| Sales and earnings growth delivered by key growth drivers | |
| · | Q2 2023 sales +4% and +11% ex COVID |
| · | Vaccines sales +18%, +15% ex COVID with Shingrix +20% |
| · | Specialty Medicines sales -7%, +12% ex COVID with HIV +12% |
| · | General Medicines sales +8% with Trelegy +30% |
| · | Strong sales growth of products launched since 2017 including in Vaccines and HIV contributing to step change in performance |
| · | Total operating profit and Total continuing EPS >100% driven by strong operating performance and favourable movements in contingent consideration liabilities |
| · | Adjusted operating profit +11% and Adjusted EPS +16% reflects strong sales ex COVID and higher royalty income offset by increased investment in R&D and new product launches |
| (Financial Performance – Q2 2023 results unless otherwise stated, growth % and commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page 54). |
| Q2 2023 | Year to Date | ||||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 7,178 | 4 | 4 | 14,129 | – | (2) | |||||
| Turnover ex COVID-19 solutions | 7,137 | 10 | 11 | 13,956 | 13 | 11 | |||||
| Total operating profit | 2,141 | 98 | >100 | 4,223 | 25 | 23 | |||||
| Total continuing EPS | 40.1p | >100 | >100 | 76.9p | 40 | 39 | |||||
| Adjusted operating profit | 2,170 | 8 | 11 | 4,262 | 8 | 6 | |||||
| Adjusted operating margin % | 30.2% | 1.3ppts | 2.0ppts | 30.2% | 2.2ppts | 2.3ppts | |||||
| Adjusted EPS | 38.8p | 12 | 16 | 75.8p | 13 | 12 | |||||
| Cash generated from operations | 1,620 | 3 | 1,907 | (52) | |||||||
| R&D innovation continued delivery of organic portfolio and targeted business development | |
| · | Arexvy, world’s first RSV vaccine in older adults, approved in US and EU |
| · | Shingrix approved, for shingles in at-risk adults aged 18 and over in Japan |
| · | Positive phase III data for MenABCWY vaccine candidate presented at ESPID and supports filing in 2024 |
| · | US FDA Fast Track designation granted to gonorrhoea vaccine candidate |
| · | CHMP positive opinion for long-acting treatment cabotegravir in HIV prevention |
| · | Paediatric exclusivity granted for dolutegravir extends US LOE to April 2028 |
| · | Completion of Bellus Health acquisition adds camlipixant, a phase III asset for refractory chronic cough |
| · | Next US FDA approval decisions include momelotinib (myelofibrosis) and Jemperli (1L endometrial cancer) |
| · | Development decisions on key phase I/II assets before year end include: bepirovirsen (Hep B), mRNA influenza, CCL17 (pain), IL18 (atopic dermatitis) and therapeutic HSV |
| 2023 guidance upgraded, Q2 2023 dividend of 14p declared, 56.5p expected for full year | |
| · | Turnover to increase 8-10% (from 6-8%) |
| · | Adjusted operating profit growth 11-13% (from 10-12%) |
| · | Adjusted EPS growth 14-17% (from 12-15%) |
| Guidance all at CER and excluding COVID-19 solutions. |
| Emma Walmsley, Chief Executive Officer, GSK:“We have delivered another excellent quarter of performance, with strong sales and earnings growth, notably in HIV and Vaccines, and continued strengthening of the R&D pipeline and product portfolio. The approval of Arexvy, the world’s first RSV vaccine, was an important milestone for us and is at the forefront of a next wave in vaccine innovation for GSK. Completion of the Bellus Health acquisition also strengthened our late-stage respiratory pipeline. Our momentum supports the upgrade we have made to our financial guidance for 2023 and further increases our confidence in delivering longer-term profitable growth for shareholders.” |
| 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 54, COVID-19 solutions are defined on page 54. 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 55. |
| 2023 guidance |
| GSK revises its full year guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions. During the first half of 2023, GSK exceeded its full-year guidance expectations with a strong performance. This was due to GSK’s strong business momentum across all product areas but particularly in HIV, as well as in General Medicines. The strong allergy season and a favourable post-pandemic recovery in comparison to the first half of 2022 also contributed to the performance. As a result, GSK has upgraded its full-year 2023 guidance at constant exchange rates (CER), excluding any contributions from COVID-19 solutions: |
| Turnover is expected to increase between 8 to 10 per cent (from 6 to 8 per cent)Adjusted operating profit is expected to increase between 11 to 13 per cent (from 10 to 12 per cent)Adjusted earnings per share is expected to increase between 14 to 17 per cent (from 12 to 15 per cent) |
