3rd Qtr & 9 Mths Rslts - Pt 1
GlaxoSmithKline PLC
23 October 2001
Issued: 23rd October 2001, London
GlaxoSmithKline plc
Results Announcement for the Third Quarter 2001
PART ONE OF A TWO PART ANNOUNCEMENT
===================================
Results Announcement for the Third Quarter 2001
-----------------------------------------------
Strong Third Quarter Performance Drives GlaxoSmithKline
Earnings Per Share Growth to 20% (18% at Constant Exchange Rates)
GlaxoSmithKline plc (GSK) today announces its results for the third
quarter ended 30th September 2001.
The business performance results are summarised below.
BUSINESS PERFORMANCE RESULTS
----------------------------
Increase Increase
------------ 9 months ------------
Q3 2001 CER% £% 2001 CER% £%
£m £m
------- ------------ ------ ------------
Sales 4,994 12 13 14,873 10 14
Trading profit 1,416 18 20 4,327 14 20
Profit before tax 1,349 16 17 4,439 12 17
Earnings per share 15.8p 18 20 52.0p 14 20
Q3 2001 HIGHLIGHTS
------------------
- Pharmaceutical sales up 13% (excluding divested products).
- All regions performing strongly with sales growth in the
USA 14%; Europe 8%; Rest of World 18%.
- New products up 59% to over £1 billion, representing
24% of sales.
- Respiratory business up 36% to £871 million.
- Over two million prescriptions written in the USA for
Seretide/Advair since launch in April.
- £4 billion share buy-back programme announced.
- GSK on track to deliver 2001 earnings per share growth target
of around 13% CER.
Commenting on the performance for the third quarter, Jean-Pierre
Garnier, Chief Executive Officer, said:-
'GlaxoSmithKline had a strong third quarter, delivering sustained
growth across all regions. I am especially pleased to see the way our
new products (up 59%) continue to help drive this growth - the
performance of Seretide/Advair, in particular, was excellent. Our
respiratory and anti-viral franchises also performed strongly this
quarter. We are on track to deliver our earnings per share growth
target of around 13% CER for the year and remain confident we will
achieve our earnings guidance for 2002 of mid-teens earnings per share
growth at comparable exchange rates.'
---------------------------------------------------------------------
Business performance results exclude merger items, integration and
restructuring costs and disposals of subsidiaries. Growth rates are
at constant exchange rates (CER) unless otherwise stated.
---------------------------------------------------------------------
Pharmaceuticals
---------------
Pharmaceuticals sales growth for the quarter, excluding divested
products, was 13% with all regions performing strongly. Sales in the
USA grew 14% to £2.2 billion. Although US wholesaler stocking patterns
affected sales growth rates of some products, the underlying growth
for the US business in total is broadly consistent with reported sales
growth. In Europe, sales grew 8% to £1.1 billion and in the Rest of
World sales increased 18% to £0.9 billion. All regions benefited from
continued growth in the key therapy areas of central nervous system
(CNS), respiratory and anti-virals as well as strong performances from
new products Seretide/Advair and Avandia.
CNS - continued strong underlying growth with sales of £983 million
-------------------------------------------------------------------
Total Seroxat/Paxil sales were in line with last year. Strong growth
in Europe,up 12% and Rest of the World, up 55% offset a 10% decline in
the USA. Despite good underlying demand in the USA, sales growth was
negatively affected by wholesaler buying patterns. Seroxat/Paxil is
currently the only SSRI approved in the USA for Generalised Anxiety
Disorder (GAD) and a DTC campaign for this new indication was launched
at the beginning of October. Wellbutrin sales grew 40% to £168 million
and sales for Imigran/Imitrex increased 9% to £198 million.
Imigran/Imitrex tablets were launched successfully in Japan and
achieved sales of over £6 million in just one month on the market.
Respiratory products - Seretide/Advair, Serevent and Flixotide/Flovent
grew 53% to over £600 million
----------------------------------------------------------------------
Total Seretide/Advair sales were £240 million. In the USA, more than
two million prescriptions have been written for Seretide/Advair since
its launch in April. The speed at which patients have adopted
Seretide/Advair in the USA makes it the most successfully launched
asthma treatment in the past decade. Seretide/Advair continues to
drive growth in Europe. An indication for the use of Seretide/Advair
to treat chronic obstructive pulmonary disease (COPD) was filed in
Europe in September, following the US filing in May. The three key
products - Seretide/Advair, Serevent, Flixotide/Flovent - grew 74% in
the USA; 35% in Europe and 37% in the Rest of the World.
