Final Results - Part 1

GlaxoSmithKline PLC 21 February 2001 PART 1 Preliminary Announcement of Results for the year ended 31st December 2000 ------------------------------------------------------------------------- GLAXOSMITHKLINE'S STRONG PERFORMANCE FROM KEY THERAPY AREAS AND NEW PRODUCTS DRIVES EARNINGS PER SHARE GROWTH TO 16% (14% CER) HIGHLIGHTS - Pharmaceutical sales up 10 per cent - Sales growth in key therapy areas: CNS 16 per cent, Respiratory 15 per cent, Anti-virals 14 per cent - New products contributed nearly £1 billion in growth, up 60 per cent - Avandia sales of £462 million - Seretide sales of £208 million, US launch of Seretide/Advair planned for April 2001 - Business performance profits before tax up 11 per cent; EPS up 14 per cent GlaxoSmithKline plc (GSK) today announces its results for the year ended 31st December 2000, summarised below. The merger of Glaxo Wellcome (GW) and SmithKline Beecham (SB) was completed on 27th December 2000, and the results for 2000 reflect the combined results of the separate GW and SB businesses in 2000. 2000 BUSINESS PERFORMANCE RESULTS ---------------------------------- 2000 1999 Increase Increase £m £m CER% £% Total Sales 18,079 16,164 9 12 Trading Profit 5,026 4,378 12 15 Profit Before Tax 5,327 4,708 11 13 Earnings Per Share 61.0p 52.7p 14 16 Commenting on the performance for the year, Jean-Pierre Garnier, Chief Executive Officer, said:- 'These results, achieved while we were separate companies, demonstrate the strength and performance of the two organisations we have brought together to form GSK. Clearly our employees remained focused on maintaining the momentum of our separate businesses, despite the distraction of integration planning, and delivered excellent results. I'm particularly pleased by the performance of Seretide and Avandia. The business is in good shape and GSK is off to a strong start.' -------------------------------------------------------------------- Business performance results exclude merger items and restructuring costs. Growth rates are at constant exchange rates (CER) unless otherwise stated. 1999 sales and trading profit exclude Healthcare Services. -------------------------------------------------------------------- Fourth quarter 2000 - Sales growth in the fourth quarter was 4 per cent, essentially reflecting the impact of wholesaler stocking in the third quarter in the USA. Key products, such as Paxil, Augmentin and Wellbutrin, achieved significantly higher growth in prescription volume than in reported sales, indicating that underlying business performance in the fourth quarter remained strong. Pharmaceuticals --------------- Pharmaceutical sales of £15,429 million were 85 per cent of total sales and grew at 10 per cent. With sales of over £2.6 billion, new products represent 17 per cent of pharmaceutical sales and grew 60 per cent. Pharmaceutical sales in the USA, which represents half of GSK's total pharmaceutical business, grew 15 per cent driven by strong performances from all major products. In Europe, pharmaceutical sales growth was 6 per cent, while the rest of the world (RoW) was up 8 per cent. Strong growth from key therapy areas: CNS growth driven by Seroxat/Paxil - In GSK's largest sales category, CNS, excellent growth of 16 per cent to £3,279 million was driven by an outstanding performance from Seroxat/Paxil, which increased by 17 per cent to £1,550 million. During 2000, Paxil became the market leader in the US SSRI (selective serotonin reuptake inhibitor) market in new retail prescriptions. Paxil benefited throughout the world from its new indication for Social Anxiety Disorder. GSK's strategy of broadening the label for new indications continued with filings for Generalised Anxiety Disorder and Post Traumatic Stress Disorder, and the expected launches during 2001 will contribute to further growth of Paxil in the USA. In Europe, where Seroxat continues to be the number one antidepressant, its sales grew by 11 per cent to £334 million, while in the RoW growth was 29 per cent to £159 million. Paxil was launched in Japan at the end of 2000 and is off to a strong start. Wellbutrin for depression also made a significant contribution to GSK's strong CNS performance. In the USA, sales grew 19 per cent, and worldwide sales amounted to £452 million. In the company's migraine portfolio - which achieved sales of £782 million, up 5 per cent - Imigran/Imitrex remains the global market leader with sales of £705 million. Lamictal for epilepsy grew strongly - 28 per cent to £289 million worldwide and 34 per cent in the USA to £138 million - owing to additional promotional resources in the USA. Three key Respiratory products - Seretide, Flixotide, and Serevent - contributed £410 million in growth - In the Respiratory therapy area, Flixotide/Flovent, up 29 per cent to £880 million, continues to be the world's leading treatment for asthma. US sales growth of 57 per cent represents an outstanding performance. Seretide