GSK PLC
01 November 2023
| Strong year-to-date and Q3 performance drives upgrade to full-year guidance |
| Broad-based execution drives further sales and earnings growth: | |
| • | Total Q3 2023 sales +10% and +16% ex COVID |
| • | Vaccines sales +33%, +34% ex COVID. Shingrix £0.8 billion +15%, Arexvy sales £0.7 billion |
| • | Specialty Medicines sales -1%, +17% ex COVID with HIV +15% |
| • | General Medicines sales -2% with impact of generic competition to older products, in part offset by Trelegy +23% |
| • | Total operating profit and Total continuing EPS reflects strong growth in the quarter and year to date with lower charges for contingent consideration liabilities remeasurement |
| • | Adjusted operating profit +15% and Adjusted EPS +17% reflects strong execution, resilient growth and higher royalty income in part offset by increased investment in R&D, new product launches and a seven percentage point operating profit reduction from lower COVID-19 solutions sales |
| (Financial Performance – Q3 2023 results unless otherwise stated, growth % and commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page 51). | |
| Q3 2023 | Year to Date | ||||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 8,147 | 4 | 10 | 22,276 | 1 | 2 | |||||
| Turnover ex COVID | 8,146 | 10 | 16 | 22,102 | 12 | 13 | |||||
| Total operating profit | 1,949 | 64 | 83 | 6,172 | 35 | 39 | |||||
| Total continuing EPS | 36.1p | 92 | >100 | 113.0p | 54 | 59 | |||||
| Adjusted operating profit | 2,772 | 6 | 15 | 7,034 | 7 | 10 | |||||
| Adjusted operating margin % | 34.0% | 0.8ppts | 1.7ppts | 31.6% | 1.7ppts | 2.2ppts | |||||
| Adjusted EPS | 50.4p | 7 | 17 | 126.2p | 11 | 14 | |||||
| Cash generated from operations | 2,508 | 32 | 4,415 | (24) | |||||||
| R&D delivery underpins longer-term growth outlook: | |
| • | Arexvy approved in Japan as country’s first RSV vaccine for older adults; positive preliminary phase III data in adults aged 50-59 presented at ACIP and support regulatory filings |
| • | New Shingrix data demonstrates 100% efficacy in preventing shingles in adults aged 50+ in China; co-promotion partnership in China with Zhifei announced, set to begin in 2024 |
| • | Apretude long-acting treatment approved for HIV prevention in EU; clinical development plans advancing for innovative long-acting treatment and prevention regimens with data anticipated in 2024 |
| • | Ojjaara approved by US FDA as first and only line agnostic treatment for myelofibrosis patients with anaemia |
| • | Jemperli plus chemotherapy approved in US as new frontline treatment for endometrial cancer |
| • | Agreement to acquire worldwide rights to Janssen’s JNJ-3989, which may have potential to further increase functional cure rates of bepirovirsen in chronic hepatitis B treatment |
| 2023 guidance upgrade, Q3 2023 dividend of 14p declared, 56.5p expected for full year | |
| • | Turnover to increase 12 to 13% (from 8 to 10%) |
| • | Adjusted operating profit growth 13 to 15% (from 11 to 13%) |
| • | Adjusted EPS growth 17 to 20% (from 14 to 17%) |
| Guidance all at CER and excluding COVID-19 solutions. | |
| Emma Walmsley, Chief Executive Officer, GSK:“GSK is delivering strong and sustained performance momentum, with another quarter of double-digit sales and earnings growth. Competitive performance was broadly based but benefitted particularly from the outstanding US launch of Arexvy, the world’s first RSV vaccine. Our excellent execution supports an upgrade to our full-year 2023 guidance and we have clear momentum as we look ahead to deliver our 2026 outlooks. GSK’s longer-term outlook also continues to strengthen, with progress in our vaccines pipeline, the development of our ultra long-acting HIV portfolio and significant new prospects in respiratory.” |
| The Total results are presented in summary above and on page 7 and Adjusted results reconciliations are presented on pages 19, 20, 22 and 23. Adjusted results are a non-IFRS measure excluding discontinued operations and other adjustments that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. Adjusted results are defined on page 17 and £% or AER% growth, CER% growth, turnover excluding COVID-19 solutions and other non-IFRS measures are defined on page 51, COVID-19 solutions are defined on page 51. GSK provides guidance on an Adjusted results basis only, for the reasons set out on page 17. All expectations, guidance and targets regarding future performance and dividend payments should be read together with ‘Guidance, assumptions and cautionary statements’ on page 52. |
| 2023 guidance |
| GSK has upgraded its full-year guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions. In the year to date, GSK has exceeded its full-year guidance expectations due to the continued strong and broad-based performance of its business, including successful launch of Arexvy in Q3 2023, which has also benefitted from initial channel inventory build. Currently, GSK assumes sales of Arexvy will track in line with high-dose flu analogues. For the full year, the company expects Arexvy sales between £0.9 to £1 billion. |
| Turnover is expected to increase between 12 to 13 per cent (from 8 to 10 per cent) |
| Adjusted operating profit is expected to increase between 13 to 15 per cent (from 11 to 13 per cent) |
| Adjusted earnings per share is expected to increase between 17 to 20 per cent (from 14 to 17 per cent) |
| This guidance is supported by the following turnover expectations for full-year 2023 at CER: |
| Vaccines | – | expected increase of around 20 per cent in turnover (increased from mid-teens) |
| Specialty Medicines | – | expected increase of low double-digit per cent in turnover (from a high single-digit increase) |
| General Medicines | – | expected increase of low to mid-single-digit per cent in turnover (from low single-digit increase) |