| In the second half of 2023, GSK expects continued strong performance across all three product areas but with lower growth reflecting a tough comparison to the second half of 2022, particularly in HIV and General Medicines. GSK still expects Adjusted operating profit growth to be higher in the second half of 2023 relative to full-year expectations, with growth of investment reducing in the second half, particularly in the fourth quarter. This guidance is supported by the following turnover expectations for full year 2023 at CER: |
| Vaccines | – | expected increase of mid-teens per cent in turnover (unchanged) |
| Specialty Medicines | – | expected increase of high single-digit per cent in turnover (from mid to high single-digit increase) |
| General Medicines | – | expected increase of low single-digit per cent in turnover (from broadly flat to slightly down) |
| Adjusted Operating profit is now expected to grow between 11 to 13 per cent at CER (previously 10 to 12 per cent increase), reflecting higher sales and higher royalty income partially offset by cost of sales which is now expected to increase broadly in line with turnover, reflecting a greater contribution from General Medicines. SG&A is anticipated to increase at a rate broadly aligned to turnover, reflecting targeted support for launches and R&D continues to be expected to increase at a rate slightly below turnover. Adjusted earnings per share are now expected to increase between 14 to 17 per cent at CER, reflecting higher operating profit and more favourable net finance costs. Expectations for non-controlling interests and tax rate of around 15% are unchanged. |
| Additional commentary |
| Dividend policies and expected pay-out ratios remain unchanged for GSK. The future dividend policies and guidance regarding the expected dividend pay-out in 2023 for GSK are provided on page 36. |
| COVID-19 solutions |
| In Q2 2023, turnover increased by 4% at CER reflecting the comparison to Q2 2022. Excluding COVID-19 solutions, turnover increased by 11% at CER. The adverse impact of lower sales of COVID-19 solutions was one percentage point of growth in the quarter on Adjusted operating profit but increased the margin by 1.8 percentage points. GSK does not anticipate further significant COVID-19 pandemic-related sales or operating profit in 2023. Consequently, GSK now expects 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 55. If exchange rates were to hold at the closing rates on 30 Jun 2023 ($1.26/£1, €1.17/£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 ‑5%. |
| Results presentation |
| A conference call and webcast for investors and analysts of the quarterly results will be hosted by Emma Walmsley, CEO, at 12pm BST on 26 July 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 | Q2 2023 | Year to date | |||||||||
| £m | GrowthAER% | GrowthCER% | £m | GrowthAER% | GrowthCER% | ||||||
| Shingles | 880 | 20 | 20 | 1,713 | 20 | 16 | |||||
| Meningitis | 266 | 13 | 13 | 546 | 22 | 19 | |||||
| Influenza | 23 | (28) | (28) | 35 | (30) | (28) | |||||
| Established Vaccines | 812 | 13 | 13 | 1,627 | 12 | 8 | |||||
| Vaccines excluding COVID-19 solutions | 1,981 | 16 | 15 | 3,921 | 16 | 12 | |||||
| COVID-19 solutions: Pandemic vaccines | 41 | – | – | 142 | – | – | |||||
| Vaccines | 2,022 | 18 | 18 | 4,063 | 20 | 16 | |||||
| HIV | 1,580 | 13 | 12 | 3,048 | 18 | 14 | |||||
| Respiratory/Immunology and Other | 792 | 16 | 16 | 1,393 | 16 | 13 | |||||
| Oncology | 151 | (2) | (3) | 287 | 2 | (1) | |||||
| Specialty Medicines excluding COVID-19 solutions | 2,523 | 13 | 12 | 4,728 | 16 | 12 | |||||
| COVID-19 solutions: Xevudy | – | (100) | (100) | 31 | (98) | (98) | |||||
| Specialty Medicines | 2,523 | (7) | (7) | 4,759 | (18) | (21) | |||||
| Respiratory | 1,792 | 9 | 9 | 3,559 | 12 | 10 | |||||
| Other General Medicines | 841 | (2) | 4 | 1,748 | 2 | 6 | |||||
| General Medicines | 2,633 | 5 | 8 | 5,307 | 8 | 8 | |||||
| Total | 7,178 | 4 | 4 | 14,129 | – | (2) | |||||
| Total excluding COVID-19 solutions | 7,137 | 10 | 11 | 13,956 | 13 | 11 | |||||
| By Region: | |||||||||||
| US | 3,610 | 9 | 7 | 6,880 | – | (5) | |||||
| Europe | 1,644 | 6 | 4 | 3,348 | 4 | 1 | |||||
| International | 1,924 | (7) | – | 3,901 | (3) | 1 | |||||
| Total | 7,178 | 4 | 4 | 14,129 | – | (2) | |||||
| Turnover excluding COVID-19 solutions is a non-IFRS measure defined on page 54 with the reconciliation to the IFRS measure Turnover included in the table above. |
| £m | AER | CER | £m | AER | CER | ||||
| Vaccines | Total | Q2 23 | 2,022 | 18% | 18% | YTD | 4,063 | 20% | 16% |
| Excluding COVID-19 solutions | Q2 23 | 1,981 | 16% | 15% | YTD | 3,921 | 16% | 12% | |
| Double-digit growth for Vaccines in Q2 23 and YTD was driven by geographical expansion and market growth for Shingrix, favourable US Center for Disease Control (CDC) stockpile movements for Rotarix, and uptake in National Immunisation Programmes for Bexsero. | |||||||||