achieved sales of £208 million, and continues to be successfully launched in markets around the world. Further Seretide growth will be driven by its US launch planned for April under the trade name Advair. The company expects Seretide/Advair to become the treatment of choice for persistent asthma. Anti-viral leadership continued with the launch of Trizivir, the first triple combination treatment for HIV/AIDS - The growth of GSK's HIV products, up 14 per cent to £1,145 million, contributed strongly to the performance of the company's Anti-viral therapy area. Combivir grew 21 per cent to £562 million, while Trizivir, the first triple combination HIV therapy, was launched in the USA in December 2000 and subsequently in the UK, France and Switzerland. Strong performances from Ziagen and Agenerase, with combined sales of over £200 million, reflect the broadness of the HIV portfolio. In the herpes franchise, Valtrex, up 32 per cent to £242 million, gained significant market share owing to the convenience of its once-daily dosing. Confirmed success of Avandia drove the Metabolic & GI business - Avandia for the treatment of Type 2 diabetes continues to fulfil its outstanding potential, achieving sales of £462 million. With sales in the US of £433 million and a 55 per cent market share, Avandia has been prescribed to over 1.7 million patients. In 2001, further growth is expected from Avandia as it continues to rollout in Europe and RoW. Lotronex, a treatment for irritable bowel syndrome, was launched in the USA in March 2000 and generated sales of £36 million before being withdrawn in November 2000. Augmentin retained momentum in Anti-bacterials, with long-term opportunities for growth - The highlight of the performance in the Anti-bacterial therapy area was Augmentin in the USA, where it grew by 13 per cent to £725 million, benefiting from increased awareness of its effectiveness in treating drug-resistant bacteria. Worldwide, Augmentin achieved total sales in 2000 of £1,219 million, up 8 per cent. Vaccines increased 11 per cent to £842 million - New vaccines, accounting for 63 per cent of the total vaccine portfolio, were up 20 per cent, boosted by the performance of Infanrix, the company's DTPa (diphtheria, tetanus and pertussis) range of combination vaccines - growing at 47 per cent. Consumer Healthcare ------------------- Consumer Healthcare sales grew 3 per cent; trading profit grew 7 per cent - In the USA, consumer sales decreased 3 per cent, reflecting the impact of private label smoking control products and a mild 'flu season. Worldwide sales of Oral Care products rose 6 per cent to £642 million, with sales growth of 13 per cent in the Aquafresh product line. Nutritional Healthcare products increased 9 per cent to £535 million. Sales growth was primarily driven in the UK by the strength of Lucozade Sport and by the success of Ribena. Worldwide sales of over-the-counter (OTC) medicines totalled £1,454 million, down 1 per cent primarily owing to an 8 per cent decline in the smoking control franchise. Consumer Healthcare set to benefit from Block Drug acquisition - In January 2001, GSK completed the acquisition of Block Drug, the manufacturer of Sensodyne toothpaste and other oral healthcare and consumer products, for $1.24 billion. This strategic acquisition will enhance the Consumer Healthcare performance through a significant increase in sales and sales synergies through geographic expansion of major brands, significant cost savings, and other improvements in trading margins. Dividend -------- Both GW and SB had already announced dividends for the period up to 31st December 2000. GW will pay a second interim dividend and SB a fourth interim dividend on 17th April 2001. -------------------------------------------------------------------- GSK - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For company information, visit GSK on the World Wide Web at www.gsk.com. Enquiries: UK Media enquiries Martin Sutton (020) 8966 8000 ------------------ Philip Thomson (020) 8966 8000 Alan Chandler (020) 8975 2290 US Media enquiries Nancy Pekarek (215) 751 7709 ------------------ Mary Anne Rhyne (919) 483 2839 European Analyst/Investor enquiries Jennie Younger (020) 8966 8378 ----------------------------------- Duncan Learmouth (020) 8966 5961 Joan Toohill (020) 8966 8715 Anita Kidgell (020) 8966 8369 US Analyst/Investor enquiries Frank Murdolo (212) 308 5185 ------------------------------ Tom Curry (215) 751 5419 -------------------------------------------------------------------- GSK prepares its financial results in £ sterling. Accordingly this Announcement is issued in £ sterling. A convenience translation in US$ is also issued and is available on 'Corporate Home' at www.gsk.com. Cautionary statement regarding forward-looking statements --------------------------------------------------------- Under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, GSK cautions investors that any forward- looking statements