| The increase in Adjusted Operating profit reflects both higher sales and royalty income partially offset by the cost of sales which continues to be expected to increase broadly in line with turnover. SG&A is anticipated to increase at a rate broadly aligned to turnover, reflecting new launches and targeted investment for growth. R&D is expected to continue to increase at a rate slightly below turnover. Adjusted earnings per share is now expected to increase between 17 to 20 per cent at CER, reflecting higher operating profit and more favourable net finance costs. Expectations for non-controlling interests are unchanged, and the company anticipates an effective tax rate between 15%-15.5%. |
| Additional commentary |
| The Dividend policy and the expected pay-out ratio remain unchanged. GSK’s future dividend policy and guidance regarding the expected dividend pay-out in 2023 are provided on page 38. |
| COVID-19 solutions |
| In Q3 2023, turnover increased by 10% at CER and reflected the comparison to Q3 2022. Excluding COVID-19 solutions, turnover increased by 16% at CER. The adverse impact of lower sales of COVID-19 solutions was seven percentage points of growth in the quarter on Adjusted operating profit. GSK does not anticipate further significant COVID-19 pandemic-related sales or operating profit in 2023. Consequently, the company now expects its full-year 2023 turnover growth to be impacted by approximately 8%, with Adjusted Operating profit growth being reduced between 4% to 5% versus the prior year. All expectations, guidance and targets regarding future performance and dividend payments should be read together with ‘Guidance, assumptions and cautionary statements’ on page 52. If exchange rates were to hold at the closing rates on 30 Sep 2023 ($1.23/£1, €1.16/£1 and Yen 183/£1) for the rest of 2023, the estimated impact on 2023 Sterling turnover growth for GSK would be -2% and if exchange gains or losses were recognised at the same level as in 2022, the estimated impact on 2023 Sterling Adjusted Operating Profit growth for GSK would be -4%. |
| Results presentation |
| A conference call and webcast for investors and analysts of the quarterly results will be hosted by Emma Walmsley, CEO, at 12pm GMT (US EDT at 8am) on 1 November 2023. Presentation materials will be published on www.gsk.com prior to the webcast and a transcript of the webcast will be published subsequently. Notwithstanding the inclusion of weblinks, information available on the company’s website, or from non GSK sources, is not incorporated by reference into this Results Announcement. |
| Performance: turnover |
| Turnover | Q3 2023 | Year to date | |||||||||
| £m | GrowthAER% | GrowthCER% | £m | GrowthAER% | GrowthCER% | ||||||
| Shingles | 825 | 9 | 15 | 2,538 | 16 | 15 | |||||
| Meningitis | 441 | – | 3 | 987 | 11 | 11 | |||||
| RSV (Arexvy) | 709 | – | – | 709 | – | – | |||||
| Influenza | 374 | (4) | (4) | 409 | (7) | (7) | |||||
| Established Vaccines | 868 | (2) | 3 | 2,495 | 7 | 6 | |||||
| Vaccines ex COVID | 3,217 | 30 | 34 | 7,138 | 22 | 21 | |||||
| Pandemic vaccines | 1 | (83) | (67) | 143 | >100 | >100 | |||||
| Vaccines | 3,218 | 30 | 33 | 7,281 | 24 | 24 | |||||
| HIV | 1,623 | 9 | 15 | 4,671 | 15 | 14 | |||||
| Respiratory/Immunology and Other | 769 | 12 | 18 | 2,162 | 15 | 15 | |||||
| Oncology | 200 | 22 | 26 | 487 | 9 | 9 | |||||
| Specialty Medicines ex COVID | 2,592 | 11 | 17 | 7,320 | 14 | 14 | |||||
| Xevudy | – | (100) | (100) | 31 | (99) | (99) | |||||
| Specialty Medicines | 2,592 | (6) | (1) | 7,351 | (14) | (15) | |||||
| Respiratory | 1,520 | (10) | (3) | 5,079 | 4 | 5 | |||||
| Other General Medicines | 817 | (11) | – | 2,565 | (3) | 4 | |||||
| General Medicines | 2,337 | (10) | (2) | 7,644 | 2 | 5 | |||||
| Total | 8,147 | 4 | 10 | 22,276 | 1 | 2 | |||||
| Total ex COVID | 8,146 | 10 | 16 | 22,102 | 12 | 13 | |||||
| By Region: | |||||||||||
| US | 4,560 | 14 | 19 | 11,440 | 5 | 4 | |||||
| Europe | 1,559 | 5 | 5 | 4,907 | 5 | 2 | |||||
| International | 2,028 | (13) | (2) | 5,929 | (6) | – | |||||
| Total | 8,147 | 4 | 10 | 22,276 | 1 | 2 | |||||
| Turnover ex COVID is excluding COVID-19 solutions and is a non-IFRS measure defined on page 51 with the reconciliation to the IFRS measure Turnover included in the table above. |
| Q3 2023 | Year to date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Vaccines | Total | 3,218 | 30% | 33% | 7,281 | 24% | 24% | |
| Excluding COVID | 3,217 | 30% | 34% | 7,138 | 22% | 21% | ||
| Double-digit growth for Vaccines in Q3 23 and YTD was driven by the successful launch of Arexvy in the US and continued strong uptake of Shingrix in International and Europe. Pandemic vaccines sales mostly include GSK’s share of 2023 contracted European volumes related to a COVID-19 booster vaccine co-developed with Sanofi. | ||||||||
| Shingles | 825 | 9% | 15% | 2,538 | 16% | 15% | |
| Shingrix, a vaccine against herpes zoster (shingles), grew 15% in Q3 23 on increased demand and favourable pricing. Growth was driven by strong private uptake and public funding expansion in International and Europe. These regions represented half of the Q3 23 turnover compared to less than 40% in Q3 22, with Shingrix now available in 38 countries outside of the US, most of which have cumulative immunisation rates in the low single digits. Europe sales included deliveries for the UK National Immunisation Programme which began offering Shingrix vaccination in September. In the US, retail demand grew 4% in the quarter and 7% YTD while overall US turnover declined 6% CER in Q3 23 and 7% CER YTD versus a challenging comparator period in which there was higher non-retail purchasing. YTD results were also impacted by a H1 22 wholesaler and distributor inventory build. The US cumulative immunisation penetration grew 5% from Q3 22 to the end of Q2 23 reaching 33% of the more than 120 million US adults(1) who are currently recommended to receive Shingrix. | |||||||
| (1) | United States Census Bureau, International Database, Year 2023. |
| Q3 2023 | Year to date | ||||||
| £m | AER | CER | £m | AER | CER | ||
| Meningitis | 441 | – | 3% | 987 | 11% | 11% | |