| Shingles | Q2 23 | 880 | 20% | 20% | YTD | 1,713 | 20% | 16% |
| Shingrix, a vaccine against herpes zoster (shingles), grew in Q2 23 and YTD in International and Europe reflecting geo-expansion and increased demand. Sales outside of the US in the quarter also include stocking for the UK national immunisation programme and channel inventory replenishment in China. US sales declined 10% in the quarter impacted by unfavourable wholesaler and distributor inventory movements plus lower non-retail demand partly offset by strong retail growth and pricing. The US cumulative immunisation rate grew from 30% at year end to 32% at the end of Q1 23 with vaccination in adults 65 and older boosted by co-pay removal in the Inflation Reduction Act. Shingrix is now available in 33 countries. | ||||||||
| Meningitis | Q2 23 | 266 | 13% | 13% | YTD | 546 | 22% | 19% |
| Building upon the momentum from Q1 23, Meningitis vaccines grew again in Q2 23 primarily driven by Bexsero, the vaccine against meningitis B, with higher sales in Europe mainly from inclusion in National Immunisation Programmes and in International due to increased private and public market demand. YTD sales benefitted from the initial stocking of Menveo liquid formulation and higher CDC purchases in the US as well as demand in anticipation of a Bexsero price increase in International in Q1 23. | ||||||||
| £m | AER | CER | £m | AER | CER | ||||
| Established Vaccines | Q2 23 | 812 | 13% | 13% | YTD | 1,627 | 12% | 8% | |
| Established Vaccines growth in Q2 23 was driven by Rotarix, benefitting from the favourable impacts of a US CDC stockpile borrow in 2022 and a replenishment in the current quarter. Cervarix, grew in Q2 23 in International and Europe reflecting higher demand and timing of deliveries. This is partly offset by Infanrix/Pediarix, due to the negative impact of a CDC stockpile borrow in the quarter and continued competitive pressure in the US. Outside of Q2 23 performance drivers, YTD turnover includes growth of Hepatitis vaccines resulting from continued travel market recovery in Europe and International and a decline on Synflorix, reflecting lower demand related to decreased birth cohorts and phasing of public market supply in International. | |||||||||
| Specialty Medicines | Total | Q2 23 | 2,523 | (7%) | (7%) | YTD | 4,759 | (18%) | (21%) |
| Excluding COVID-19 solutions | Q2 23 | 2,523 | 13% | 12% | YTD | 4,728 | 16% | 12% | |
| In Q2 23 and YTD there were minimal sales of Xevudy contrasting with strong sales YTD 2022. Specialty Medicines growth excluding COVID-19 solutions reflects consistent performance in Q2 23 and YTD driven by HIV and Respiratory/Immunology and Other categories. | |||||||||
| HIV | Q2 23 | 1,580 | 13% | 12% | YTD | 3,048 | 18% | 14% |
| The performance of HIV benefitted from strong patient demand, driven by the Oral two-drug regimen (Oral 2DR) and Long-Acting medicines which contributed approximately eight percentage points of growth. Pricing favourability driven by the US contributed two percentage points of growth. YTD includes the majority of the inventory depletion now expected from the 2022 build. | ||||||||
| Oral 2DR and Long-Acting | Q2 23 | 805 | 46% | 44% | YTD | 1,502 | 53% | 47% |
| Oral 2DR (Dovato, Juluca) and Long-Acting medicines (Cabenuva, Apretude) sales growth continues and now represent 51% of the total HIV portfolio compared to 39% for Q2 22, driven by market share growth of 4 percentage points versus Q2 22. Long-Acting medicines sales in the quarter were £212 million, growing £128 million versus Q2 22 and £61 million versus Q1 23, with approximately three quarters of sales coming from patient switches from competitor products. | ||||||||
| Respiratory/Immunology and Other | Q2 23 | 792 | 16% | 16% | YTD | 1,393 | 16% | 13% |
| This therapy area includes sales of Nucala and Benlysta plus Duvroq (Daprodustat) in Japan. Growth in Q2 23 exceeds YTD reflecting the impact of wholesaler inventory movements in US and International regions in Q1 23. | ||||||||
| Nucala | Q2 23 | 424 | 16% | 15% | YTD | 771 | 16% | 13% |
| Nucala is a 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 Q2 23 reflected patient demand in severe eosinophilic asthma and for the new indications with ongoing launches. YTD growth is slightly lower due to impact of US inventory depletion in Q1 23 and an unfavourable prior period Return and Rebates (RAR) adjustment. | ||||||||
| Benlysta | Q2 23 | 358 | 21% | 19% | YTD | 611 | 19% | 15% |
| Benlysta, a monoclonal antibody treatment for Lupus, continues to show consistent growth representing strong demand in US and Europe alongside biological penetration and volume uptake in China and Japan. US growth in Q2 23 shows an acceleration following wholesaler inventory movements in Q1 23. | ||||||||