or projections made by GSK, including those made in this Announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect GSK's operations include generic and brand competition for existing products, ability to integrate the businesses and realise synergies and cost savings, difficulties and uncertainties inherent in new product development, pricing pressures, changes in government laws and regulations, efficacy or safety concerns over marketed products, adverse outcome of material legal proceedings, changes in tax laws, and economic factors over which GSK has no control including changes in inflation, interest rates and foreign currency exchange rates and controls. PROFIT AND LOSS ACCOUNT 2000 ======================= Merger, rest- ructuring and disposal of Business performance subsidiaries Total -------------------- ------------ --------------- 2000 1999 CER 2000 1999 2000 1999 £m £m % £m £m £m £m SALES ------ ------ --- ----- ----- ------ ------ Retained businesses * Pharmaceuticals 15,429 13,618 10 - - 15,429 13,618 * Consumer Healthcare 2,650 2,546 3 - - 2,650 2,546 ------ ------ ----- ----- ------ ------ 18,079 16,164 9 - - 18,079 16,164 * Healthcare Services - 632 - - - 632 ------ ------ ----- ----- ------ ------ Total Sales 18,079 16,796 - - 18,079 16,796 ------ ------ ----- ----- ------ ------ Cost of sales (3,811) (3,499) (8) (151) (399) (3,962) (3,898) Selling, general and (6,732) (6,002) (9) (404) (44) (7,136) (6,046) administration Research and (2,510) (2,285) (7) (16) - (2,526) (2,285) development ------ ------ ----- ----- ------ ------ Operating costs - (13,053) (11,786 ) (571) (443) (13,624) (12,229) retained businesses ------ ------ ----- ----- ------ ------ Operating costs - - (607) - (30) - (637) Healthcare Services TRADING PROFIT Retained businesses * Pharmaceuticals 4,581 3,973 13 (526) (423) 4,055 3,550 * Consumer Healthcare 445 405 7 (45) (20) 400 385 ------ ------ ----- ----- ------ ------ 5,026 4,378 12 (571) (443) 4,455 3,935 * Healthcare Services - 25 - (30) - (5) ------ ------ ----- ----- ------ ------ Total Trading Profit 5,026 4,403 12 (571) (473) 4,455 3,930 Other operating 274 413 - - 274 413 income/(expense) ------ ------ ----- ----- ------ ------ Operating profit 5,300 4,816 (571) (473) 4,729 4,343 Disposal of associates 144 39 - - 144 39 Profits/(losses) of 65 15 (8) (8) 57 7 associates Divestments - - 1,402 9 1,402 9 Merger transaction costs - - (121) - (121) - ------ ------ ----- ----- ------ ------ Profit before interest 5,509 4,870 11 702 (472) 6,211 4,398 Net interest payable (182) (162) - - (182) (162) ------ ------ ----- ----- ------ ------ PROFIT BEFORE TAXATION 5,327 4,708 11 702 (472) 6,029 4,236 Taxation (1,454) (1,327) (245) 109 (1,699) (1,218) ------ ------ ----- ----- ------ ------ Profit after taxation 3,873 3,381 12 457 (363) 4,330 3,018 Minority interests (120) (110) - - (120) (110) Preference share (56) (49) - - (56) (49) dividends ------ ------ ----- ----- ------ ------ EARNINGS 3,697 3,222 13 457 (363) 4,154 2,859 ====== ====== ===== ===== ====== ====== EARNINGS PER SHARE 61.0p 52.7p 14 68.5p 46.7p ====== ====== ====== ====== To illustrate 'Business performance', merger items and restructuring costs in 2000 and restructuring costs and disposal of subsidiaries in 1999 have been excluded and an adjusted EPS presented. Appropriations of profit attributable to shareholders are set out under 'Appropriations'. PROFIT AND LOSS ACCOUNT Q4 2000 ======================= Merger and Business performance restructuring Total -------------------- ------------ --------------- Q4 2000 Q4 1999 CER Q4 2000 Q4 1999 Q4 2000 Q4 1999 £m £m % £m £m £m £m SALES ------ ------ --- ----- ----- ------ ------ Retained businesses * Pharmaceuticals 4,304 3,883 5 - - 4,304 3,883 * Consumer Healthcare 725 701 (1) - - 725 701 ------ ------ ----- ----- ------ ------ 5,029 4,584 4 - - 5,029 4,584 * Healthcare Services - - - - - - ------ ------ ----- ----- ------ ------ Total Sales 5,029 4,584 - - 5,029 4,584 ------ ------ ----- ----- ------ ------ Cost of sales (1,048) (979) (1) (89) (166) (1,137) (1,145) Selling, general and (1,858) (1,743) 2 (181) (18) (2,039) (1,761) administration Research and development (716) (673) (2) (13) - (729) (673) ------ ------ ----- ----- ------ ------ Operating costs - (3,622) (3,395) (283) (184) (3,905) (3,579) retained businesses ------ ------ ----- ----- ------ ------ Operating costs - - - - (24) - (24) Healthcare Services TRADING PROFIT Retained businesses * Pharmaceuticals 1,266 1,085 14 (280) (167) 986 918 * Consumer Healthcare 141 104 29 (3) (17) 138 87 ------ ------ ----- ----- ------ ------ 1,407 1,189 15 (283) (184) 1,124 1,005 * Healthcare Services - - - (24) - (24) ------ ------ ----- ----- ------ ------ Total Trading Profit 1,407 1,189 15 (283) (208) 1,124 981 Other operating 148 190 - - 148 190 income/(expense) ------ ------ ----- ----- ------ ------ Operating profit 1,555 1,379 (283) (208) 1,272 1,171 Disposal of associates - - - - - - Profits/(losses) of 14 24 (1) (8) 13 16 associates Divestments - - 1,402 9 1,402 9 Merger transaction costs - - (75) - (75) - ------ ------ ----- ----- ------ ------ Profit before interest 1,569 1,403 9 1,043 (207) 2,612 1,196 Net interest payable (44) (52) - - (44) (52) ------ ------ ----- ----- ------ ------ PROFIT BEFORE TAXATION 1,525 1,351 10 1,043 (207) 2,568 1,144 Taxation (416) (376) (321) 36 (737) (340) ------ ------ ----- ----- ------ ------ Profit after taxation 1,109 975 11 722 (171) 1,831 804 Minority interests (34) (28) - - (34) (28) Preference share (15) (13) - - (15) (13) dividends ------ ------ ----- ----- ------ ------ EARNINGS 1,060 934 12 722 (171) 1,782 763 ====== ====== ===== ===== ====== ====== EARNINGS PER SHARE 17.5p 15.4p 12 29.4p 12.5p ====== ====== ====== ====== To illustrate 'Business performance', merger items and restructuring costs in 2000 and restructuring costs in 1999 have been excluded and an adjusted EPS presented. Pharmaceutical sales by therapeutic area ----------------------------------------- 2000 -------------------------------------------------------- Total USA Europe RoW £m CER% £m CER% £m CER% £m CER% ------------ ------------ ----------- ----------- CNS 3,279 16 2,307 15 678 16 294 28 Depression 2,002 17 1,495 18 334 11 173 31 Seroxat/Paxil 1,550 17 1,057 18 334 11 159 29 Wellbutrin 452 19 438 19 - - 14 58 Migraine 782 5 588 5 152 - 42 11 Imigran/Imitrex 705 3 542 4 127 (2) 36 6 Naramig/Amerge 77 20 46 20 25 15 6 51 Lamictal 289 28 138 34 116 20 35 35 Requip 58 20 26 19 30 20 2 26 Zyban 115 54 60 1 34 >100 21 23 RESPIRATORY 2,789 15 1,122 26 1,117 9 550 10 Flixotide/Flovent 880 29 414 57 305 2 161 49 Serevent 622 8 330 24 253 (6) 39 14 Seretide 208 >100 - - 179 >100 29 >100 Flixonase/Flonase 408 16 294 18 45 10 69 14 Ventolin 343 (7) 31 (21) 149 (5) 163 (6) Becotide 205 (25) 4 (82) 152 (12) 49 (40) ANTI-BACTERIALS 2,472 2 1,142 7 705 (4) 625 1 Augmentin 1,219 8 725 13 320 (3) 174 9 Zinnat/Ceftin 430 - 204 (7) 113 3 113 10 Fortum 213 (9) 40 (17) 88 (1) 85 (14) Amoxil 199 1 52 55 61 (18) 86 - ANTI-VIRALS 1,899 14 917 17 531 13 451 12 HIV 1,145 14 686 16 345 18 114 (9) Trizivir 7 >100 6 >100 1 >100 - - Combivir 562 21 345 17 173 38 44 (5) Epivir 309 (7) 164 - 100 (9) 45 (22) Retrovir 61 (30) 25 (22) 23 (35) 13 (33) Ziagen 154 75 100 46 44 >100 10 >100 Agenerase 52 60 46 52 4 81 2 >100 Herpes 616 5 188 14 162 1 266 3 Valtrex 242 32 147 24 58 22 37 >100 Zovirax 374 (7) 41 (12) 104 (8) 229 (6) Zeffix 70 >100 5 >100 7 >100 58 >100 Relenza 32 97 14 29 6 51 12 >100 METABOLIC & GASTRO- 1,232 33 594 >100 248 (13) 390 3 INTESTINAL Avandia 462 >100 433 >100 8 >100 21 >100 Zantac 575 (11) 119 (18) 189 (16) 267 (4) Lotronex 36 >100 36 >100 - - - - VACCINES 842 11 212 (5) 390 11 240 29 Hepatitis 462 (3) 168 (4) 210 (3) 84 (2) Infanrix 171 47 35 59 98 34 38 84 ONCOLOGY & EMESIS 710 11 499 12 129 9 82 10 Zofran 491 13 338 15 93 12 60 6 Hycamtin 95 1 63 (5) 23 6 9 40 CARDIOVASCULAR 463 - 282 (8) 120 19 61 10 Coreg 148 11 148 17 - - - - ARTHRITIS (Relafen) 210 (28) 183 (30) 17 (7) 10 (23) DERMATOLOGICALS 249 (4) 35 (20) 62 (5) 152 - OTHER 837 (2) 171 (6) 228 (7) 438 2 ------------ ------------ ----------- ----------- TOTAL SALES 14,982 11 7,464 15 4,225 6 3,293 9 CONTINUING BUSINESS Divested products 447 (2) 241 (1) 43 (5) 163 (3) Famvir 152 11 114 20 18 (13) 20 (5) Kytril 219 (7) 123 (14) 25 1 71 2 Other 76 (9) 4 (40) - - 72 (7) ------------ ------------ ----------- ----------- TOTAL 15,429 10 7,705 15 4,268 6 3,456 8 PHARMACEUTICAL SALES ============ ============ =========== =========== SALES Pharmaceutical sales by therapeutic area ---------------------------------------- Q4 2000 -------------------------------------------------------- Total USA Europe RoW £m CER% £m CER% £m CER% £m CER% ------------ ------------ ----------- ----------- CNS 911 5 634 1 188 7 89 31 Depression 546 3 398 (1) 93 - 55 45 Seroxat/Paxil 421 - 277 (5) 93 - 51 45 Wellbutrin 125 12 121 11 - - 4 48 Migraine 222 - 172 2 38 (10) 12 14 Imigran/Imitrex 201 - 160 2 31 (12) 10 11 Naramig/Amerge 21 4 12 4 7 (2) 2 42 Lamictal 82 20 41 26 31 14 10 16 Requip 17 3 8 6 9 1 - - Zyban 36 76 15 (12) 14 >100 7 66 RESPIRATORY 806 14 341 25 305 7 160 9 Flixotide/Flovent 265 28 139 64 77 (6) 49 36 Serevent 184 10 106 30 68 (8) 10 (1) Seretide 77 >100 - - 63 >100 14 >100 Flixonase/Flonase 104 5 77 5 10 4 17 4 Ventolin 97 (10) 11 (20) 40 (8) 46 (8) Becotide 50 (34) (1) >(100) 39 (19) 12 (41) ANTI-BACTERIALS 720 (7) 360 (3) 194 (12) 166 (9) Augmentin 371 (2) 237 4 89 (12) 45 (6) Zinnat/Ceftin 135 (4) 70 (9) 34 4 31 (2) Fortum 56 (16) 10 (30) 22 (11) 24 (16) Amoxil 52 (19) 11 3 17 (35) 24 (10) ANTI-VIRALS 539 11 261 11 136 4 142 18 HIV 321 12 193 13 92 13 36 - Trizivir 7 >100 6 >100 1 >100 - - Combivir 159 18 96 16 48 23 15 16 Epivir 85 (3) 47 6 25 (7) 13 (20) Retrovir 16 (22) 7 (16) 5 (26) 4 (27) Ziagen 41 31 26 13 12 64 3 82 Agenerase 13 - 11 (11) 1 41 1 >100 Herpes 170 3 55 16 38 (8) 77 2 Valtrex 78 51 43 28 15 19 20 >100 