| YTD double-digit Meningitis vaccine sales growth was largely delivered by Bexsero, our vaccine against meningitis B, driven by inclusion in National Immunisation Programmes in Europe. In the US, Menveo, a vaccine against meningitis ACWY, grew and Bexsero maintained YTD market share. In the quarter, Meningitis vaccines sales growth was largely due to the favourable impact of a Menveo US CDC (Center for Disease Control) stockpile borrow in Q3 22, partly offset by lower sales in International. Bexsero Q3 23 sales were flat while Bexsero grew in Europe in the quarter, the US declined as a result of CDC purchasing patterns and lower demand leaving performance flat. | |||||||
| RSV (Arexvy) | 709 | – | – | 709 | – | – | |
| Arexvy, the world’s first approved respiratory syncytial virus (RSV) vaccine for older adults, delivered significant sales in its first quarter since launch driven by strong demand and initial channel inventory build. Almost all sales were in the US where Arexvy is available in all major retail pharmacies with competitive contracting in place. More than 90% of Q3 23 doses shipped from wholesalers was to retailers, and Arexvy achieved two-thirds of the share of retail vaccinations in the quarter. YTD, 1.4 million of the more than 83 million US adults(1) at risk have been protected by Arexvy. | |||||||
| Influenza | 374 | (4%) | (4%) | 409 | (7%) | (7%) | |
| Fluarix/FluLaval sales declined in Q3 23 driven by competitive pressure primarily in the US. | |||||||
| Established Vaccines | 868 | (2%) | 3% | 2,495 | 7% | 6% | |
| Established Vaccines Q3 23 performance was driven by resupply of MMR/V vaccines in Europe and positive phasing for Synflorix in International, partly offset by increased competition in the US and constrained supply in Europe for Infanrix/Pediarix. YTD sales also include favourable CDC stockpile movements for Rotarix in the US and continued travel market recovery benefiting Hepatitis vaccine sales in Europe and International. | |||||||
| Specialty Medicines | Total | 2,592 | (6%) | (1%) | 7,351 | (14%) | (15%) | |
| Excluding COVID | 2,592 | 11% | 17% | 7,320 | 14% | 14% | ||
| Specialty Medicines growth (excluding COVID-19 solutions) in Q3 23 reflected increased performance in the quarter, with continued growth momentum on the HIV portfolio and growth acceleration in both Oncology and Respiratory/Immunology and Other. In Q3 23 there were minimal sales of Xevudy contrasting with strong International sales in Q3 22, resulting in a drag of 18 percentage points (CER) in Q3 23, and a 29 percentage points (CER) drag YTD. | ||||||||
| HIV | 1,623 | 9% | 15% | 4,671 | 15% | 14% | |
| The growth of HIV in Q3 23 and YTD was primarily driven by a 2 percentage point increase in market share within a broadly flat global treatment market, attributable to patient demand for the Oral 2DR (Dovato, Juluca) and Long-Acting medicines (Cabenuva, Apretude). YTD patient demand contributed approximately 10 percentage points of sales growth, with the remainder from favourable pricing, customer ordering patterns and tender phasing. Growth in Q3 23 was mainly driven by continued patient demand for Oral 2DR and Long-Acting medicines and tender phasing. Dovato continues to be the highest selling product in the HIV portfolio with sales of £477 million in the quarter. | |||||||
| Oral 2DR and Long-Acting | 867 | 38% | 43% | 2,369 | 47% | 46% | |
| Oral 2DR (Dovato, Juluca) and Long-Acting medicine (Cabenuva, Apretude) sales growth continues and now represents 53% of the total HIV portfolio compared to 42% for Q3 22, driven by market share growth of 4 percentage points versus Q3 22. Long-Acting medicine sales in the quarter were £219 million, growing £117 million versus Q3 22, with approximately three quarters of sales coming from patient switches from competitor products. Cabenuva sales in Q3 23 were £182 million, reflecting strong patient demand, high levels of market access and reimbursement across US and EU, underpinned by strong data from the SOLAR phase IIIb study presented at CROI 2023. | |||||||
| Respiratory/Immunology and Other | 769 | 12% | 18% | 2,162 | 15% | 15% | |
| This therapy area includes sales of Nucala and Benlysta, and also sales of Duvroq (Daprodustat) in Japan. Growth in Q3 23 exceeds H1 23 reflecting accelerating growth in both Benlysta and Nucala. | |||||||
| Nucala | 413 | 13% | 19% | 1,184 | 15% | 16% | |
| Nucala, is an IL-5 antagonist monoclonal antibody treatment for severe asthma, with additional indications including chronic rhinosinusitis with nasal polyps, eosinophilic granulomatosis with polyangiitis (EGPA) and hypereosinophilic syndrome (HES). Strong growth in all regions in the quarter reflected patient demand in severe eosinophilic asthma and for the new indications with ongoing launches, with growth in the quarter accelerated from H1 23 due to stronger US performance resulting from increasing new patient starts. | |||||||
| (1) | United States Census Bureau, International Database, Year 2023. |
| Q3 2023 | Year to date | ||||||
| £m | AER | CER | £m | AER | CER | ||
| Benlysta | 349 | 13% | 20% | 960 | 17% | 17% | |
| Benlysta, a monoclonal antibody treatment for Lupus, continues to show consistent growth representing strong demand in US and Europe with bio penetration and volume uptake in certain International markets, particularly in Japan and China. Q3 23 growth acceleration to 20% uplifts the YTD growth to 17%. | |||||||
| Oncology | 200 | 22% | 26% | 487 | 9% | 9% | |
| Oncology demonstrated strong growth in Q3 23 driven by Jemperli and Zejula performance offset by the impact of Blenrep withdrawal from the US market in November 2022. In the quarter, Jemperli was approved in the US for frontline treatment in combination with chemotherapy for patients with dMMR/MSI-H primary advanced or recurrent endometrial cancer. Consequently, Jemperli achieved sales of £45 million in Q3 23 (£81 million YTD) driven by increasing new patient starts in the US. Strong Q3 23 performance drives Oncology growth YTD to 9%. GSK launched Ojjaara late in the quarter, with approval received for use in myelofibrosis patients with anaemia regardless of prior myelofibrosis therapy. | |||||||