| £m | AER | CER | £m | AER | CER | |||
| Oncology | Q2 23 | 151 | (2%) | (3%) | YTD | 287 | 2% | (1%) |
| In Q2 23 and YTD sales were impacted by the withdrawal of Blenrep from the US market in November 2022. Jemperli grew strongly in Q2 23, achieving £25 million sales driven by increasing new patient starts in the US, and is now available in 18 markets worldwide. | ||||||||
| Zejula | Q2 23 | 117 | (3%) | (2%) | YTD | 231 | 6% | 4% |
| In the US, growth of the first line indication of Zejula, a PARP inhibitor treatment for ovarian cancer, was more than offset by reduction in use in second line following the update to prescribing information agreed with the FDA in Q4 2022. Zejula delivered strong sales growth in Europe and International markets in both Q2 23 and YTD. | ||||||||
| General Medicines | Q2 23 | 2,633 | 5% | 8% | YTD | 5,307 | 8% | 8% |
| Growth driven in Q2 23 and YTD by both Respiratory and Other General Medicines categories, with ongoing demand for Trelegy in all regions. YTD benefitted from a strong allergy season in Japan and continued post pandemic recovery of the antibiotic market in Europe and International regions. | ||||||||
| Respiratory | Q2 23 | 1,792 | 9% | 9% | YTD | 3,559 | 12% | 10% |
| Performance in Q2 23 and YTD reflects growth of Trelegy and the single inhaled triple therapy (SITT) class across all regions and of Anoro in Europe and International. YTD growth also includes the benefits of a strong allergy season in Japan. In Q2 23 and YTD favourable US prior period RAR adjustments to Seretide/Advair and Trelegy were offset by adverse adjustments to Relvar/Breo and Flixotide/Flovent. | ||||||||
| Trelegy | Q2 23 | 611 | 31% | 30% | YTD | 1,076 | 33% | 29% |
| Trelegy is the most prescribed SITT treatment for COPD and asthma. Trelegy grew in Q2 23 and YTD with strong performance across all regions, reflecting increased patient demand and growth of the SITT market. Favourable US prior period RAR adjustments contributed 7 percentage points of growth in Q2 23 and 3 percentage points YTD. | ||||||||
| Seretide/Advair | Q2 23 | 322 | 23% | 26% | YTD | 661 | 17% | 16% |
| Seretide/Advair is an ICS/LABA treatment for asthma and COPD. Growth in Q2 23 and YTD reflected targeted promotion in certain International markets and the benefit of favourable US prior period RAR adjustments which contributed 16 percentage points in Q2 23 and 14 percentage points YTD. Growth was partially offset by the ongoing impact of generic competition in Europe, US and certain International markets. | ||||||||
| Other General Medicines | Q2 23 | 841 | (2%) | 4% | YTD | 1,748 | 2% | 6% |
| Growth in Q2 23 reflects ongoing post pandemic demand for anti-infectives in Europe and International, and certain third party manufacturing agreements. Ongoing generic competition continues to impact this product group in Q2 23 and YTD. | ||||||||
By Region
| £m | AER | CER | £m | AER | CER | ||||
| US | Total | Q2 23 | 3,610 | 9% | 7% | YTD | 6,880 | – | (5%) |
| Excluding COVID-19 solutions | Q2 23 | 3,611 | 10% | 8% | YTD | 6,881 | 13% | 7% | |
| Strong Xevudy sales in 2022 caused a 12 percentage points adverse impact on growth YTD, but in Q2 23 the impact is not significant. Excluding this effect, Specialty Medicines grew in Q2 23 and YTD driven by strong HIV performance and Nucala and Benlysta continued growth, partially offset by Oncology, due to the withdrawal of Blenrep in November 2022. General Medicines growth was driven by Trelegy increased patient demand and growth of the SITT market. Vaccines product group was broadly flat in Q2 23 and YTD reflecting lower non-retail demand, wholesaler destocking and a strong Q1 22 comparator on Shingrix growth resulting in a decline of 10% in the quarter for Shingrix, offset by favourable CDC stockpile movements in Established Vaccines. | |||||||||
| Europe | Total | Q2 23 | 1,644 | 6% | 4% | YTD | 3,348 | 4% | 1% |
| Excluding COVID-19 solutions | Q2 23 | 1,621 | 14% | 12% | YTD | 3,224 | 16% | 13% | |
| Strong Xevudy sales in 2022 caused a 8 percentage points adverse impact on growth in Q2 23 and 12 percentage points in YTD. Excluding this effect, Europe grew strongly in Q2 23 and YTD. Vaccines strong growth reflected Shingrix stocking, launches and uptake and Bexsero national immunisation campaigns in France and Spain alongside ongoing travel vaccine recovery. Specialty Medicines delivered double digit growth due to HIV, Oncology, and in Respiratory/ Immunology for Benlysta and Nucala which included the impact of new indication launches. | |||||||||
| International | Total | Q2 23 | 1,924 | (7%) | – | YTD | 3,901 | (3%) | 1% |