Zovirax 92 (18) 12 (13) 23 (19) 57 (19) Zeffix 23 >100 2 >100 2 >100 19 >100 Relenza 12 (23) 1 (93) 1 (76) 10 >100 METABOLIC & GASTRO 341 23 162 86 65 (11) 114 2 - INTESTINAL Avandia 140 >100 127 >100 4 >100 9 >100 Zantac 153 (16) 29 (33) 48 (16) 76 (8) Lotronex 4 >100 4 >100 - - - - VACCINES 215 5 52 17 98 (8) 65 23 Hepatitis 113 (10) 42 7 50 (21) 21 (6) Infanrix 46 20 10 88 25 12 11 8 ONCOLOGY & EMESIS 201 11 144 16 33 (2) 24 6 Zofran 135 13 94 18 24 6 17 3 Hycamtin 29 (1) 20 1 6 (11) 3 24 CARDIOVASCULAR 123 (3) 74 (12) 31 18 18 3 Coreg 40 23 40 23 - - - - ARTHRITIS (Relafen) 49 (31) 43 (30) 4 (40) 2 (31) DERMATOLOGICALS 67 (5) 10 (17) 15 (2) 42 (3) OTHER 229 8 49 26 62 (11) 118 16 ------------ ------------ ----------- ----------- TOTAL SALES 4,201 6 2,130 9 1,131 (1) 940 8 CONTINUING BUSINESS ------------ ------------ ----------- ----------- Divested products 103 (26) 44 (40) 10 (18) 49 (11) Famvir 31 (23) 22 (25) 4 (27) 5 (10) Kytril 48 (32) 21 (51) 6 (11) 21 (8) Other 24 (15) 1 (40) - - 23 (14) ------------ ------------ ----------- ----------- TOTAL 4,304 5 2,174 7 1,141 (1) 989 7 PHARMACEUTICAL SALES ============ ============ =========== =========== FINANCIAL REVIEW - PROFIT AND LOSS ================================== Pharmaceutical sales by therapeutic area ---------------------------------------- GSK pharmaceutical sales in 2000 amounted to £15,429 million, compared to £13,618 million in 1999, an increase of 10 per cent. Excluding the sales of divested products (products divested in 2000 to fulfil regulatory conditions for approval of the GW/SB merger), sales growth of the continuing business was 11 per cent. The growth was substantially all volume increase, with only a minor net increase from price. Sales of new products (those launched in a major market within the last five years) were £2,646 million, representing 17 per cent of sales, compared to 12 per cent in 1999, and grew by 60 per cent. Sales of franchise products (established products) were £8,077 million, representing 52 per cent of sales, and grew by 11 per cent. Sales of older products, now less actively promoted, were £4,259 million, representing 28 per cent of sales, and declined by 8 per cent. In the fourth quarter 2000 pharmaceutical sales growth was 5 per cent (excluding divested products, 6 per cent). Sales growth in the USA was affected by the impact of wholesaler stocking in the third quarter 2000 in anticipation of price increases. Key products, such as Paxil, Augmentin and Wellbutrin, achieved significantly higher growth in prescription volume than in reported sales, indicating that underlying business performance remained strong. Sales growth in Europe was affected by generic competition and mild 'flu-season demand for anti- bacterial products. Central nervous system ---------------------- In the anti-depressant sector sales of £2 billion were achieved, with strong growth of Seroxat/Paxil and Wellbutrin contributing to growth of 17 per cent. In the important US market, Seroxat/Paxil was supported by a successful direct-to-consumer (DTC) campaign and promotional efforts also enabled Wellbutrin to increase its market share. Both products benefited from overall growth in the US anti- depressant market. New Drug Application (NDA) dossiers for Paxil as a treatment for generalised anxiety disorder and for post traumatic stress disorder were filed with the US Food and Drug Administration (FDA) in 2000. Paxil was launched in November 2000 in Japan as the only once-a-day selective serotonin reuptake inhibitor for treatment of both depression and panic disorder. The migraine portfolio of Imigran/Imitrex and Naramig/Amerge grew by 5 per cent. This reflects a return to growth in the USA, which accounts for three quarters of sales, where DTC marketing campaigns and migraine awareness programmes were instrumental in increasing sales. In Europe sales were stable, with strong growth in France offsetting declines in other markets. Imigran was launched in Japan in April 2000. Sales of Lamictal, the epilepsy treatment, grew strongly worldwide and particularly in the USA where greater market penetration was achieved in an expanding market. Requip, for the treatment of Parkinson's disease, now marketed in 20 countries, increased sales by 20 per cent, benefiting from the positive outcome of a five year comparative study published in May 2000. In the smoking cessation market, Zyban's growth of 54 per cent reflects its rollout into European markets following European Union approval in April 2000. Initial sales were particularly strong in the UK and Germany. Respiratory ----------- Flixotide/Flovent continues to be the world's highest selling asthma medication and is also indicated for chronic obstructive pulmonary disease (COPD). Sales increased by 29 per cent, notably in the USA where DTC promotion and an expanding market led to a 57 per cent increase in sales. In Europe, where the Group's new combination product, Seretide, has been launched