Anti-bacterial sales over £500m
-------------------------------
Total sales of anti-bacterial products were £543 million, with
Augmentin contributing £278 million. Despite good underlying demand in
the USA, sales of Augmentin at £168 million were in line with last year,
negatively affected by wholesaler buying patterns. New Augmentin ES
(extra strength), the only product with an indication to treat
children at risk of otitis media caused by antibiotic resistant strep.
pneumoniae, was launched in the USA in October.
Anti-viral sales up 15% to over £530 million - driven by HIV products
and Valtrex
----------------------------------------------------------------------
Total HIV sales were £340 million, up 16%. US sales were up 11% to
£203 million, driven by strong uptake of Trizivir, the new HIV triple
combination product. Sales in Europe, up 17%, and the Rest of World,
up 48%, improved as a result of further launches of Trizivir and
strong performances by Ziagen. Valtrex sales were £89 million, up 54%.
Sales in the USA grew to £55 million, helped by the new 3-day
indication for recurrent genital herpes.
Strong performance from Avandia drives metabolic and gastro-intestinal
sales
----------------------------------------------------------------------
Total sales of metabolic and gastro-intestinal products were up 24% to
£400 million. Sales for Avandia were up 94% to £226 million, inflated
by advanced US wholesaler stocking. Total US prescription growth for
Avandia was 30% for the quarter reflecting increased acceptance of the
product in the oral diabetes market. Zantac sales continued to decline
in most markets.
Cardiovascular and Oncology sales growth driven by Coreg and Zofran
-------------------------------------------------------------------
Total sales for Coreg grew 24% to £60 million. In the USA, Coreg
received an approvable letter from the FDA for the treatment of severe
heart failure. Coreg is the only beta-blocking agent that has clinical
data showing survival in severe heart failure patients. In oncology,
Zofran sales increased 20% to £153 million owing to new growth in the
post operative market.
Vaccines - worldwide sales grew 9%
----------------------------------
Total vaccines sales were up 9% to £241 million. Infanrix (our new
DTPa range of combination vaccines) was up 28% to £54 million. Other
vaccines, including Priorix, Tritanrix and Typherix, all achieved
strong growth of over 30%. Growth from these vaccines more than offset
an 8% decline in the hepatitis portfolio.
Pipeline
--------
GSK has completed a review and prioritisation of its product
development portfolio and today issued an update of its product
pipeline. The company currently has 113 projects in clinical
development, which include 50 new chemical entities (NCE's),
22 new vaccines and 41 line extensions.
The review of the portfolio has concluded that GI262570, a peroxisome
proliferator activated receptor (PPAR) agonist, in Phase III clinical
trials for the treatment of type 2 diabetes, did not meet its target
profile. Development of the compound for this indication has now
ceased and alternative indications are being explored.
GSK continues to actively pursue external collaborations to further
enhance its product development pipeline and has initiated six new
collaborations, so far, in 2001. In the third quarter, GSK completed
an agreement to form a joint venture with Shionogi & Co., Ltd. and a
collaboration to research, develop and commercialise several compounds
with Tanabe Seiyaku Co. Ltd.
During the quarter, regulatory filings were made in Europe for
Seretide/Advair to treat COPD and dutasteride for the treatment of
benign prostatic hyperplasia (BPH).
Consumer Healthcare
-------------------
Consumer Healthcare sales grew 27% to £810 million; sales excluding
Block Drug grew 4% to £663 million.
Worldwide sales of oral care products, excluding Block Drug, were £165
million, up 1%; US sales were down 15%, but in Europe sales were up
9%, benefiting from new product launches. Block Drug added oral care
product sales of £111 million.
Nutritional Healthcare products increased 13% to £153 million, led by
strong growth from Lucozade, Ribena and Horlicks.
Worldwide sales of over-the-counter medicines were £381 million. The
performance of smoking control products improved, up 2%, as a result
of stabilisation of market share in the USA and a strong performance
in Europe. Sales of Analgesic products, up 39%, were also drivers of
growth in this category.
Consumer Healthcare trading profit increased 27%, reflecting sales
growth and the contribution from Block Drug.
Share Buy-Back Programme
------------------------
GSK plans to spend up to L4 billion buying its shares in the market.