| Zejula | 140 | 17% | 22% | 371 | 10% | 10% | |
| Zejula, a PARP inhibitor treatment for ovarian cancer, saw positive growth globally in Q3 23, with the US demonstrating strong growth resulting from the launch of the recently approved tablet formulation including associated channel inventory impacts. Zejula strategy involves a switch from capsule to tablet formulation leading to improved patient experience and compliance. In the US, growth in first line indication was partially offset by reduction in use in second line following the update to US prescribing information agreed with the FDA in Q4 2022. Q3 23 sales also continue to show positive momentum in Europe and International, which when combined with US performance drives Q3 23 global growth to 22% and YTD global growth to 10%. | |||||||
| General Medicines | 2,337 | (10%) | (2%) | 7,644 | 2% | 5% | |
| Performance in the quarter was adversely impacted by the US market through RAR adjustments, largely impacting the Established Respiratory portfolio. Unfavourable RAR adjustments contributed 6 percentage points of decline in Q3 23 and 3 percentage points YTD. Growth YTD was driven by both Respiratory and Other General Medicines, with ongoing strong demand for Trelegy in all regions, and a continued post pandemic recovery of the antibiotic market in Europe and International regions. | |||||||
| Respiratory | 1,520 | (10%) | (3%) | 5,079 | 4% | 5% | |
| Performance in Q3 23 and YTD reflects growth of Trelegy and the single inhaled triple therapy class across all regions and of Anoro in Europe and International. Performance in Q3 23 was adversely impacted by the US market through RAR adjustments, largely impacting the Established Respiratory portfolio. Unfavourable RAR adjustments contributed 7 percentage points of decline in Q3 23 and 3 percentage points YTD. | |||||||
| Trelegy | 537 | 15% | 23% | 1,613 | 27% | 27% | |
| Trelegy, is the most prescribed single inhaler triple therapy (SITT) treatment worldwide for COPD and asthma. Strong growth in Q3 23 and YTD delivered across all regions, reflecting increased patient demand, growth of the SITT market and penetration of the class. Growth momentum continues supported by the outputs of recently updated primary care guidelines from the Global Initiative for Chronic Obstructive Lung Disease. | |||||||
| Seretide/Advair | 202 | (24%) | (14%) | 863 | 4% | 6% | |
| Seretide/Advair is an ICS/LABA treatment for asthma and COPD. Growth YTD reflected targeted promotion and growth in certain International markets and the benefit of favourable US RAR adjustments cumulatively in the period. Growth is partially offset by the ongoing impact of generic competition in Europe, US and certain International markets. Quarterly performance was significantly impacted by unfavourable RAR adjustments, accounting for 9 percentage points of decline. | |||||||
| Other General Medicines | 817 | (11%) | – | 2,565 | (3%) | 4% | |
| Flat growth in Q3 23 reflects ongoing post pandemic demand for anti-infectives in Europe and International, and certain third party manufacturing arrangements. Ongoing generic competition continues to impact this product group in Q3 23 and YTD, and specifically in Q3 23 adverse impacts in the US from RAR adjustments which contributed 4 percentage points of decline in the quarter and 1 percentage point YTD. | |||||||
By Region
| Q3 2023 | Year to date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| US | Total | 4,560 | 14% | 19% | 11,440 | 5% | 4% | |
| Excluding COVID | 4,560 | 14% | 19% | 11,441 | 13% | 12% | ||
| YTD 2023 there was an 8 (CER) percentage point drag due to a decrease in sales of Xevudy, however the decline had no impact in Q3 23, as Xevudy sales in 2022 were predominantly in the first quarter. Vaccines grew strongly in Q3 23 driven by the launch and initial stocking for Arexvy, partly offset by lower non-retail demand for Shingrix, competitive pressure on Infanrix/Pediarix and CDC purchasing patterns and lower private demand for Bexsero. YTD performance also includes unfavourable wholesaler and retailer inventory movements for Shingrix and favourable CDC stockpile movements in Established Vaccines. Specialty Medicines grew in Q3 23 and YTD driven by strong HIV performance, Benlysta and Nucala continued growth, and despite strong Oncology growth in Q3 23, partially offset by Oncology YTD on the withdrawal of Blenrep in November 2022. General Medicines declined in Q3 23 as Trelegy growth from increased patient demand and growth of the SITT market was more than offset by declines in Established Respiratory resulting from adjustments to channel inventories and RAR. | ||||||||
| Europe | Total | 1,559 | 5% | 5% | 4,907 | 5% | 2% | |
| Excluding COVID | 1,559 | 5% | 5% | 4,783 | 12% | 10% | ||
| In Q3 23 there is no impact from the impacts of COVID-19 solutions, however YTD there is an 8 (CER) percentage point drag due to high sales of Xevudy in the first half of 2022. Excluding the impacts of COVID-19 solutions, Europe continued to grow in Q3 23 and deliver strong growth of 10% YTD. Vaccines strong growth reflected Shingrix launches and uptake, Bexsero national immunisation campaigns in France and Spain and ongoing travel vaccine recovery. Specialty Medicines double digit growth came from HIV, Oncology, Benlysta and Nucala including the impact of new indication launches. General Medicines low single digit percentage decline in the quarter was driven by Established Respiratory performance, with growth maintained at a low single digit percentage YTD. | ||||||||
| International | Total | 2,028 | (13%) | (2%) | 5,929 | (6%) | – | |
| Excluding COVID | 2,027 | 4% | 17% | 5,878 | 9% | 16% | ||