in most markets, sales of Flixotide were maintained despite Seretide's success. Serevent grew by 8 per cent. Again growth was particularly strong in the US market, where Seretide has yet to be launched. Seretide, the new combination of Flixotide and Serevent, continues to be successfully rolled out in markets around the world, generating sales of over £200 million in 2000. Significant new markets in 2000 included Spain, Italy and Australia. In the UK and Germany, where Seretide has been available for over a year, it continues to make strong gains in market share. Launch in the USA under the name Advair is planned for April 2001. Approval was received at the end of 2000 to market the product in the European Union in the metered dose inhaler delivery device. Whilst there is an impact on sales of Flixotide and Serevent from the introduction of Seretide, both continue to be leading asthma medications as individual products. Combined sales of Flixotide, Serevent and Seretide increased by almost one third, indicating their collective strength. In total, anti-asthma/COPD sales grew by 16 per cent. This reflects the strong performance of Flixotide, Serevent and Seretide, offset by declining sales of the older asthma products, Ventolin and Becotide, as patients convert to newer products. In the rhinitis sector, growth of Flixonase/Flonase is similarly offset by decline in the older product, Beconase. Overall, the Group's products in this sector grew by 12 per cent, supported by DTC advertising in the USA, where over two thirds of sales are made. Anti-bacterials --------------- Sales of anti-bacterial products increased by 2 per cent, with growth in Augmentin offset by flat sales of Zinnat/Ceftin and Amoxil and a decrease in Fortum. With sales reaching £1.2 billion, Augmentin continued to perform strongly. In the USA sales grew 13 per cent, with a market share of nearly a quarter. Solid growth was achieved in Latin America and South East Asia. In Europe sales were affected by generic competition. Zinnat/Ceftin declined by 7 per cent in its largest market, the USA, but this was offset by growth in the emerging markets of the Middle East, Africa, Latin America and Asia Pacific. Anti-virals ----------- Growth in anti-viral sales of 14 per cent reflects strong growth in the HIV franchise, where the Group markets a range of reverse transcriptase inhibitors (RTIs) and a recently launched protease inhibitor, Agenerase, as well as steady growth in sales of herpes products and continued uptake of new products against other viral diseases. Sales of RTIs increased by 12 per cent. Combivir again grew strongly, reflecting conversion of patients from its constituent single products, Epivir and Retrovir. In aggregate the three products achieved real growth of 5 per cent; excluding the effect of one-off contracts in Brazil in 1999 which were not repeated in 2000, underlying growth was nearer 8 per cent. The newer RTI, Ziagen, grew by 75 per cent, reflecting continued uptake in the USA and in Europe. Trizivir, which combines Epivir, Retrovir and Ziagen, was launched in the USA in December 2000 and in the European Union (the UK and France) in January 2001. The triple combination tablet simplifies the dosing regimen for patients who are often taking several tablets a day. The new protease inhibitor, Agenerase, also benefits from a relatively simple dosing regimen. The majority of its sales were in the USA, where it has been available since May 1999. European Union approval was received in October 2000, and the product was launched in some markets, including the UK and France, before the end of the year. The Group's two herpes treatments, the newer Valtrex and the older Zovirax, grew at a combined rate of 5 per cent. Valtrex continues to protect the Group's franchise in this area, with strong increases in all regions and a successful launch in Japan in August. Zeffix, for chronic hepatitis B, achieved sales of £70 million. First launched in the Asia Pacific region, it performed strongly in the Chinese and South Korean markets. Relenza, the new influenza treatment, doubled its sales to £32 million and, following launch in Japan in December, is now available in most major markets. Metabolic and gastro-intestinal ------------------------------- Avandia, GSK's new treatment for Type 2 diabetes, achieved sales approaching half a billion pounds, the majority in the USA, where it was first launched in 1999. Avandia scrips now account for over half of the US thiazolidinedione market, a market which grew by 75 per cent in 2000. In April 2000 the US FDA approved Avandia in combination with a sulphonylurea, having previously approved it both as a monotherapy and in combination with metformin. Avandia will be rolled out into Europe and Rest of the World markets in 2001. In August 2000 Avandia received a positive recommendation in the UK from the National Institute for Clinical Excellence (NICE). Zantac continues to decline in the face of