GlaxoSmithKline : FY 21 results transcript PDF - 147.4KB

GLAXOSMITHKLINE

FULL YEAR & Q4 2021 Results

ANALYSTS PRESENTATION

Wednesday, 9 February 2022

Nick Stone (Head of Investor Relations): Hello everyone and welcome to our full year and Q4 conference call and webcast for investors and analysts. The presentation was posted on gsk.com and it was sent out by email to our distribution list earlier today.

Cautionary statement regarding forward-looking statements

This is the usual safe harbour statement and we shall be making comments on constant exchange rates or CER unless otherwise stated.

Agenda

This is today's schedule and we plan to cover all aspects of our full year results. The presentation will last around 35 minutes to maximise the opportunity for questions. For those on the phone, please join the queue by pressing *1 and we request, in the first instance, if you could ask one question so that everyone has the chance to participate in today's call.

Today, our speakers are Emma Walmsley, Luke Miels, Deborah Waterhouse, Brian McNamara, Iain Mackay and Hal Barron. The Q&A portion of the call will be joined by Roger Connor and David Redfern. With that, I will now hand the call over to Emma.

Accelerating progress

Emma Walmsley (CEO): Thanks, Nick, and a very warm welcome to

everyone.

2021: strong results and accelerating momentum

I am delighted to announce our 2021 full year results. They demonstrate strong financial performance and continued progress against our strategic priorities. For the full year, sales increased 5% and adjusted EPS increased 9%. Excluding the contribution from COVID Solutions, we exceeded our raised guidance with adjusted EPS stable for the full year.

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Sales growth was driven by first class commercial execution and strong uptake of new products. Pharma delivered 10% growth, New and Specialty Medicines growing 26%, double digit sales in Immuno-inflammation, Respiratory and Oncology, together with sales from Xevudy for COVID-19, all drove this performance. Vaccines sales increased 2% and Consumer Healthcare finished the year with 4% growth overall, notably accelerating again in the fourth quarter with sales up 11%.

Alongside this, we increased investment for key R&D pipeline programmes, expanded support for new and ongoing launches and maintained a strong focus on cost optimisation. This is also reflected in adjusted operating profit growth, which increased 9% for the full year.

We see these results as very encouraging and a demonstration of the accelerating momentum we now have at GSK. As we said, 2022 marks a step-change in growth for the company and is underscored by the guidance for New GSK, the Biopharma business, we are giving today of 5-7% sales growth and 12-14% adjusted operating profit growth at CER. This includes the anticipated benefit of Biktarvy-related royalties but excludes any contribution from Pandemic Solutions, and Iain will provide more detail on this and our overall financial performance in his section.

Excellent progress across all three strategic priorities

2021 was a year of excellent progress across all three of our long-term strategic priorities. In Innovation, we delivered three major product approvals: Jemperli for endometrial cancer, Xevudy for COVID-19 and Apretude, our new long-acting medicine forHIV prevention. We also presented positive Phase III data for daprodustat, a potential best-in-class medicine for treading anaemia of chronic kidney disease. We expect to file this new and exciting medicine with regulators in the first half of 2022.

These new medicines are at the forefront of an exciting, high-value pipeline we continue to build across prevention and treatment of disease through organic and inorganic delivery. We now have a pipeline of 21 vaccines and 43 medicines, 22 of which are in pivotal studies. This year we anticipate data readouts on up to seven of the 11 new vaccines and medicines we have identified as key future growth drivers. This includes our RSV vaccine for older adults in the first half of 2022 and several new potential specialty treatments, including those for rheumatoid arthritis, cancer and hepatitis B.

In Performance, our decision to prioritise investment in commercial execution to specialty medicines and vaccines is evident in our improving sales growth. Shingrix sales clearly reflected the adverse impact of COVID-19 last year, particularly in the US, but we

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exceeded our expectations highlighted at Q3 to deliver sales of £1.7 billion. This year, we do expect to see strong recovery growth and Luke will give details on this in a moment.

Lastly, on Trust, we continue to maintain sector leadership in ESG, with our No. 1 ranking in the Dow Jones Sustainability Index and our longstanding leadership in the Access to Medicines index.

Looking ahead, we also aim to deliver ambitious environmental commitments, with targets of net zero on carbon and net-positive on nature by 2030, and we are also making good progress on diversity and inclusion. ESG will continue to be an integral part of New GSK's strategy and investment case.

Ready to unlock long-term value with the demerger in mid-2022

Turning to Slide 7, 2022 sees the biggest change in GSK's recent corporate history, with the creation of a new, unique world leader, dedicated to Consumer Healthcare, expected in the middle of this year. This will be the culmination of a series of progressive, strategic moves, successfully executed over the last few years to build significant value and a new Consumer Healthcare company. We are now in full countdown mode to demerger and, by doing so, our aim is to unlock the potential of both GSK and Consumer Health, strengthen GSK's balance sheet and to maximise value for all our shareholders.

