 8 Source: Adjusted weekly IQVIA National Sales Perspective, *factored for indication
HIV: performance strong across DTG portfolio and momentum building for the 2DRs 2DRs: new options for patients to reduce Dolutegravir maintaining share of drug burden STR/Core agent market 30% dolutegravir + lamivudine 27.1% Oral 2DR for naive & switch patients 25% Q2 2019 Anticipated US approval 20% Q3 2019 GEMINI I&II 96-week data 13.3% Q3 2019 TANGO switch study data 15% 12.9% Q3 2019 Anticipated EU FDC approval 12.6% 10% cabotegravir + rilpivirine 5% Long-acting injectable 2DR 1.2% 0% Q2 2019 ATLAS/FLAIR pivotal data presentation Q2/Q3 2019 EU and US filings Q3 2019 ATLAS2M (8 week dosing) study data Tivicay Triumeq DTG Total Q1 2020 Anticipated US approval Juluca Competitor Source: IQVIA NPA w/e 19 Jan 2018 9
Focus on delivering business priorities 2019 priorities New global Innovation Pharmaceuticals and • Strengthen pipeline Vaccines company with • Execution of launches R&D focused on science of the immune system, genetics and – Drive operating advanced technologies performance Performance – Progress • Driving growth and operating performance pipeline • Plan for the integration of Pfizer consumer – Successful health business New world-leading integration Consumer Healthcare Trust company with category • Regular updates on innovation leading power brands and • Global health focused for impact science based innovation • Modern employer 10
2018 results and 2019 guidance Simon Dingemans, CFO
Headline results Continued sales growth and investment in the future FY 2018 Reported growth % £m AER CER Turnover 30,821 2 5 Total operating profit 5,483 34 43 Total EPS 73.7p >100 >100 Adjusted operating profit 8,745 2 6 Adjusted EPS 119.4p 7 12 Free cash flow 5,692 63 n/a 12
Results reconciliation 2018 full year results Disposals, Intangible Intangible Major Transaction significant US Tax Total Adjusted results amortisation impairment restructuring related legal and other reform results Turnover 30.8 30.8 (£bn) Operating 5.5 0.6 0.1 0.8 2.0 (0.2) - 8.7 profit (£bn) EPS 73.7 9.6 2.0 13.1 30.2 (9.2) - 119.4 (pence) 2017 EPS 31.4 9.4 10.5 17.4 19.2 (9.4) 33.3 111.8 (pence) 13
Sales growth Growth at CER across all three businesses 2018 All figures £m 2017 sales at '17 rates 30,186 Pharma up 2% CER 403 Vaccines up 16% CER 830 Consumer up 2% CER 161 CER +5% 31,580 FX -3% 759 AER +2% 30,821 14
Adjusted operating margin Investment in new products, funded by R&D portfolio rationalisation & cost efficiencies 2018 Sales up 5% CER at actual rates 2017 Adjusted operating margin 28.4% 33.3% Pharma COGS up 6% CER 0.4% (-90 bps CER) SG&A up 4% CER 0.3% +0.5% CER R&D down 2% CER 0.8% 33.0% Vaccines Royalties down 17% CER 0.2% (+250 bps CER) 2018 margin at 17 FX 28.9% Currency 0.5% 19.8% Consumer (+220 bps CER) 2018 margin at 18 FX 28.4% 15
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