| In Q3 23 there was a 19 (CER) percentage point drag due to high sales of Xevudy in 2022, while YTD the impact was 16 (CER) percentage points. Excluding this effect, all product groups grew in Q3 23 and YTD. Vaccines double digit growth was driven by Shingrix strong uptake across several markets. Specialty Medicines grew in HIV, Oncology and Respiratory/Immunology and Other with Nucala delivering strong growth. General Medicines product group was driven by Respiratory, with Trelegy growth and a strong allergy season in Japan, Other General Medicines was driven by Augmentin on strong post pandemic antibiotic demand. | ||||||||
| Financial performance |
| Total Results | Q3 2023 | Year to Date | |||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 8,147 | 4 | 10 | 22,276 | 1 | 2 | |||||
| Cost of sales | (2,272) | (6) | (4) | (6,147) | (16) | (16) | |||||
| Selling, general and administration | (2,296) | 12 | 18 | (6,707) | 13 | 13 | |||||
| Research and development | (1,575) | 17 | 21 | (4,176) | 13 | 12 | |||||
| Royalty income | 312 | 22 | 23 | 718 | 30 | 30 | |||||
| Other operating income/(expense) | (367) | 208 | |||||||||
| Operating profit | 1,949 | 64 | 83 | 6,172 | 35 | 39 | |||||
| Net Finance expense | (158) | (11) | (8) | (484) | (13) | (14) | |||||
| Share of after tax profit/(loss) of associates and joint ventures | – | (4) | |||||||||
| Profit/(loss) on disposal of interest in associates | – | 1 | |||||||||
| Profit before taxation | 1,791 | 77 | 99 | 5,685 | 42 | 46 | |||||
| Taxation | (257) | (775) | |||||||||
| Tax rate % | 14.3% | 13.6% | |||||||||
| Profit after taxation | 1,534 | 97 | >100 | 4,910 | 49 | 53 | |||||
| Profit attributable to non-controlling interests | 70 | 332 | |||||||||
| Profit attributable to shareholders | 1,464 | 4,578 | |||||||||
| 1,534 | 97 | >100 | 4,910 | 49 | 53 | ||||||
| Earnings per share | 36.1p | 92 | >100 | 113.0p | 54 | 59 | |||||
| Financial Performance – Q3 2023 results unless otherwise stated, growth % and commentary at CER. |
| Adjusted resultsReconciliations between Total results and Adjusted results for Q3 2023, Q3 2022, YTD 2023 and YTD 2022 are set out on pages 19, 20, 22 and 23. |
| Q3 2023 | Year to Date | ||||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 8,147 | 4 | 10 | 22,276 | 1 | 2 | |||||
| Cost of sales | (2,073) | (6) | (4) | (5,553) | (17) | (17) | |||||
| Selling, general and administration | (2,185) | 11 | 17 | (6,441) | 13 | 13 | |||||
| Research and development | (1,429) | 10 | 14 | (3,966) | 12 | 11 | |||||
| Royalty income | 312 | 22 | 23 | 718 | 30 | 30 | |||||
| Adjusted operating profit | 2,772 | 6 | 15 | 7,034 | 7 | 10 | |||||
| Adjusted profit before taxation | 2,616 | 8 | 17 | 6,552 | 9 | 12 | |||||
| Taxation | (404) | – | 9 | (1,022) | 6 | 8 | |||||
| Adjusted profit after taxation | 2,212 | 9 | 19 | 5,530 | 10 | 13 | |||||
| Adjusted profit attributable to non-controlling interests | 169 | 420 | |||||||||
| Adjusted profit attributable to shareholders | 2,043 | 5,110 | |||||||||
| 2,212 | 9 | 19 | 5,530 | 10 | 13 | ||||||
| Earnings per share | 50.4p | 7 | 17 | 126.2p | 11 | 14 | |||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Cost of sales | Total | 2,272 | (6%) | (4%) | 6,147 | (16%) | (16%) | |
| % of sales | 27.9% | (3.1%) | (3.9%) | 27.6% | (5.7%) | (5.8%) | ||
| Adjusted | 2,073 | (6%) | (4%) | 5,553 | (17%) | (17%) | ||
| % of sales | 25.4% | (2.8%) | (3.6%) | 24.9% | (5.6%) | (5.7%) | ||
| Total and Adjusted cost of sales as a percentage of sales in Q3 2023 and year to date decreased primarily reflecting lower sales of lower margin Xevudy compared to 2022. Excluding Xevudy, the quarter and year to date benefitted from an increasing margin contribution from Vaccines sales, particularly the launch of Arexvy in the quarter in the US and Shingrix outside the US. In addition, Specialty Medicines, particularly HIV, contributed to the improved margin, as well as continued operational efficiencies. This was partly offset by adverse inventory provision adjustments in the quarter as well as higher input costs. The year to date also reflected an unfavourable comparator to a one-time benefit from inventory adjustments in Q1 2022. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Selling, general & administration | Total | 2,296 | 12% | 18% | 6,707 | 13% | 13% | |
| % of sales | 28.2% | 1.9% | 1.9% | 30.1% | 3.1% | 2.8% | ||
| Adjusted | 2,185 | 11% | 17% | 6,441 | 13% | 13% | ||
| % of sales | 26.8% | 1.7% | 1.7% | 28.9% | 3.0% | 2.7% | ||
| Growth in Total and Adjusted SG&A in Q3 2023 and in the year to date primarily reflected increased investment for growth in Vaccines, including disease awareness and initial launch preparations across 15 markets for Arexvy, and investment behind global market expansion and disease awareness for Shingrix. In Specialty Medicines, increased investment was targeted behind long-acting injectables in HIV and the recent launch of Ojjaara for myelofibrosis in Oncology. This was partly offset by the continuing benefit of restructuring and tight control of ongoing costs. In the quarter there was a 3% adverse impact to growth reflecting foreign exchange gains in Q3 2022 for COVID-19 solutions. The year to date also reflected the Zejula royalty dispute in Q1 2023. Total SG&A also included an increase in significant legal costs (see details on page 21). | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Research & development | Total | 1,575 | 17% | 21% | 4,176 | 13% | 12% | |
| % of sales | 19.3% | 2.1% | 1.7% | 18.7% | 1.9% | 1.7% | ||
| Adjusted | 1,429 | 10% | 14% | 3,966 | 12% | 11% | ||
| % of sales | 17.5% | 1.0% | 0.6% | 17.8% | 1.7% | 1.4% | ||