competition from generic products and alternative anti-ulcerant treatments. The rate of decline slowed to 11 per cent in 2000. Zantac's largest market is now Japan, where sales remained stable. Lotronex, a treatment for irritable bowel syndrome, was launched in the USA in March 2000 and generated sales of £36 million before being withdrawn in November 2000 following discussions with the US FDA over the interpretation of data relating to gastro-intestinal side effects. The company disagreed with the FDA's assessment of the safety profile of Lotronex, but agreed to withdraw it from the US market and has also withdrawn all other regulatory submissions worldwide. Vaccines -------- Vaccines sales reached £842 million, an increase of 11 per cent. In the hepatitis franchise, Engerix-B declined 8 per cent due to lower sales in the USA, Havrix, for hepatitis A, grew slightly and Twinrix, a combined hepatitis A and B vaccine in both adult and paediatric strengths, grew 5 per cent to £95 million. Infanrix, GSK's range of combination vaccines for diphtheria, tetanus, and pertussis (whooping cough), grew 47 per cent. In October 2000 the European Commission approved Infanrix PeNta, which provides additional protection for hepatitis B and polio and Infanrix HeXa which further adds protection against haemophilus influenzae type b disease. Oncology and emesis ------------------- Zofran, for emesis, a now well-established product and a leader in its sector, benefited from market growth in the USA, where over two thirds of its sales are generated. Other therapeutic areas ----------------------- Cardiovascular sales were stable, with 11 per cent growth in Coreg and recent launches of Pritor for hypertension in European markets offsetting declines in older products. Future sales should benefit from new data showing Coreg's effectiveness in treating severe heart failure. The disposal of the anaesthesia franchise in the USA at the end of 1999 contributed to a fall in this therapeutic area of 21 per cent. In October 2000, GW's US company also disposed of its portfolio of dermatological products, contributing to the 4 per cent decline in this sector. Pharmaceutical sales by geographic area --------------------------------------- 2000 --------------------------- % of total £m CER% ---------- ------ ---- USA 50 7,705 15 Europe 28 4,268 6 France 786 10 UK 701 (2) Italy 574 10 Germany 482 3 Spain 424 6 Central & Eastern Europe 472 6 Other Europe 829 6 Rest of World 22 3,456 8 Asia Pacific 1,049 12 Japan 832 5 Latin America 682 2 Middle East & Africa 511 12 Canada 382 10 ---------- ------ ---- TOTAL PHARMACEUTICAL SALES 100 15,429 10 ========== ====== ==== USA --- Sales in the US market, representing half of total Group pharmaceutical sales, grew by 15 per cent. Avandia, launched in June 1999, achieved sales of £433 million and is the market leader in its class. It benefited from the withdrawal of a competitor product from the market in the first quarter of the year. Respiratory sales increased by 26 per cent, reflecting in particular increased acceptance of inhaled steroids in the treatment of asthma. The planned launch of Seretide in April 2001 will further enhance the potential of the Group's range of asthma treatments. CNS sales increased by 15 per cent. In the growing anti-depressant market, DTC campaigns focussing on social anxiety disorder helped Paxil to grow by 18 per cent. In the migraine portfolio growth of 5 per cent reversed the decline seen in the previous year, reflecting the promotional efforts in 2000 and some overall expansion in the market. Lamictal, although a smaller product, contributed significantly to growth as its sales increased by 34 per cent. In the anti-viral sector, HIV sales grew by 16 per cent, reflecting continuing growth in the established products and uptake of the newer products: Ziagen, Agenerase, and initial sales of Trizivir together generated over £150 million in sales. Approval to market Trizivir was received in November 2000. In the herpes sector strong sales of Valtrex benefited from the convenience of its once-daily dosage form and from its wider usage as a long-term herpes suppression therapy. Strong growth in sales of Augmentin and Amoxil offset declines in Ceftin and Fortum, enabling sales in the anti-bacterial area to outperform market growth. Augmentin benefited from increased prescriber awareness of its effectiveness against bacteria resistant to other antibiotics. There was a minor impact on sales growth from product disposals: the anaesthesia portfolio in 1999 and the dermatological range in October 2000. Lotronex, for irritable bowel syndrome, achieved sales of £36 million in 2000 prior to its withdrawal from the market. Europe ------ Sales in Europe, representing 28 per cent of the Group's pharmaceutical sales, grew by 6 per cent. In France, GSK's largest market within the region, sales grew strongly, reflecting growth in the HIV portfolio and in the asthma franchise; the launch