| Excluding COVID-19 solutions | Q2 23 | 1,905 | 9% | 17% | YTD | 3,851 | 11% | 15% | |
| Strong Xevudy sales in 2022 caused a 17 percentage points adverse impact on growth in Q2 23 and 14 percentage points in YTD. Excluding this effect, all product groups grew in Q2 23 and YTD. Vaccines double digit growth was driven by Shingrix stocking in China and uptake in Japan plus launches in other markets. Specialty Medicines grew due to HIV, Oncology and Respiratory/Immunology with Nucala delivering strong growth in severe eosinophilic asthma and new indications. General Medicines product group was driven by Respiratory, with Trelegy growth and a strong allergy season in Japan. Other General Medicines growth was driven by strong post pandemic antibiotic demand for Augmentin. | |||||||||
| Financial performance |
| Total Results | Q2 2023 | Year to Date | |||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 7,178 | 4 | 4 | 14,129 | – | (2) | |||||
| Cost of sales | (1,932) | (11) | (11) | (3,875) | (21) | (21) | |||||
| Selling, general and administration | (2,268) | 10 | 9 | (4,411) | 14 | 10 | |||||
| Research and development | (1,341) | 8 | 7 | (2,601) | 11 | 8 | |||||
| Royalty income | 226 | 42 | 44 | 406 | 37 | 36 | |||||
| Other operating income/(expense) | 278 | 575 | |||||||||
| Operating profit | 2,141 | 98 | >100 | 4,223 | 25 | 23 | |||||
| Net Finance expense | (152) | (326) | (14) | (17) | |||||||
| Share of after tax profit/(loss) of associates and joint ventures | (2) | (4) | |||||||||
| Profit/(loss) on disposal of interest in associates | – | 1 | |||||||||
| Profit before taxation | 1,987 | >100 | >100 | 3,894 | 30 | 28 | |||||
| Taxation | (242) | (518) | |||||||||
| Tax rate % | 12.2% | 13.3% | |||||||||
| Profit after taxation | 1,745 | >100 | >100 | 3,376 | 34 | 32 | |||||
| Profit attributable to non-controlling interests | 121 | 262 | |||||||||
| Profit attributable to shareholders | 1,624 | 3,114 | |||||||||
| 1,745 | >100 | >100 | 3,376 | 34 | 32 | ||||||
| Earnings per share | 40.1p | >100 | >100 | 76.9p | 40 | 39 | |||||
| Financial Performance – Q2 2023 results unless otherwise stated, growth % and commentary at CER. |
| Adjusted resultsReconciliations between Total results and Adjusted results for Q2 2023, Q2 2022, H1 2023 and H1 2022 are set out on pages 19, 20, 22 and 23. |
| Q2 2023 | Year to Date | ||||||||||
| £m | % AER | % CER | £m | % AER | % CER | ||||||
| Turnover | 7,178 | 4 | 4 | 14,129 | – | (2) | |||||
| Cost of sales | (1,728) | (12) | (12) | (3,480) | (23) | (23) | |||||
| Selling, general and administration | (2,191) | 12 | 11 | (4,256) | 14 | 11 | |||||
| Research and development | (1,315) | 14 | 13 | (2,537) | 13 | 10 | |||||
| Royalty income | 226 | 42 | 44 | 406 | 37 | 36 | |||||
| Adjusted operating profit | 2,170 | 8 | 11 | 4,262 | 8 | 6 | |||||
| Adjusted profit before taxation | 2,016 | 10 | 14 | 3,936 | 10 | 8 | |||||
| Taxation | (315) | 14 | 18 | (618) | 10 | 8 | |||||
| Adjusted profit after taxation | 1,701 | 10 | 14 | 3,318 | 10 | 9 | |||||
| Adjusted profit attributable to non-controlling interests | 130 | 251 | |||||||||
| Adjusted profit attributable to shareholders | 1,571 | 3,067 | |||||||||
| 1,701 | 10 | 14 | 3,318 | 10 | 9 | ||||||
| Earnings per share | 38.8p | 12 | 16 | 75.8p | 13 | 12 | |||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Cost of sales | Total | 1,932 | (11%) | (11%) | 3,875 | (21%) | (21%) | |
| % of sales | 26.9% | (4.5%) | (4.5%) | 27.4% | (7.2%) | (6.8%) | ||
| Adjusted | 1,728 | (12%) | (12%) | 3,480 | (23%) | (23%) | ||
| % of sales | 24.1% | (4.4%) | (4.3%) | 24.6% | (7.2%) | (6.8%) | ||
| The decrease in Total and Adjusted cost of sales as a percentage of sales in Q2 2023 and year to date primarily reflected lower sales of lower margin Xevudy compared to Q2 2022 and YTD 2022. In the quarter, positive mix and efficiencies were offset by higher freight and energy costs and the year to date also reflected an unfavourable comparator to a one-time benefit from inventory adjustments in Q1 2022. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Selling, general & administration | Total | 2,268 | 10% | 9% | 4,411 | 14% | 10% | |
| % of sales | 31.6% | 1.8% | 1.3% | 31.2% | 3.8% | 3.4% | ||
| Adjusted | 2,191 | 12% | 11% | 4,256 | 14% | 11% | ||
| % of sales | 30.5% | 2.3% | 1.8% | 30.1% | 3.7% | 3.4% | ||
| Growth in Total and Adjusted SG&A in Q2 2023 primarily reflected an increased level of launch investment in Specialty Medicines, particularly HIV and Vaccines including Shingrix and preparation for the launch of Arexvy. Total SG&A also reflected an increase in significant legal costs in the quarter (see details on page 19). Year to date growth in Total and Adjusted SG&A is primarily relating to an increased level of launch investment in Specialty Medicines, particularly HIV and Vaccines, and the Zejula royalty dispute provision in Q1 2023. Growth was partly offset by favourable comparison due to impairment provisions relating to Ukraine in the year to date 2022 and the continuing benefit of restructuring and tight control of ongoing costs. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Research & development | Total | 1,341 | 8% | 7% | 2,601 | 11% | 8% | |