The programme covers purchases by the company's employee trusts
relating to share option grants and other share based incentives,
of which £0.7 billion has already been spent in 2001. It also covers
purchases by the company of shares for cancellation. The exact amount
and timing of future purchases will be determined by the company and
is dependent on market conditions and other factors.
Merger & Restructuring
----------------------
GSK continues to implement the manufacturing restructuring plans
initiated by both SmithKline Beecham and Glaxo Wellcome, and is
proceeding with the integration of the SB and GW businesses in
accordance with the merger plans developed during 2000. Merger
savings in excess of £400 million are expected in 2001.
Costs of £659 million were incurred in the quarter in respect of the
merger, integration and restructuring and disposal of subsidiaries.
After tax relief of £73 million, the net charge was £586 million.
Together with business performance earnings of £960 million, this
produces total earnings of £374 million for the quarter.
Trading Profit and Earnings Per share
-------------------------------------
Trading profit growth was 18%, reflecting improved trading margins.
The trading margin improved 1.7% to 28.4% as a result of cost savings
from merger integration, partly offset by the divestment of certain
high margin products required by regulatory authorities as a condition
of the merger.
Third quarter EPS was up 18% in CER terms and 20% in sterling terms,
benefiting from favourable exchange rates in the USA and Europe.
Dividend
--------
The Board has declared a third quarter interim dividend of 9 pence per
share. The equivalent dividend receivable by ADR holders is 25.584
cents per ADS based on an exchange rate of £1/$1.42133. The dividend
will be paid on 3rd January 2002 to shareholders and ADR holders of
record on 2nd November 2001.
GlaxoSmithKline - one of the world's leading research-based
pharmaceutical and healthcare companies - is committed to improving
the quality of human life by enabling people to do more, feel better
and live longer. For company information and a copy of the company's
updated product development pipeline, visit GSK on the World Wide Web
at www.gsk.com.
----------------------------------------------------------------------
Enquiries: UK Media Martin Sutton (020) 8966 8372
Philip Thomson (020) 8966 8372
Alan Chandler (020) 8966 8372
US Media Nancy Pekarek (215) 751 7709
Mary Anne Rhyne (919) 483 2839
European Analyst / Investor Jennie Younger (020) 8966 8378
Duncan Learmouth (020) 8966 5961
Anita Kidgell (020) 8966 8369
US Analyst / Investor Frank Murdolo (215) 751 7002
Tom Curry (215) 751 5419
----------------------------------------------------------------------
GSK prepares its financial results in £ sterling. Accordingly this
Announcement is issued in £ sterling. A convenience translation in
US$ is also issued. Both £ sterling and US$ versions of the
Announcement are 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, the Company cautions investors that any
forward-looking statements or projections made by the Company,
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 the Group's operations are
described under Risk Factors in the Operating and Financial Review and
Prospects in the Company's Annual Report on Form 20-F for 2000, filed
with the US Securities and Exchange Commission.
PROFIT AND LOSS ACCOUNT
Three months ended 30th September 2001
-------------------------------------------------------
Merger,
integration and
restructuring
and disposal
Business performance of subsidiaries Total
----------------------- --------------- ---------------
Q3 2001 Q3 2000 Q3 2001 Q3 2000 Q3 2001 Q3 2000
£m £m CER% £m £m £m £m
----- ----- ---- ----- ---- ----- -----
Sales
Pharmaceuticals
- Existing portfolio 4,184 3,663 13 - - 4,184 3,663
- Divested products - 123 - - - 123
----- ----- ----- ---- ----- -----
- Total 4,184 3,786 10 - - 4,184 3,786
----- ----- ----- ---- ----- -----
Consumer Healthcare
- Existing portfolio 663 639 4 - - 663 639
- Acquisition - Block 147 - - - 147 -
Drug
----- ----- ----- ---- ----- -----
810 639 27 - - 810 639
- Divested products - 4 - - - 4
----- ----- ----- ---- ----- -----
- Total 810 643 27 - - 810 643
----- ----- ----- ---- ----- -----
SALES 4,994 4,429 12 - - 4,994 4,429
Cost of sales (1,071) (919) (16) (79) (24) (1,150) (943)
----- ----- ----- ---- ----- -----
Gross profit 3,923 3,510 10 (79) (24) 3,844 3,486