| R&D growth in the quarter was driven by late-stage investment in Vaccines, Respiratory/Immunology and Infectious Diseases. Investment increased in Vaccines driven by pneumococcal and mRNA programmes, partly offset by lower investment on Meningitis ABCWY and RSV following successful trial completion. Respiratory/Immunology increased investment on paediatric Benlysta, Nucala COPD, CCL17 for osteo arthritic pain and the collaboration with Alector Inc. for Alzheimer’s disease was offset by a decrease related to completion of the late-stage clinical programme last year for otilimab. Infectious Diseases investment increase was driven by bepirovirsen to support development in chronic hepatitis B. In Oncology, increased investment in Jemperli and momelotinib (Ojjaara) in the quarter was offset by reductions in Zejula and Cell and Gene Therapy. Early stage research increases included investment in IL18 for atopic dermatitis and in the HIV portfolio, focused on next generation long-acting treatments and preventative medicines. This was offset by lower spend on projects transitioning into development including mRNA and therapeutic HSV vaccines. The year to date growth factors were similar to the quarter, but also included reduced investment in Blenrep compared to the same period in 2022. Total R&D included higher impairment charges compared with the same quarter and year to date in 2022. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Royalty income | Total | 312 | 22% | 23% | 718 | 30% | 30% | |
| Adjusted | 312 | 22% | 23% | 718 | 30% | 30% | ||
| Growth in Total and Adjusted royalty income in Q3 2023 primarily related to Gardasil royalties, which increased to £189 million in the quarter and £392 million in the year to date, as well as Kesimpta and Biktarvy royalties. The majority of the income from Gardasil royalties will cease at the end of 2023. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Other operating income/(expense) | Total | (367) | 66% | 66% | 208 | >100% | >100% | |
| The Q3 2023 expense reflected a charge of £576 million (Q3 2022: £698 million) arising from the remeasurement of contingent consideration liabilities and the liabilities for the Pfizer, Inc. (Pfizer) put option partly offset by a fair value gain of £184 million (Q3 2022: £377 million loss) on the retained stake in Haleon plc (Haleon) and net income of £25 million (Q3 2022: £9 million) primarily received from equity investments and milestone income. Year to date income reflects a fair value gain of £154 million (YTD 2022: £377 million loss) on the retained stake in Haleon as well as £170 million (YTD 2022: £158 million) of other net income primarily related to equity investments and milestone income (including £30 million dividend received form the retained investment in Haleon), partly offset by a charge of £116 million (YTD 2022: £1,729 million) arising from the remeasurement of contingent consideration liabilities and the liabilities for the Pfizer put option. In Q1 2022 upfront income of £0.9 billion was received from the settlement with Gilead Sciences, Inc. (Gilead). | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Operating profit | Total | 1,949 | 64% | 83% | 6,172 | 35% | 39% | |
| % of sales | 23.9% | 8.7% | 10.1% | 27.7% | 6.9% | 7.5% | ||
| Adjusted | 2,772 | 6% | 15% | 7,034 | 7% | 10% | ||
| % of sales | 34.0% | 0.8% | 1.7% | 31.6% | 1.7% | 2.2% | ||
| Total operating profit margin was higher in the quarter and year to date due to profitable, resilient growth across the portfolio as well as favourable movements in contingent consideration liabilities and fair value gains (2022 fair value losses) on the retained stake in Haleon. In the year to date there is an unfavourable comparison due to the £0.9 billion upfront income received from the settlement with Gilead in Q1 2022. Adjusted operating profit in Q3 2023 benefitted from leverage from profitable, resilient growth and strong execution across Specialty Medicines and Vaccines, particularly with the launch of Arexvy, as well as higher royalty income, offset by a decline in operating profit for General Medicines in the quarter and increased investment behind product launches and in R&D. The adverse impact of lower sales of COVID-19 solutions was seven percentage points of operating profit growth in the quarter. There was minimal impact on Adjusted operating profit margin. Year to date Adjusted operating profit benefitted from strong sales, favourable product mix and increased royalty income partly offset by increased investment behind product launches and in R&D as well as increased legal charges primarily relating to the Zejula royalty dispute. The adverse impact of lower sales of COVID-19 solutions was 4 percentage points of operating profit growth in the quarter. The Adjusted operating profit margin improved by 1.8 percentage points. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Adjusted operating profit by segment | Commercial Operations | 4,188 | 6% | 13% | 11,044 | 6% | 7% | |
| % of sales | 51.4% | 1.0% | 1.4% | 49.6% | 2.3% | 2.3% | ||
| R&D | (1,371) | 5% | 9% | (3,876) | 9% | 8% | ||
| Commercial Operations Adjusted operating profit in the quarter and year to date benefitted from strong sales and favourable product mix (with minimal Xevudy sales) and increased royalty income, partly offset by increased investment in growth and launch assets as well as an increase in legal provisions in the year to date. The R&D segment operating expenses growth was driven by late-stage investment in Vaccines, Respiratory/Immunology and Infectious Diseases, including pneumococcal and mRNA programmes, and bepirovirsen to support development in chronic hepatitis B. This was partly offset by decreases related to the completion of late-stage clinical development programmes and reduced investment in RSV and Blenrep versus the same period in 2022. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Net finance costs | Total | 158 | (11%) | (8%) | 484 | (13%) | (14%) | |
| Adjusted | 156 | (12%) | (9%) | 478 | (14%) | (15%) | ||
| The decrease in net finance costs in Q3 2023 and year to date is mainly driven by the net savings from maturing bonds including the Sterling Notes repurchase in Q4 2022 and higher interest income on cash, partly offset by higher interest on commercial paper. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Taxation | Total | 257 | 10% | 27% | 775 | 10% | 14% | |