| % of sales | 18.7% | 0.8% | 0.5% | 18.4% | 1.8% | 1.7% | ||
| Adjusted | 1,315 | 14% | 13% | 2,537 | 13% | 10% | ||
| % of sales | 18.3% | 1.7% | 1.4% | 18.0% | 2.1% | 1.9% | ||
| Growth in Total and Adjusted R&D reflected continued investment across a combination of both early and late-stage programmes. There was increased investment in the early-stage research portfolio, particularly CCL17 for osteo arthritic pain and IL18 for atopic dermatitis. There was also increased investment in the HIV portfolio, particularly in next generation long-acting HIV medicines. In addition, there was higher investment in Jemperli as phase II/III trials in rectal and colon cancer progress as well as in ongoing trials in endometrial cancer and momelotinib, a potential new treatment of myelofibrosis patients with anaemia; and for bepirovirsen, to support development in chronic hepatitis B. These increases in investment were partly offset by decreases related to the completion of late-stage clinical programmes for otilimab and Cell & Gene Therapy. Within Vaccines there was increased investment in recently acquired pneumococcal programmes, partly offset by reduced investment in RSV following the successful completion of a phase III clinical trial and decreased spend on other programmes. The year to date factors were similar, but also included reduced R&D investment in Blenrep versus the same period in 2022. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Royalty income | Total | 226 | 42% | 44% | 406 | 37% | 36% | |
| Adjusted | 226 | 42% | 44% | 406 | 37% | 36% | ||
| Growth in Total and Adjusted royalty income in Q2 2023 primarily related to Gardasil royalties, which increased to £132 million in the quarter and £203 million in the year to date, as well as Kesimpta and Biktarvy royalties. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Other operating income/(expense) | Total | 278 | >100% | >100% | 575 | >100% | >100% | |
| The increase in Q2 2023 primarily reflected an accounting credit of £189 million (Q2 2022: £699 million charge) arising from the remeasurement of contingent consideration liabilities and the liabilities for the Pfizer, Inc. (Pfizer) put option and Pfizer and Shionogi & Co. Ltd (Shionogi) preferential dividends in ViiV Healthcare. Year to date includes a favourable comparison due to an accounting credit of £460 million (YTD 2022: £1,031 million charge) arising from the remeasurement of contingent consideration liabilities and the liabilities for the Pfizer put option and the Pfizer and Shionogi preferential dividends. This was partly offset by the upfront income in Q1 2022 of £0.9 billion received from the settlement with Gilead Sciences, Inc. (Gilead). | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Operating profit | Total | 2,141 | 98% | >100% | 4,223 | 25% | 23% | |
| % of sales | 29.8% | 14.2% | 15.0% | 29.9% | 6.0% | 6.2% | ||
| Adjusted | 2,170 | 8% | 11% | 4,262 | 8% | 6% | ||
| % of sales | 30.2% | 1.3% | 2.0% | 30.2% | 2.2% | 2.3% | ||
| Total operating profit margin was higher in the quarter and year to date due to strong operating performance and favourable movements in contingent consideration liabilities, partly offset in the year to date by an unfavourable comparison due to the £0.9 billion upfront income received from the settlement with Gilead in Q1 2022. Adjusted operating profit in Q2 2023 benefitted from strong sales across all three product areas and higher royalty income, partly offset by increased investment in R&D and product launches. The adverse impact of lower sales of COVID-19 solutions was one percentage point of growth in the quarter but increased the Adjusted operating profit margin by 1.8 percentage points. Year to date Adjusted operating profit was also impacted by lower sales of COVID-19 solutions which led to a drag of 3 percentage points at AER and CER but increased the Adjusted operating profit margin by 2.9 percentage points. Excluding COVID-19 solutions sales, year to date Adjusted operating profit benefitted from strong sales partly offset by increased legal charges primarily relating to the Zejula royalty dispute and an unfavourable comparison to one-time benefits from inventory adjustments in the year to date 2022. Contingent consideration cash payments made to Shionogi and other companies reduce the balance sheet liability. Total contingent consideration cash payments in the year to date 2023 amounted to £579 million (YTD 2022: £615 million). These included cash payments made to Shionogi of £565 million (YTD 2022: £603 million). | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Adjusted operating profit by business | Commercial Operations | 3,481 | 5% | 6% | 6,856 | 7% | 4% | |