Selling, general and (1,867) (1,690) (9) (262) (39) (2,129) (1,729)
administration
Research and development (640) (636) 1 (17) (3) (657) (639)
----- ----- ----- ---- ----- -----
Trading profit:
Pharmaceuticals 1,272 1,070 17 (336) (60) 936 1,010
Consumer Healthcare 144 114 27 (22) (6) 122 108
----- ----- ----- ---- ----- -----
TRADING PROFIT 1,416 1,184 18 (358) (66) 1,058 1,118
Other operating (59) 6 - - (59) 6
income/(expense) ----- ----- ----- ---- ----- -----
Operating profit 1,357 1,190 13 (358) (66) 999 1,124
Profits/(losses) of 19 23 - (2) 19 21
associates
Business disposals - - (301) - (301) -
Merger transaction costs - - - (24) - (24)
----- ----- ----- ---- ----- -----
Profit before interest 1,376 1,213 (659) (92) 717 1,121
Net interest payable (27) (59) - - (27) (59)
----- ----- ----- ---- ----- -----
PROFIT BEFORE TAXATION 1,349 1,154 16 (659) (92) 690 1,062
Taxation (360) (316) 73 22 (287) (294)
----- ----- ----- ---- ----- -----
Profit after taxation 989 838 17 (586) (70) 403 768
Minority interests (23) (22) - - (23) (22)
Preference share dividends (6) (14) - - (6) (14)
----- ----- ----- ---- ----- -----
EARNINGS 960 802 19 (586) (70) 374 732
===== ===== ===== ==== ===== =====
EARNINGS PER SHARE 15.8p 13.2p 18 6.1p 12.1p
===== ===== ===== =====
To illustrate 'Business performance', merger items, integration and
restructuring costs and disposal of subsidiaries have been excluded
and an adjusted EPS presented. Appropriations of profit attributable to
shareholders are set out under 'Appropriations' below.
PROFIT AND LOSS ACCOUNT
Nine months ended 30th September 2001
---------------------------------------------------------
Merger,
integration and
restructuring
and disposal
Business performance of subsidiaries Total
------------------------- --------------- --------------
9 months 9 months 9 months 9 months 9 months 9 months
2001 2000 2001 2000 2001 2000
£m £m CER% £m £m £m £m
----- ----- ---- ----- ----- ----- -----
Sales
Pharmaceuticals
- Existing portfolio 12,486 10,781 12 - - 12,486 10,781
- Divested products - 344 - - - 344
----- ----- ----- ----- ----- -----
- Total 12,486 11,125 9 - - 12,486 11,125
----- ----- ----- ----- ----- -----
Consumer Healthcare
- Existing portfolio 1,950 1,912 - - - 1,950 1,912
- Acquisition - Block 437 - - - 437 -
- Drug
----- ----- ----- ----- ----- -----
2,387 1,912 23 - - 2,387 1,912
- Divested products - 13 - - - 13
----- ----- ----- ----- ----- -----
- Total 2,387 1,925 22 - - 2,387 1,925
----- ----- ----- ----- ----- -----
SALES 14,873 13,050 10 - - 14,873 13,050
Cost of sales (3,166) (2,763) (13) (141) (62) (3,307) (2,825)
----- ----- ----- ----- ----- -----
Gross profit 11,707 10,287 10 (141) (62) 11,566 10,225
Selling, general and (5,533) (4,874) (9) (754) (223) (6,287) (5,097)
administration
Research and (1,847) (1,794) - (61) (3) (1,908) (1,797)
development
----- ----- ----- ----- ----- -----
Trading profit:
Pharmaceuticals 3,964 3,315 14 (870) (246) 3,094 3,069
Consumer Healthcare 363 304 17 (86) (42) 277 262
----- ----- ----- ----- ----- -----
TRADING PROFIT 4,327 3,619 14 (956) (288) 3,371 3,331
Other operating 32 126 - - 32 126
income/(expense)
----- ----- ----- ----- ----- -----
Operating profit 4,359 3,745 11 (956) (288) 3,403 3,457
Profits/(losses) of 54 51 - (7) 54 44
associates
Disposal of interests in 96 144 - - 96 144
associates
Business disposals - - (302) - (302) -
Merger transaction costs - - - (46) - (46)
----- ----- ----- ----- ----- -----
Profit before interest 4,509 3,940 (1,258) (341) 3,251 3,599
Net interest payable (70) (138) - - (70) (138)
----- ----- ----- ----- ----- -----
PROFIT BEFORE TAXATION 4,439 3,802 12 (1,258) (341) 3,181 3,461
Taxation (1,185) (1,038) 182 76 (1,003) (962)
----- ----- ----- ----- ----- -----
Profit after taxation 3,254 2,764 13 (1,076) (265) 2,178 2,499
Minority interests (68) (86) - - (68) (86)
Preference share (27) (41) - - (27) (41)
dividends
----- ----- ----- ----- ----- -----
EARNINGS 3,159 2,637 15 (1,076) (265) 2,083 2,372
===== ===== ===== ===== ===== =====
EARNINGS PER SHARE 52.0p 43.5p 14 34.3p 39.1p
===== ===== ===== =====
Weighted average 6,074 6,064 6,074 6,064
number of shares ===== ===== ===== =====
(millions)
To illustrate 'Business performance', merger items, integration and
restructuring costs and disposal of subsidiaries have been excluded and an
adjusted EPS presented. Appropriations of profit attributable to shareholders
are set out under 'Appropriations' below.