of Trizivir and Seretide in January 2001 add to sales potential. In the major markets of Italy, Germany and Spain, Seretide was a key contributor to growth. The UK market benefited from increased sales of Seretide and a successful launch of Zyban, but overall sales declined slightly due to generic competition and parallel trade. The success of Seretide in those markets where it has already been launched contributed to a 10 per cent growth in the asthma/COPD range, while growth in Lamictal and launches of Zyban contributed to 16 per cent increase in total CNS sales. Sales of HIV products increased by 18 per cent, a combination of solid growth in the established product range and uptake of the recently launched Ziagen. Sales of Infanrix, the combination vaccine for children, grew by over a third, with recent approvals for Infanrix PeNta and Infanrix HeXa offering further potential for growth. In the cardiovascular area, the launch of Pritor led to a 19 per cent increase in sales. Offsetting these strong performances were a decline in sales of Augmentin, due to a mild 'flu season and the impact of generic competition in the UK and Germany, and the continuing decline in Zantac. Avandia was launched in the UK and Germany in late 2000 and is expected to be launched in other European markets in 2001. Rest of World ------------- Overall growth of 8 per cent reflects a mix of double digit growth in Asia Pacific, Middle East and Africa, and Canada, with slower growth in Japan and Latin America. In Asia Pacific, the markets principally contributing to sales growth were Australia, the area's largest market, with launches of Seretide in August and Zyban in November, and China, where Zeffix, launched in 1999, was the key factor in sales growth of 20 per cent. In Japan, the Group's second largest market, sales grew by 5 per cent. Sales of asthma products grew by a quarter, and the launch of Paxil in November and Relenza in December together added £19 million to sales. This was offset by a decline in sales of antibiotics. In Latin America, overall sales growth of 2 per cent was affected by difficult conditions in Brazil. Excluding Brazil, sales in the region grew by 10 per cent. In Mexico, the Group's largest market in the region, sales grew by 14 per cent, with good performances in most therapeutic areas and particularly in vaccines. In Brazil sales were affected by a government drive to promote generic products and by the impact of HIV contracts in 1999 which were not repeated in 2000. The Middle East and Africa region grew by 12 per cent, with notable increases in HIV products and in antibiotics. In Canada sales grew by 10 per cent reflecting strong growth in Paxil and recent launches of Seretide and Avandia. The rest of the asthma/COPD range and Wellbutrin also contributed to growth, while Zyban declined by 13 per cent. Consumer Healthcare sales ------------------------- Q4 2000 2000 -------------- ------------- £m CER% £m CER% ----- ---- ----- ---- OTC medicines 416 (7) 1,454 (1) Oral care 166 3 642 6 Nutritional healthcare 137 16 535 9 ----- ---- ----- ---- Total sales continuing business 719 (1) 2,631 3 Divested products 6 18 19 73 ----- ---- ----- ---- Total Consumer Healthcare sales 725 (1) 2,650 3 ===== ==== ===== ==== GSK Consumer Healthcare sales in 2000 amounted to £2,650 million, compared to £2,546 million in 1999, an increase of 3 per cent. OTC medicines ------------- Sales growth in vitamins and naturals and in dermatologicals was offset by declines in other categories, notably in smoking control. Gastro-intestinal sales were affected by lower sales of Tums in the competitive US market. Analgesics were affected by the voluntary recall of Panadol in Australia, a key market, following a tampering threat. Smoking control sales declined 8 per cent, reflecting competition in the US market following the introduction of private label Nicotine Replacement Therapy (NRT) gum and patch. The introduction of two new GSK smoking control products in the US market, Clear NicoDerm Patch and Nicorette Orange Gum, prevented further inroads from private label brands. Excluding the USA, smoking control sales grew by 58 per cent. Oral Care --------- Sales of Aquafresh toothpastes and toothbrushes increased by 13 per cent, notably in the USA and in Rest of the World markets. This was offset by declines in other oral care brands. In Western Europe, GSK continues to hold the number one oral care ranking. Nutritional Healthcare ---------------------- Strong sales growth was achieved across the nutritional healthcare range. Sales of Lucozade benefited from strong growth of Lucozade Sport in the UK. Block Drug ---------- In January 2001 GSK acquired Block Drug, the manufacturer of Sensodyne toothpaste and other oral healthcare and consumer products. The acquisition will extend the Consumer Healthcare product range and is expected to enhance sales performance. MORE TO FOLLOW

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