glaxosmithkline healthcare 14 spd at jpmorgan slides without notes (10jan14)

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32 nd Annual JP Morgan Healthcare Conference Simon Dingemans, CFO January 14, 2014

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Page 1: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

32nd Annual JP Morgan Healthcare Conference

Simon Dingemans, CFO January 14, 2014

Page 2: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Deliver more products

of value

Grow a diversified

global business

Simplify the operating

model

Multiple drivers of sales growth in place

Significant pipeline filings & approvals

Continued restructuring of operating costs

Further financial efficiency gains

Strong cash generation and

returns to shareholders

2013: A year of strategic delivery

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

Page 3: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

20% 9m YTD sales

+5%* Sales growth 9m YTD

13% 9m YTD sales

-2%* Sales growth for 9m YTD

+3%* (ex Cervarix in Japan)

Further strengthening of business mix

3

Sales growth (ex disposals) 9 months YTD: +2%* (CER)

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

67% 9m YTD sales

+1%* Sales growth 9m YTD

*CER growth rates excluding disposals (Vesicare, OTC divestments, Australian Classic brands)

Pharmaceuticals Vaccines Consumer

Page 4: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Continued rebalancing of geographies

4 14 January 2014 32nd Annual JP Morgan

Healthcare Conference

38% of GSK’s overall business is outside the US & Europe

33% 9m YTD sales

+3%* Sales growth 9m YTD

US

Other regions represents the remaining 6% of turnover and principally represent Canada/ Puerto Rico; Australia and contract manufacturing

*CER growth rates excluding disposals (Vesicare, OTC divestments, Australian Classic brands)

Europe

Japan

EMAP

25% 9m YTD sales

+1%* Sales growth 9m YTD

29% 9m YTD sales

+1%* Sales growth 9m YTD 7%

9m YTD sales

-2%* Sales growth 9m YTD

+5%* ex Cervarix in Japan

Page 5: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Significant R&D delivery of new products in 2013

5

Major additions to three core franchises: Respiratory, Oncology and HIV

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

10 May 12 August 18 December 29 May +

Combination

Indication

9 Jan 2014

Date of 1st approval in a major market

Page 6: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Continued progress in building a more sustainable

pipeline

6 14 January 2014 32nd Annual JP Morgan

Healthcare Conference

Files currently with regulators Key Ph III data expected in 2014

albiglutide

Arzerra CLL first line

dolutegravir-Trii

ff mono

UMEC mono

Votrient Ovarian Cancer

Arzerra (DLBCL, relapsed CLL,

maintenance CLL)

darapladib (SOLID)

MAGE A3 (MAGRIT)

MEK + BRAF (v Zelboraf)

mepolizumab (steroid reduction,

PhIII in severe asthma)

Tykerb (ALTTO)

Page 7: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

GSK Financial Architecture ensuring focus on returns

7 14 January 2014 32nd Annual JP Morgan

Healthcare Conference

Focus

on

returns

Focus

on

returns

Returns to

shareholders

Free Cash

Flow

EPS

Sales

growth

Operating

leverage

Financial

efficiency

Cash flow

growth

Page 8: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Continued delivery of restructuring benefits

8 14 January 2014 32nd Annual JP Morgan

Healthcare Conference

Manufacturing efficiencies

Supply chain simplification and alignment

New technologies

Operational simplification

Centralisation of support functions

Improved capabilities: Finance, Procurement, IT

Focus on R&D returns

Common platforms and technologies

Trial design & clinical capabilities

Sales

growth

Operating

leverage

Financial

efficiency

Cash flow

growth

£2.7bn of annual savings delivered to date

Releasing investment for launches & other growth opportunities

Offsetting mix pressures and building leverage

Page 9: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Operating profit

EPS

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

Further financial efficiency gains

Sales

growth

Operating

leverage

Financial

efficiency

Cash flow

growth

Funding rate reduced by 3% (vs 2010)

Target debt rating maintained: A1/P1

Effective tax rate expected to be 24% or less for 2013

Patent box and other benefits to come

Long-term share buyback programme continued

£1.5bn purchased in 2013

£6.2bn purchased since 2011 restart

9

Page 10: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Continued focus on cash flow

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

9m YTD Net cash from operations: £5.0bn +10%*

*YTD growth ex legal

10

Sales

growth

Operating

leverage

Financial

efficiency

Cash flow

growth

Tighter control of receivables and

payables

Supply chain initiatives

driving inventory delivery

Active

divestment

programme

Capital

expenditure

and

restructuring

Working

capital

discipline

Investment behind launches and

new technologies

Restructuring of supply chain and

functional capability

Over £2bn proceeds in 2013:

Lucozade & Ribena

Fraxiparine & Arixtra

Aspen shareholding

Page 11: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Returns to shareholders

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

£5.2bn

Cash returned to shareholders

2013

11

£3.7bn

Dividends

9m YTD +6%*

*Interim dividends per share for first three quarters of 2013, up ~6%.

£23bn+

Cash returned to shareholders

Past 5 years

£1.5bn

Buybacks

£17bn

Dividends

£6bn

Buybacks

Page 12: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Deliver more products

of value

Grow a diversified

global business

Simplify the operating

model

Multiple drivers of sales growth in place

Significant pipeline filings & approvals

Continued restructuring of operating costs

Further financial efficiency gains

Strong cash generation and

returns to shareholders

2013: A year of strategic delivery

14 January 2014 32nd Annual JP Morgan

Healthcare Conference

Page 13: GlaxoSmithKline Healthcare 14 SPD at JPMorgan Slides Without Notes (10Jan14)

Thank you

13