PHARMACEUTICAL SALES - EXISTING PORTFOLIO
Three months ended 30th September 2001
-----------------------------------------
Total USA Europe RoW
£m CER% £m CER% £m CER% £m CER%
----------- ------------ ------------- -----------
CENTRAL NERVOUS SYSTEM 983 8 702 5 183 5 98 43
Depression 607 8 457 3 89 12 61 53
Seroxat/Paxil 439 - 293 (10) 89 12 57 55
Wellbutrin 168 40 164 40 - - 4 34
Migraine 221 10 166 6 39 8 16 68
Imigran/Imitrex 198 9 151 6 32 8 15 74
Naramig/Amerge 23 12 15 13 7 6 1 33
Lamictal 89 23 45 27 34 20 10 20
Requip 23 48 12 75 10 23 1 24
Zyban 22 (34) 11 (4) 8 (61) 3 (8)
RESPIRATORY 871 36 429 55 304 20 138 26
Flixotide/Flovent, 613 53 316 74 226 35 71 37
Serevent,
Seretide/Advair
Flixotide/Flovent 219 7 122 22 57 (19) 40 15
Serevent 154 7 96 20 49 (12) 9 2
Seretide/Advair 240 >100 98 - 120 >100 22 >100
Flixonase/Flonase 116 20 93 21 11 29 12 11
Ventolin 69 (1) 6 (5) 31 (9) 32 9
Becotide 37 (17) - - 28 (21) 9 (3)
ANTI-BACTERIALS 543 - 258 2 147 1 138 (5)
Augmentin 278 (1) 168 - 67 (1) 43 (5)
Zinnat/Ceftin 74 - 25 (11) 22 (5) 27 16
Fortum 50 9 13 20 21 10 16 2
Amoxil 33 (17) 8 9 11 (5) 14 (32)
ANTI-VIRALS 533 15 277 16 141 12 115 18
HIV 340 16 203 11 97 17 40 48
Trizivir 46 >100 32 - 14 >100 - -
Combivir 150 3 90 (4) 42 (1) 18 72
Epivir 74 (3) 40 (5) 22 (6) 12 9
Retrovir 14 - 7 12 5 (5) 2 (14)
Ziagen 42 1 24 (12) 12 6 6 >100
Agenerase 14 (1) 10 (23) 2 97 2 >100
Herpes 154 8 64 32 37 - 53 (5)
Valtrex 89 54 55 39 15 20 19 >100
Zovirax 65 (22) 9 4 22 (11) 34 (31)
Zeffix 27 49 2 42 3 55 22 49
METABOLIC & GASTRO- 400 24 228 48 68 (4) 104 9
INTESTINAL
Avandia 226 94 205 90 8 >100 13 >100
Zantac 111 (14) 22 (29) 35 (16) 54 (4)
VACCINES 241 9 68 6 103 1 70 28
Hepatitis 110 (8) 45 (9) 46 (4) 19 (14)
Infanrix 54 28 21 82 23 (8) 10 57
ONCOLOGY & EMESIS 217 20 162 24 34 7 21 15
Zofran 153 20 111 22 27 13 15 19
Hycamtin 27 16 21 26 5 (5) 1 (1)
CARDIOVASCULAR 141 9 94 11 30 8 17 1
Coreg 60 24 58 22 - - 2 88
ARTHRITIS (Relafen) 32 (46) 27 (48) 2 (33) 3 (31)
OTHER 223 (3) 1 (93) 59 8 163 30
----------- ------------ ------------- -----------
4,184 13 2,246 14 1,071 8 867 18
=========== ============ ============= ===========
PHARMACEUTICAL SALES - EXISTING PORTFOLIO
Nine months ended 30th September 2001
-----------------------------------------
Total USA Europe RoW
£m CER% £m CER% £m CER% £m CER%
----------- ------------ ------------- -----------
CENTRAL NERVOUS SYSTEM 2,870 14 2,018 11 569 14 283 38
Depression 1,768 16 1,320 13 277 14 171 42
Seroxat/Paxil 1,310 11 875 5 277 14 158 44
Wellbutrin 458 32 445 32 - - 13 31
Migraine 617 5 460 4 120 5 37 27
Imigran/Imitrex 550 4 419 3 99 3 32 26
Naramig/Amerge 67 14 41 13 21 12 5 32
Lamictal 253 19 126 24 100 16 27 10
Requip 59 38 30 55 27 23 2 30
Zyban 103 30 41 (13) 32 55 30 >100
RESPIRATORY 2,565 26 1,198 44 935 14 432 14
Flixotide/Flovent, 1,746 43 857 61 678 27 211 40
Serevent,
Seretide/Advair
Flixotide/Flovent 708 12 382 30 199 (14) 127 18
Serevent 506 11 306 29 171 (9) 29 1
Seretide/Advair 532 >100 169 - 308 >100 55 >100
Flixonase/Flonase 373 18 275 19 42 22 56 10
Ventolin 223 (8) 23 13 98 (11) 102 (9)
Becotide 118 (24) - (98) 91 (20) 27 (24)