| Tax rate % | 14.3% | 13.6% | ||||||
| Adjusted | 404 | – | 9% | 1,022 | 6% | 8% | ||
| Tax rate % | 15.4% | 15.6% | ||||||
| The effective tax rate on Adjusted Profits is broadly in line with expectations for the year of 15% to 15.5%. Further details on taxation are described in Note 14, “Taxation” in the Annual Report 2022. | ||||||||
| Q3 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Non-controlling interests (“NCIs”) | Total | 70 | >100% | >100% | 332 | (1%) | (3%) | |
| Adjusted | 169 | 25% | 30% | 420 | (6%) | (8%) | ||
| The increase in Total profit from continuing operations allocated to NCIs in Q3 2023 was primarily driven by higher ViiV Healthcare profits with an allocation of £57 million (Q3 2022: £24 million). The year to date was impacted by lower net profits in some of the Group’s other entities with NCIs offset by higher ViiV Healthcare profits with an allocation of £324 million (2022: £292 million). In Q3 2023 the growth in Adjusted profit from continuing operations allocated to NCIs reflected higher profits in ViiV Healthcare with an allocation of £156 million (Q3 2022: £139 million) and higher net profits in some of the Group’s other entities with NCIs. The decrease in the year to date primarily reflected lower net profits in some of the Group’s other entities with NCIs, partly offset by higher profit allocations from ViiV Healthcare of £412 million (2022: £403 million). | ||||||||
| Q3 2023 | Year to Date | |||||||
| £p | AER | CER | £p | AER | CER | |||
| Earnings per share | Total continuing | 36.1p | 92% | >100% | 113.0p | 54% | 59% | |
| Adjusted | 50.4p | 7% | 17% | 126.2p | 11% | 14% | ||
| Adjusted EPS in the quarter and year to date reflected the growth in Adjusted Operating profit as well as lower finance costs. Year to date growth also reflected the growth in Adjusted Operating profit, lower finance costs and a favourable benefit from lower non-controlling interests. In Q3 2023 and the year to date, lower sales from lower margin COVID-19 solutions reduced Adjusted EPS by eight and five percentage points respectively. In Q3 2023 and the year to date, the increase in Total continuing EPS primarily reflected lower charges related to the remeasurement of contingent consideration liabilities and a fair value gain on the retained stake in Haleon compared to a fair value loss in the same period last year. In the year to date there is an unfavourable comparison due to upfront income received from the settlement with Gilead in Q1 2022. | ||||||||
| Currency impact on resultsThe results for the year to date 2023 are based on average exchange rates, principally £1/$1.24, £1/€1.15 and £1/Yen 173. The results for Q3 2023 are based on average exchange rates, principally £1/$1.26, £1/€1.16 and £1/Yen 182. The period-end exchange rates were £1/$1.23, £1/€1.16 and £1/Yen 183. Comparative exchange rates are given on page 40. |
| Q3 2023 | Year to Date | |||||||
| £m/£p | AER | CER | £m/£p | AER | CER | |||
| Turnover | 8,147 | 4% | 10% | 22,276 | 1% | 2% | ||
| Earnings per share | Total | 36.1p | 92% | >100% | 113.0p | 54% | 59% | |
| Adjusted | 50.4p | 7% | 17% | 126.2p | 11% | 14% | ||
| In Q3 2023, the adverse currency impact primarily reflected the strengthening of Sterling against the US Dollar as well as the weakening of emerging market currencies against Sterling. Exchange gains or losses on the settlement of intercompany transactions had a minimal impact on Adjusted EPS. In the year to date the adverse currency impact primarily reflected weakening of emerging market currencies against Sterling partly offset by weakening of Sterling against the US Dollar and the Euro. Exchange gains or losses on the settlement of intercompany transactions had a one percentage point adverse impact on Adjusted EPS. | ||||||||
| Cash generation |
| Cash flow | |||||||
| Q3 2023£m | Q3 2022£m | 9 months 2023£m | 9 months 2022£m | ||||
| Cash generated from operations attributable to continuing operations (£m) | 2,508 | 1,907 | 4,415 | 5,843 | |||
| Cash generated from operations attributable to discontinued operations (£m) | – | 10 | – | 928 | |||
| Total cash generated from operations (£m) | 2,508 | 1,917 | 4,415 | 6,771 | |||
| Total net cash generated from operating activities (£m) | 2,212 | 1,321 | 3,572 | 5,498 | |||
| Free cash inflow/(outflow) from continuing operations* (£m) | 1,655 | 712 | 1,314 | 2,453 | |||
| Free cash flow from continuing operations growth (%) | >100% | (13%) | (41%) | >100% | |||
| Free cash flow conversion from continuing operations* (%) | >100% | 94% | 29% | 83% | |||
| Total net debt** (£m) | 17,589 | 18,436 | 17,589 | 18,436 | |||
| * | Free cash flow from continuing operations and free cash flow conversion are defined on page 51. Free cash flow from continuing operations is analysed on page 42. |
| ** | Net debt is analysed on page 42. |
| Q3 2023Cash generated from operating activities from continuing operations for the quarter was £2,508 million (Q3 2022: £1,907 million). The increase primarily reflected increased operating profit, timing of returns and rebates, favourable comparison to timing of profit share payments for Xevudy and timing of additional pension contributions both in 2022, offset in part by an increase in trade receivables due to higher sales in the quarter, including the launch of Arexvy. Total contingent consideration payments in the quarter were £281 million (Q3 2022: £249 million), including cash payments made to Shionogi & Co. Ltd (Shionogi) of £269 million (Q3 2022: £240 million). £278 million (Q3 2022: £247 million) of these were recognised in cash flows from operating activities. Free cash inflow was £1,655 million for the quarter (Q3 2022: £712 million inflow). In addition to the increase in cash generated from operating activities from continuing operations, the increase in free cash inflow was driven by a favourable comparison due to increased tax payments in Q3 2022 and lower dividends paid to non-controlling interests in the quarter partly offset by lower proceeds from sale of intangible assets. 