JP Morgan 2011 Healthcare Conference - gsk.com · JP Morgan 2011 Healthcare Conference David...
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JP Morgan 2011 Healthcare Conference
David Redfern, Chief Strategy Officer12 January 2011
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GSK performance through patent cliff + Avandia
GSK patent cliff + Avandia2006-2009
5,000
6,000
PaxilReQuipFlonase
£5.4bn (23% of GSK’s total turnover)
4,000
FlonaseImitrexZofranCoregLamictalWellbutrinel
ecte
d pr
oduc
ts
2,000
3,000 Avandia
£1.2bn
S tu
rnov
er fo
r se
1,000
(4% of GSK’s total turnover)
US
2
0
2006 2009CER growth rates. Total franchise turnover included above; Business Performance EPS excludes major restructurings.
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GSK performance through patent cliff + Avandia
+9% +2%-3%
+3%
20
25
30
Turnover £bn
GSK patent cliff + Avandia2006-2009
+19% +10% -9%+2%
120140
152005 2006 2007 2008 2009
5,000
6,000
PaxilReQuipFlonase
£5.4bn (23% of GSK’s total turnover)
EPS+19% +10%
020406080
100
2005 2006 2007 2008 2009
penc
e
4,000
FlonaseImitrexZofranCoregLamictalWellbutrinel
ecte
d pr
oduc
ts
FCF2 0003,0004,0005,0006,000
£bn2,000
3,000 Avandia
£1.2bn
S tu
rnov
er fo
r se
01,0002,000
2005 2006 2007 2008 20091,000
(4% of GSK’s total turnover)
US
Dividend
3
penc
e0
2006 2009CER growth rates. Total franchise turnover included above; Business Performance EPS excludes major restructurings.
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GSK’s strategic priorities
Grow a diversified global businessGrow a diversified global business
Deliver more products of value
Simplify the operating modelSimplify the operating model
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Grow a diversified global business
Drive & diversify small molecule Rx business
Prophylacticvaccines
Therapeuticvaccines
BiopharmVaccines Globalise & innovate consumer brands
PharmaPharmaLeverage current & future vaccines portfolio
Emergingmarket OTC
Consumer
Deliver Biopharm R&D pipeline
brands OTC
Oral care/nutritionals
Launch past, present, future portfolio in Japan
nutritionalsStrengthen Emerging Markets business
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Turnover growth +4% despite decline in US Pharma
+5%
+15%
US
Rest of Pharma£0.7bn
Asia Pac/J Ph
Consumer £3.7bn
+17% -7%
US Pharma£5.8bn
Emerging Markets Pharma
Japan Pharma£2.3bn
EuropePharma£4.9bn
Markets Pharma£2.6bn
+24%ViiV(HIV)
£1 2bn
+3%
£1.2bn-2%
CER growth rates; Business performance
3%
GSK 3Q YTD 2010 Turnover £21.2bn +4%6
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Underlying turnover +5% 3Q10 YTD
Total reported +4%
% Change CER 3Q10 YTD
£ million
21 195Total reported
Avandia
+4%
-33%
21,195
391
Pandemic*
Valtrex
>100%
-60%
1,141
436
Total excl. Pandemic,Avandia, Valtrex +5%19,227
* Pandemic includes includes Relenza and vaccines related to H5N1 pre-pandemic and H1N1 pandemic. 7
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Investment businesses reaching significant scale and delivering sustained growth
30% of GSK sales generated from expansion markets
Derm: 4% of GSK+5% 3Q10 YTD
Cx: 19% of GSK
Vx: 11% of GSK+7% 3Q10 YTD
+2% in 2009Resp: 26% of GSK
+4% 3Q10 YTD+5% 3Q10 YTD
+7% in 2009
4% 3Q10 YTD+5% in 2009
CER growth rates% of GSK based on 3Q10 YTD excluding pandemic products; vaccines growth excludes pandemic vaccine; (including pandemic FY’09 +30%;3Q10 YTD +51%); derm growth rate is proforma Expansion markets = Emerging markets / Asia Pac / Japan & Central & Eastern Europe (Rx +Cx) 8
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Creating a broader portfolio of potential high value assets as generic exposure declines
Horizant
Benlysta
PotigaNew products 3Q10 YTD
£1 25b +36% (+55% l di R t i 27%)
MenhibrixHorizant£1.25bn +36% (+55% excluding Rotarix -27%)
Pandemic vaccine also added £1.0bn
2008 2010/112007 2009CER growth rates
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Pipeline maturing while maintaining ~30 assets in late-stage development
Six assets moved into late stageSix assets moved into late-stageZoster
(herpes)
B f*
Integrase ‘572(HIV)
MEK*
Prosensa PRO051*(DMD)
‘786 (T fi )*
Two Rare Diseases assets added to the late-stage pipeline
Braf*(melanoma)
MEK*(melanoma)
‘786 (Traficet)*(Crohn’s Disease)
Two Rare Diseases assets added to the late-stage pipelineEx vivo stem cell
gene therapy(ADA-SCID)
Amigal(Fabry disease)
More to come with data expected on many key assets in 2011-12
10* Commitment to PIII decision made; first patient expected to be dosed shortly
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Increasing externalisation in early R&D
More than 80 active projects from ~50 external engines
38 internal i
Tempero Pharmaceuticals
engines
Alveonix Pentraxin Pentraxin
TherapeuticsUCL Institute of Ophthalmology
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Bolt-on acquisitions and partnerships
17 deals undertaken across the business since May 2008
Emerging Markets/Asia Pacific/Japan VaccinesPharma
Egypt /Pakistan /Near East
EM/APWalvax
ConsumerAlgeria Korea Japan
AZ TikaArgentina
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Why we are successful with our bolt-on strategy
Strong strategic alignment with key growth areas: Emerging Markets, Vaccines, Consumer, Rare Diseases
Rigorous financial metrics: IRR and ROIC
Selective and choosy: majority of deals are not pursuedSelective and choosy: majority of deals are not pursued
Disciplined integration and strong governance:Board focus and review of post-acquisition performanceGSK ‘fusion’ approach developed to manage integration
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Re-energising GSK’s dermatology business –Stiefel acquisition
Key growth levers create a great platform for the future:
+6% pro forma growth in 3Q10
Geographic expansion
g p
6% pro forma growth in 3Q10~40% operating margin in 3Q10#1 dermatology companyStrong brand with global presenceCombined global sales ~£1.0bn
Portfolio and pipeline
gExpert management team in placeCost synergies – manufacturing; admin Business development
Transaction closed July 2009 14
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New HIV company launched November 2009
10 marketed products10 marketed productsCombined revenue >£1.6bnSignificant pipeline opportunities; 4 in Phase II, 1 in Phase IIIGlobal, lean, agile, entrepreneurial, focused Leverages infrastructure of GSK and Pfizer
Combined revenue estimated based on 2009 actual sales 15
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Delivering on the strategy
Diverse geographic and business mix
Reducing product concentrationReducing product concentration
R&D pipeline optionality
Focus on cost reduction
Reducing legal exposure
Strong cash generation
Return cash to shareholders
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