ANTI-BACTERIALS 1,838 2 922 11 500 (3) 416 (9)
Augmentin 972 10 611 19 230 (2) 131 (1)
Zinnat/Ceftin 299 (2) 138 (4) 84 5 77 (6)
Fortum 151 (5) 31 (4) 66 (3) 54 (7)
Amoxil 109 (27) 28 (34) 37 (20) 44 (28)
ANTI-VIRALS 1,527 9 756 8 433 8 338 12
HIV 975 14 568 8 299 17 108 40
Trizivir 102 >100 70 - 31 >100 1 -
Combivir 448 7 263 (1) 137 8 48 67
Epivir 223 (4) 116 (7) 72 (6) 35 10
Retrovir 40 (13) 18 (9) 15 (16) 7 (13)
Ziagen 124 5 72 (9) 38 20 14 84
Agenerase 38 (7) 29 (23) 6 88 3 >100
Herpes 463 3 177 25 117 (7) 169 (6)
Valtrex 247 46 150 36 48 12 49 >100
Zovirax 216 (23) 27 (14) 69 (17) 120 (27)
Zeffix 76 62 5 50 9 71 62 62
METABOLIC & GASTRO- 1,156 17 613 33 218 (3) 325 8
INTESTINAL
Avandia 597 75 541 66 22 >100 34 >100
Zantac 364 (13) 72 (25) 120 (16) 172 (5)
VACCINES 693 8 191 14 295 - 207 16
Hepatitis 328 (9) 135 4 135 (17) 58 (14)
Infanrix 176 37 53 98 89 18 34 30
ONCOLOGY & EMESIS 626 18 460 22 105 7 61 8
Zofran 445 20 319 23 80 14 46 12
Hycamtin 75 8 53 16 17 (4) 5 (8)
CARDIOVASCULAR 413 16 263 19 99 18 51 -
Coreg 167 40 161 39 - - 6 55
ARTHRITIS (Relafen) 133 (22) 116 (20) 7 (44) 10 (24)
OTHER 665 (4) 34 (69) 172 2 459 10
------------ ------------ ------------- -----------
12,486 12 6,571 16 3,333 7 2,582 9
============ ============ ============= ===========
CONSUMER HEALTHCARE SALES
-------------------------
Three months ended
30th September 2001
-------------------
Including Block Drug £m CER%
----- -----
Over-the-counter medicines 381 12
Analgesics 80 39
Dermatological 42 53
Gastro intestinal 81 7
Respiratory tract 40 11
Smoking control 81 2
Vitamins & naturals 38 7
Oral care 276 70
Nutritional care 153 13
----- -----
Total 810 27
===== =====
Excluding Block Drug
Over-the-counter medicines 345 2
Oral care 165 1
Nutritional healthcare 153 13
----- -----
663 4
Block Drug 147 -
----- -----
Total 810 27
===== =====
Nine months ended
30th September 2001
Including Block Drug £m CER%
----- -----
Over-the-counter medicines 1,137 6
Analgesics 240 22
Dermatological 138 55
Gastro intestinal 248 4
Respiratory tract 108 (3)
Smoking control 228 (15)
Vitamins & naturals 117 9
Oral care 815 70
Nutritional healthcare 435 9
----- -----
Total 2,387 22
===== =====
Excluding Block Drug
Over-the-counter medicines 1,023 (4)
Oral care 492 2
Nutritional healthcare 435 9
----- -----
1,950 -
Block Drug 437 -
----- -----
Total 2,387 22
===== =====
FINANCIAL REVIEW - PROFIT AND LOSS
----------------------------------
Total sales
-----------
An analysis of total sales between existing portfolio, divested and acquired
products is set out below:
Q3 2001 Q3 2000 Growth 2000
£m £m CER% £m
----- ----- ----- -----
Existing portfolio:
Pharmaceuticals 4,184 3,663 13 14,982
Consumer Healthcare 663 639 4 2,631
----- ----- ----- -----
4,847 4,302 12 17,613
Products divested on merger - 127 - 466
----- ----- ----- -----
4,847 4,429 8 18,079
Acquired products - Block Drug 147 - - -
----- ----- ----- -----
4,994 4,429 12 18,079
===== ===== ===== =====
Sales of existing portfolio products in Q3 2001 increased in aggregate by 12%
over Q3 2000. The revenue lost from products divested at the end of 2000 to