9 months 2023Cash generated from operating activities from continuing operations was £4,415 millions (9 months 2022: £5,843 million). The decrease primarily reflected an unfavourable comparison due to the upfront income from the settlement with Gilead received in Q1 2022, increase in trade receivables due to higher sales including the launch of Arexvy and lower Xevudy collections and lower payable balances reflecting increased investment in 2022. Total contingent consideration cash payments in the year to date 2023 were £860 million (YTD 2022: £864 million), including cash payments made to Shionogi of £834 million (YTD 2022: £843 million). £853 million (YTD 2022: £789 million) of these were recognised in cash flows from operating activities. Free cash inflow was £1,314 million for the YTD 2023 (YTD 2022: £2,453 million inflow). The reduction was primarily due to lower cash generated from operating activities including an unfavourable comparison due to the upfront income from the settlement with Gilead in Q1 2022. This was partly offset by a favourable comparison due to increased tax payments in Q3 2022. Total Net debt At 30 September 2023, net debt was £17,589 million, compared with £17,197 million at 31 December 2022, comprising gross debt of £20,836 million and cash and liquid investments of £3,247 million. See net debt information on page 42. Net debt increased by £0.4 billion primarily due to dividends paid to shareholders of £1.7 billion and the net acquisition cost of BELLUS Health Inc. (Bellus) for £1.5 billion, partly offset by £1.3 billion free cash inflow, £0.9 billion disposal of investments, £0.2 billion of income received from equity investments and net favourable exchange impacts of £0.4 billion from the translation of non-Sterling denominated debt and exchange on other financing items. At 30 September 2023, GSK had short-term borrowings (including overdrafts and lease liabilities) repayable within 12 months of £4,843 million with loans of £2,323 million repayable in the subsequent year. On 6 October 2023, GSK completed the sale of 270 million shares in Haleon raising gross proceeds of approximately £885.6 million. See post balance sheet event note on page 41. |
| Q3 2023 pipeline highlights (since 26 July 2023) |
| Medicine/vaccine | Trial (indication, presentation) | Event | |
| Regulatory approvals or other regulatory action | Arexvy | RSV, older adults aged60+ years | Regulatory approval (JP) |
| Apretude | HIV, pre-exposure prophylaxis, long-acting injectable and tablets | Regulatory approval (EU) | |
| Vocabria | HIV, combination with rilpivirine long-acting injection | Regulatory approval (CN) | |
| Jemperli | RUBY (1L mismatch repair deficient/microsatellite instability-high (dMMR/MSI-H) endometrial cancer) | Regulatory approval (US) | |
| Jemperli | RUBY (1L dMMR/MSI-H endometrial cancer) | Positive CHMP opinion (EU) | |
| Ojjaara (momelotinib) | MOMENTUM (myelofibrosis with anaemia) | Regulatory approval (US) | |
| Regulatory submissions or acceptances | Nucala | chronic rhinosinusitis with nasal polyps | Regulatory acceptance (JP) |
| momelotinib | MOMENTUM (myelofibrosis with anaemia) | Regulatory acceptance (JP) | |
| Phase III data readouts or other significant events | Arexvy | RSV, older adults aged50-59 years | Positive phase III data readout |
| Shingrix | Shingles, older adults aged50+ years | Positive phase III data (CN) | |
| Jemperli | RUBY part 1 (OS overall population, 1L endometrial cancer) | Positive phase III data readout |
| Anticipated news flow |
| Timing | Medicine/vaccine | Trial (indication, presentation) | Event |
| H2 2023 | Arexvy | RSV, older adults aged50-59 years | Regulatory submission(US, EU, JP) |
| Nucala | Chronic rhinosinusitis with nasal polyps | Regulatory submission (CN) | |
| H1 2024 | gepotidacin | EAGLE-1 (urogenital gonorrhoea) | Phase III data readout |
| MenABCWY (gen 2)vaccine candidate | Meningitis ABCWY | Phase II data readout | |
| MenABCWY (gen 1)vaccine candidate | Meningitis ABCWY | Regulatory submission(US, EU) | |
| depemokimab | SWIFT-1/2 (severe asthma) | Phase III data readout | |
| Blenrep | DREAMM-7 (2L+ multiple myeloma) | Phase III data readout | |
| Jemperli | RUBY (1L dMMR/MSI-H endometrial cancer) | Regulatory decision (EU) | |
| Jemperli | RUBY part 1 (OS overall population, 1L endometrial cancer) | Regulatory submission (US) | |
| Jemperli | RUBY part 2 (1L endometrial cancer) | Phase III data readout | |
| Jemperli | RUBY part 2 (1L endometrial cancer) | Regulatory submission(US, EU) | |
| momelotinib | MOMENTUM (myelofibrosis with anaemia) | Regulatory decision(EU, JP) | |
| Zejula | FIRST (1L maintenance ovarian cancer) | Phase III data readout | |
| H2 2024 | Arexvy | RSV, older adults aged50-59 years | Regulatory decision(US, EU, JP) |
| gepotidacin | EAGLE-2/3 (uncomplicated urinary tract infection) | Regulatory submission (US) | |
| depemokimab | ANCHOR-1/2 (chronic rhinosinusitis with nasal polyps) | Phase III data readout | |
| depemokimab | ANCHOR-1/2 (chronic rhinosinusitis with nasal polyps) | Regulatory submission (US) | |
| depemokimab | SWIFT-1/2 (severe asthma) | Regulatory submission (US) | |
| Nucala | Severe asthma | Regulatory decision (CN) | |
| Nucala | Chronic rhinosinusitis with nasal polyps | Regulatory decision (JP) | |
| Nucala | MATINEE (chronic obstructive pulmonary disease) | Phase III data readout | |
| Nucala | MATINEE (chronic obstructive pulmonary disease) | Regulatory submission (US) | |
| Blenrep | DREAMM-8 (2L + multiple myeloma) | Phase III data readout | |
| cobolimab | COSTAR (non-small cell lung cancer) | Phase III data readout | |
| Zejula | ZEAL (1L maintenance non-small cell lung cancer) | Phase III data readout | |
| linerixibat | GLISTEN (cholestatic pruritus in primary biliary cholangitis) | Phase III data readout |
| Refer to pages 43 to 50 for further details on several key medicines and vaccines in development by therapy area. |