| % of sales | 48.5% | 0.8% | 0.7% | 48.5% | 3.0% | 2.6% | ||
| R&D | (1,273) | 11% | 10% | (2,505) | 11% | 8% | ||
| Commercial Operations Adjusted operating profit in the quarter and year to date benefitted from product mix upside (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 primarily reflected continued investment across a combination of both early and late-stage programmes, as well as pneumococcal programmes. 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. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Net finance costs | Total | 152 | (17%) | (17%) | 326 | (14%) | (17%) | |
| Adjusted | 152 | (16%) | (17%) | 322 | (15%) | (17%) | ||
| The decrease in net finance costs in Q2 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. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Taxation | Total | 242 | 61% | 67% | 518 | 10% | 7% | |
| Tax rate % | 12.2% | 13.3% | ||||||
| Adjusted | 315 | 14% | 18% | 618 | 10% | 8% | ||
| Tax rate % | 15.6% | 15.7% | ||||||
| The effective tax rate impact is broadly in line with expectations for the quarter. Issues related to taxation are described in Note 14, ‘Taxation’ in the Annual Report 2022. The Group continues to believe it has made adequate provision for the liabilities likely to arise from periods that are open and not yet agreed by relevant tax authorities. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with relevant tax authorities. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £m | AER | CER | £m | AER | CER | |||
| Non-controlling interests | Total | 121 | >100% | >100% | 262 | (17%) | (22%) | |
| Adjusted | 130 | (13%) | (15%) | 251 | (19%) | (24%) | ||
| The increase in Total profit from continuing operations allocated to non-controlling interests in Q2 2023 was primarily driven by a higher allocation of ViiV Healthcare profits of £127 million (Q2 2022: £41 million). The year to date was impacted by lower net profits in some of the Group’s other entities with non-controlling interests with a stable allocation of ViiV Healthcare profits of £267 million (2022: £268 million). The Q2 2023 and year to date decreases in Adjusted profit from continuing operations allocated to non-controlling interests reflected lower profit allocations from ViiV Healthcare of £136 million in the quarter (Q2 2022: £151 million) and year to date £256 million (2022: £264 million) and lower net profits in some of the Group’s other entities with non-controlling interests. | ||||||||
| Q2 2023 | Year to Date | |||||||
| £p | AER | CER | £p | AER | CER | |||
| Earnings per share | Total | 40.1p | >100% | >100% | 76.9p | 40% | 39% | |
| Adjusted | 38.8p | 12% | 16% | 75.8p | 13% | 12% | ||
| The increase in Total EPS in the quarter primarily reflected remeasurement credits for contingent consideration liabilities compared to charges in Q2 2022 partly offset by higher non-controlling interests. In the year to date there is an unfavourable comparison due to upfront income received from the settlement with Gilead in Q1 2022. Adjusted EPS in the quarter and YTD reflected strong growth in sales across all product areas excluding COVID-19 solutions, a benefit from mix, higher royalty income, lower finance costs and lower non-controlling interests, partly offset by investment behind launches in Specialty Medicines including HIV and Vaccines and higher supply chain costs, freight and distribution costs. The year to date growth was also impacted by increased legal charges primarily relating to royalties. The decline in lower margin COVID-19 solutions sales resulted in 1 percentage point impact on Adjusted EPS growth in the quarter and 3 percentage points in the year to date. | ||||||||