fulfil regulatory conditions for the Glaxo Wellcome/SmithKline Beecham merger,
principally Kytril and Famvir, is more than offset by the additional revenue
from the acquired Block Drug portfolio.
Pharmaceutical sales
--------------------
Sales of existing portfolio products increased 13%, which represents additional
sales of £480 million (in CER). An analysis of sales between new products
(those launched in a major market within the last five years), franchise
products (established products), and older products now less actively
promoted is set out below:
Q3 2001
----------------------------------
£m % total CER% CER £m
----- ----- ----- -----
New 1,003 24 59 365
Franchise 2,250 54 8 172
Other 931 22 (6) (57)
----- ----- ----- -----
4,184 100 13 480
===== ===== ===== =====
The growth of the new products, notably Seretide/Advair and Avandia, more than
offsets the decline of older products, such as Zantac and they build an
increasing share of the total portfolio.
Regional analysis
-----------------
In the third quarter 54% of the Group's total pharmaceutical revenue was earned
in the USA where overall sales growth was 14%. Advair (Seretide) for asthma
recorded sales approaching £100m in the quarter and Wellbutrin also continued
its strong growth record. A number of products were impacted by changes in
wholesaler stocking patterns, some, such as Avandia, beneficially, others, such
as Paxil and Augmentin, adversely. The net effect of these buying patterns in
the quarter is not considered to be material. Zantac sales continued to decline
in the face of increased generic competition.
Europe region sales accounted for 25% of the Group's total pharmaceutical sales.
Seretide was the major driver of the 8% overall sales growth in the region. The
continued strength of Seroxat/Paxil together with growth of the HIV portfolio,
particularly Trizivir, offset declines in a number of other products. France,
Italy and Spain all returned good performances in the quarter.
Sales growth of 18% in the Rest of the World, an improvement on the second
quarter results, reflected better conditions in most markets, notably India and
Latin America, and a number of tender orders in the Middle East and Africa.
Japan continued to perform well with sales growth in the quarter of 20%, driven
by the recent launches of Paxil, Valtrex and Imigran tablets.
Trading profit - business performance
-------------------------------------
Q3 2001 Q3 2000
-------------- -------------- Growth 2000
£m % £m % CER% £m
----- ------ ----- ----- ----- -----
Sales 4,994 100.0 4,429 100.0 12 18,079
Cost of sales (1,071) (21.4) (919) (20.7) (16) (3,811)
Selling, general and (1,867) (37.4) (1,690) (38.2) (9) (6,732)
administration
Research and development (640) (12.8) (636) (14.4) 1 (2,510)
----- ------ ----- ----- ----- -----
Trading profit 1,416 28.4 1,184 26.7 18 5,026
===== ====== ===== ===== ===== =====
Cost of sales increased as a percentage of sales as the loss of the high-margin
products divested in December 2000 and the inclusion of lower margin Block Drug
products were only partly offset by the benefits of merger and manufacturing
restructuring savings.