As a new standalone company, the Consumer Healthcare business is a compelling prospect. It has an outstanding brand portfolio and will be a world leader in consumer health. For prospective investors, it will offer a highly attractive financial profile of above-category sales growth, sustainable margin expansion and high, stable cash generation. It will have a fantastic leadership team, led by CEO Brian McNamara and a Board with best-in-class international consumer sector experience, as is already evident with the recent appointment of Sir Dave Lewis, as Chairman designate. We will provide a great deal more detail on this business at our Capital Markets event later this month. Brian will give you more on this shortly.

For New GSK, as we have previously shared, we have set a new purpose and new ambitions for growth. Our purpose is to unite science, talent and technology, to get ahead of disease together - to deliver scale human health impacts, improved returns for shareholders and to be a company where outstanding people thrive. This is reflected in the growth commitments and ambition that we set out in our Investor Update in June last year and these represent a significant step-change in delivery for GSK. As I said earlier, they start now and are reflected in the guidance we are giving today and the exciting R&D catalyst ahead.

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Before closing, I would like to say a very big thank you to the more than 94,000 GSK people who helped us to deliver our 2021 performance and the momentum they have built as we head into this landmark year. Let me now hand over to the team, who will take you through more of the detail. Luke, first of all, over to you.

Growth Drivers

Luke Miels: Thanks, Emma. Let us turn to slide 9.

New and Specialty: strong double-digit growth (+26%, +14% ex-Xevudy)

Let me start with New and Specialty, where we have made remarkable progress driven by excellent commercial execution. Excluding Xevudy, we delivered 14% sales growth for the year, and 10% in Q4, maintaining our double-digit track record. I am incredibly proud to report that two of our assets exceeded £1 billion sales for the first time: Trelegy and Nucala. And, as you have seen, we were able to respond quickly to the strong demand for Xevudy, delivering close to £1 billion in sales with this crucial COVID treatment. Trelegy had a fantastic year despite growing competition and our unique dual indication of COPD and asthma continues to drive high demand in the US and Japan.

We have also seen very positive trends for our launch in China, where the single inhaler therapy class is growing rapidly and we are winning share in Tier 1 and Tier 2 cities.

For Nucala, sales were up 22% and it remains the leading IL-5 for eosinophil disease across key markets. We are pleased to see that our robust approach to life-cycle innovation is driving incremental growth opportunities with the launch of three new indications: EGPA, HES and nasal polyps in Europe.

Benlysta also benefitted from label expansion, with sales up 29% as we reached more new patients with lupus nephritis. Against the backdrop of COVID, we continued to see the importance of having a subcut formulation available for at-home use. And, as expected, with competitors entering the market, we have seen an overall increase in biologic use, benefitting Benlysta as the leader.

In Oncology, we continued to make steady progress. Blenrep remains the only off- the-shelfanti-BCMA therapy, and we have expanded our presence in 13 markets. In the US, we are driving use in the community setting, where most multiple myeloma patients are treated, we are working to reach new physicians as prescribing increases perception of corneal adverse event management.

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Closing with Zejula, COVID continues to impact the ovarian cancer market with diagnosis and debulking surgery still below pre-pandemic levels. Despite the constrained market, Zejula has delivered its strongest quarter of sales today and we continue to perform exceptionally well in market share terms with one in two new patients receiving a PARP being prescribed Zejula.

A very strong year for New and Specialty and we expect to grow Specialty sales by around 10% in 2022, even with Trelegy moving into the new General Medicines area and this is before we include the expected contributions of Xevudy.

Vaccines: Shingrix poised for 2022 recovery

Moving to Vaccines, full year sales increased by 2% but decreased by 5% excluding pandemic sales. The overall performance demonstrated the impact on several of our vaccines of COVID. Most impacted was Shingrix where sales were down by 9% in the year which was slightly better than the outlook we indicated at the nine-month stage. Based on the encouraging early momentumwe are seeing, we continue to anticipate a strong sales recovery in 2022.

Since Q2 2021 Shingrix has delivered strong sequential growth reflecting improvement in trends in the US, including solid demand in the non-retail channel as well as contributions from new European launches and recovery of demand in Germany. We expect this momentum to continue in 2022, despite Omicron's short-term impact. We continue to launch in new markets supported by our unconstrained supply position and we believe there is a significant pent-up demand in the US. Consequently, we continueto expect Shingrix to deliver strong double-digit sales growth in 2022 with record annual sales. This will be a crucial driver of the expected low teen sales growth in vaccines this year, excluding pandemic solutions.

Looking further ahead, by 2024 we expect Shingrix to be available in 35 markets representing nearly 90% of the global vaccines market, underscoring our ambition to double Shingrix revenues by 2026.

Let me now hand over to Deborah on Slide 11.

HIV: innovation medicines accelerating growth

Deborah Waterhouse: Thank you, Luke. Our goal is to remain innovation leaders in HIV, achieve a mid single-digit sales CAGR to 2026 and digest the loss of exclusivity

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