| Currency impact on resultsThe results for the year to date 2023 are based on average exchange rates, principally £1/$1.23, £1/€1.14 and £1/Yen 168. The results for Q2 2023 are based on average exchange rates, principally £1/$1.25, £1/€1.15 and £1/Yen 173. The period-end exchange rates were £1/$1.26, £1/€1.17 and £1/Yen 183. Comparative exchange rates are given on page 37. In Q2 2023, turnover was up 4% at AER and 4% at CER. Total EPS from continuing operations was 40.1p compared with 17.5p in Q2 2022. Adjusted EPS was 38.8p compared with 34.7p in Q2 2022, up 12% at AER and 16% at CER. The adverse currency impact primarily reflected the 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 two percent adverse impact on the four percentage points adverse currency impact on Adjusted EPS. In the year to date 2023, turnover was stable at AER and down 2% at CER. Total EPS from continuing operations was 76.9p compared with 54.8p in YTD 2022. Adjusted EPS was 75.8p compared with 67.0p in YTD 2022, up 13% at AER and 12% at CER. The favourable currency impact primarily reflected the weakening of Sterling against the US Dollar and the Euro partly offset by the weakening of emerging market currencies against Sterling. Exchange gains or losses on the settlement of intercompany transactions had a one percent adverse impact on the one percentage point favourable currency impact on Adjusted EPS. |
| Cash generation |
| Cash flow | |||||
| Q2 2023£m | H1 2023£m | H1 2022£m | |||
| Cash generated from operations attributable to continuing operations (£m) | 1,620 | 1,907 | 3,936 | ||
| Cash generated from operations attributable to discontinued operations (£m) | – | – | 918 | ||
| Total cash generated from operations (£m) | 1,620 | 1,907 | 4,854 | ||
| Total net cash generated from operating activities (£m) | 1,307 | 1,360 | 4,177 | ||
| Free cash inflow/(outflow) from continuing operations* (£m) | 348 | (341) | 1,741 | ||
| Free cash flow from continuing operations growth (%) | 34% | <(100)% | >100% | ||
| Free cash flow conversion from continuing operations* (%) | 21% | – | 79% | ||
| Total net debt** (£m) | 18,220 | 18,220 | 21,458 | ||
| * | Free cash flow from continuing operations and free cash flow conversion are defined on page 54. Free cash flow from continuing operations is analysed on page 44. |
| ** | Net debt is analysed on page 44. |
| Q2 2023Cash generated from operating activities from continuing operations for the quarter was £1,620 million (Q2 2022: £1,584 million). The increase primarily reflected favourable timing of profit share payments for Xevudy and timing of returns and rebates, partly offset by additional pension contributions and an increase in trade receivables due to higher sales. Total cash payments to Shionogi in relation to the ViiV Healthcare contingent consideration liability in the quarter were £278 million (Q2 2022: £395 million), all of which was recognised in cash flows from operating activities. These payments are deductible for tax purposes. Free cash inflow was £348 million for the quarter (Q2 2022: £264 million inflow). The increase primarily reflected favourable timing of profit share payments for Xevudy and timing of returns and rebates, partly offset by an increase in trade receivables due to higher sales, additional pension contributions and higher dividend payments to non-controlling interests. H1 2023Cash generated from operating activities from continuing operations was £1,907 million (H1 2022: £3,936 million). The decrease primarily reflected an unfavourable comparison due to the upfront income from the settlement with Gilead received in Q1 2022, additional pension contributions, increase in trade receivables due to higher sales, increase in seasonal inventory and lower payable balances reflecting increased investment in 2022. Total cash payments to Shionogi in relation to the ViiV Healthcare contingent consideration liability in the half year were £565 million (H1 2022: £603 million), all of which was recognised in cash flows from operating activities. These payments are deductible for tax purposes. Free cash outflow was £341 million for the six months (H1 2022: £1,741 million inflow). The decrease primarily reflected an unfavourable comparison due to the upfront income from the settlement with Gilead received in Q1 2022, additional pension contributions, increase in trade receivables due to higher sales, increase in seasonal inventory, lower payable balances reflecting increased investment in 2022 and higher dividend payments to non-controlling interests. |
| Total Net debtAt 30 June 2023, net debt was £18,220 million, compared with £17,197 million at 31 December 2022, comprising gross debt of £21,474 million and cash and liquid investments of £3,254 million. Net debt increased by £1 billion primarily due to the net acquisition cost of Bellus Health for £1.4 billion, dividends paid to shareholders of £1.1 billion, and £0.3 billion free cash outflow. This was partly offset by £0.8 billion disposal of investments, £0.1 billion disposal of businesses, £0.2 billion of income received from equity investments and net favourable exchange impacts of £0.7 billion from the translation of non-Sterling denominated debt and exchange on other financing items. At 30 June 2023, GSK had short-term borrowings (including overdrafts and lease liabilities) repayable within 12 months of £5,921 million with loans of £2,286 million repayable in the subsequent year. |