Selling, general and administration (SG&A) costs also benefited from merger
savings, principally in general and administration expenditure, but the
inclusion of Block Drug costs distorts the quarterly comparison. Excluding
Block Drug expenses, growth in SG&A costs would have been 5% and SG&A
expressed as a percentage of sales would have been 1.3% lower. Research and
development expenditure increased at below the rate of sales growth. It is
expected that growth in research and development costs will increase as
merger savings begin to be reinvested in this area.
Overall the trading margin improved 1.7%, which is consistent with expectations
of an improvement for the full year of up to 2%.
Profit before tax - business performance
----------------------------------------
Q3 2001 Q3 2000 2000
£m £m £m
----- ----- -----
Trading profit 1,416 1,184 5,026
Other operating income/(expense) (59) 6 274
Profits of associates 19 23 65
Disposal of interests in associates - - 144
Net interest payable (27) (59) (182)
----- ----- -----
Profit before tax 1,349 1,154 5,327
===== ===== =====
Other operating income in Q3 2001 includes costs associated with product
withdrawals, and equity investment write downs due to adverse stock market
conditions.
Net interest payable was lower due to a lower average level of net debt in Q3
2001 than in Q3 2000 and to lower interest rates. Overall profit before tax
increased by 16%.
Merger items, integration and restructuring costs and disposal of subsidiaries
------------------------------------------------------------------------------
Q3 2001 Q3 2000 2000
£m £m £m
----- ----- -----
Manufacturing and other restructuring (37) (28) (171)
Merger integration costs (299) (38) (400)
Block Drug integration costs (22) - -
----- ----- -----
Effect on operating profit (358) (66) (571)
Share of associate - (2) (8)
Product divestments - - 1,416
Merger transaction costs - (24) (121)
Loss on disposal of businesses (301) - (14)
----- ----- -----
Effect on profit before tax (659) (92) 702
===== ===== =====
The loss on disposal in Q3 2001 arose on the sale of Affymax. It includes a
£299 million write off of goodwill which has no net effect on Group
reserves.
Taxation
--------
Q3 2001 Q3 2000 2000
£m £m £m
----- ----- -----
Business performance (360) (316) (1,454)
Merger items, integration and restructuring costs 73 22 (245)
and disposal of subsidiaries
----- ----- -----
(287) (294) (1,699)
===== ===== =====
The charge for taxation on business performance profit in Q3 2001 represents an
effective rate of tax of 26.7%, which is the rate expected to apply for the
year. This represents a reduction compared to the effective rate of 27.3% in
the full year 2000.
The credit for taxation on merger items, integration and restructuring costs
and disposal of subsidiaries in Q3 2001 reflects the estimated actual tax
rate applicable to the transactions in the territories in which they arise.
Earnings
--------
Q3 2001 Q3 2000 2000
£m £m £m
----- ----- -----
Net profit attributable to shareholders
---------------------------------------
Earnings 374 732 4,154
Adjustment for merger items, integration and 586 70 (457)
restructuring costs and disposal of subsidiaries
----- ----- -----
Adjusted earnings 960 802 3,697
===== ===== =====
Earnings per share pence pence pence
------------------ ----- ----- -----
Basic earnings per share 6.1 12.1 68.5
Adjustment for merger items, integration and 9.7 1.1 (7.5)
restructuring costs and disposal of subsidiaries
----- ----- -----
Adjusted earnings per share 15.8 13.2 61.0
===== ===== =====
Appropriations
--------------
£m £m £m
----- ----- -----
Earnings (profit attributable to shareholders) 374 732 4,154
Dividends (546) (163) (2,097)
----- ----- -----
Retained (loss)/profit (172) 569 2,057
===== ===== =====
The dividend in Q3 2001 is the declared GSK dividend of 9p per share. In
Q3 2000 the dividend charge reflects the third quarter dividend payable by
SmithKline Beecham plc. Glaxo Wellcome plc did not declare quarterly
dividends.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
----------------------------------------------
9 Months 9 Months
2001 2000 2000
£m £m £m
----- ----- -----
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 2,083 2,372 4,154
Exchange movements on overseas net assets (125) (30) (23)
UK tax on exchange movements (6) (11) 16
----- ----- -----
TOTAL RECOGNISED GAINS AND LOSSES 1,952 2,331 4,147
===== ===== =====
END OF PART ONE
PART TWO FOLLOWS
================
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