GSK har annonceret salgstal for Arzerra her kl.13.01
Scoren blev 7M Pund for us og 3M Pind for EU og -1(?) for rest of world.
Så også dette kvartal var fladt fsva. salget. Det må siges at være skuffende at der ikke er noget J-Code effekt i salgstallene, men som Vinkel og Eatwell var ude og sige at det tager år ikke måneder at penetrere markedet.
Det bliver interessant at høre om GSK har nogle bemærkninger til salget.
Scoren blev 7M Pund for us og 3M Pind for EU og -1(?) for rest of world.
Så også dette kvartal var fladt fsva. salget. Det må siges at være skuffende at der ikke er noget J-Code effekt i salgstallene, men som Vinkel og Eatwell var ude og sige at det tager år ikke måneder at penetrere markedet.
Det bliver interessant at høre om GSK har nogle bemærkninger til salget.
GSK Q1 performance demonstrates continued progress with delivery
of underlying sales growth*, cash generation and pipeline visibility
Reported sales -10%; underlying sales* +4%
EPS before major restructuring* 32.2p (+9%); dividend 16p (+7%)
Results before major restructuring*
Q1 2011
Growth
£m
CER%
£%
Turnover
6,585
(10)
(10)
Earnings per share
32.2p
9
5
Total results
Q1 2011
Growth
£m
CER%
£%
Turnover
6,585
(10)
(10)
Restructuring charges
135
Earnings per share
30.0p
18
14
The full results are presented under 'Income Statement' on page 9.
* For explanations of the measures 'Results before major restructuring', 'CER growth' and 'Underlying sales growth', which excludes pandemic products, Avandia and Valtrex, see page 8.
Summary
·
Underlying sales growth across each of Pharmaceuticals, Vaccines and Consumer:
-
Strong underlying pharmaceutical sales growth* in Emerging Markets (+23%) and Japan (+53%) more than offset declines in USA (-4%) and Europe (-5%)
-
Sales of new pharmaceuticals, including vaccines, £575 million (+40%)
-
Consumer sales +7% with growth across all categories (OTC, Oral care, Nutritionals)
-
Reported sales -10% reflecting loss of approximately £1 billion of sales of pandemic products, Avandia and Valtrex
·
Continuing focus on costs, cash generation and capital allocation:
-
Cost and operating margin expectations for 2011 unchanged
-
Annualised restructuring benefits of £1.9 billion delivered; on track for 2012 £2.2 billion target
-
Adjusted net cash inflow from operating activities (excluding £451 million cash outflow for legal matters) £1.4 billion
-
Quest and Zovirax divestments realise cash proceeds of £1.2 billion; net EPS contribution of 7.1p
-
Net debt down £440 million to £8.4 billion
·
Enhancing returns to shareholders:
-
Q1 dividend up 7% to 16p
-
£317 million of shares repurchased in Q1; 2011 share buybacks now expected to be at top end of £1-2 billion range
·
Increasing pipeline visibility:
-
3 product approvals year to date (Benlysta (USA), Trobalt (EU), Horizant (USA)) and one filing (Nimenrix (EU))
-
Positive Phase III studies for IPX066 (Parkinson's disease) and Votrient (sarcoma), Phase III study for otelixizumab (Type 1 diabetes) failed to show efficacy
-
Phase III data expected on an additional ~12 assets by end of 2012
GSK's strategic priorities
GSK has focused its business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve GSK's long-term financial performance:
·
Grow a diversified global business
·
Deliver more products of value
·
Simplify GSK's operating model
Chief Executive Officer's Review
These first quarter results are in line with the expectation that I set out in February that GSK will make significant progress during 2011 to improve sales performance, enhance cash generation and deliver new product approvals and pipeline visibility.
Reported sales were down 10%, reflecting a £1 billion reduction in sales of pandemic products, Avandia and Valtrex versus a year ago. This impact is set to decline going forward and we expect underlying sales growth to translate into sustainable reported growth in 2012.
Underlying sales grew 4%, reflecting growth across multiple areas of the business including Emerging Markets, Japan and Consumer Healthcare. On the same basis, US and Europe pharmaceutical sales declined 4% and 5% respectively, primarily as a result of the year-on-year impact of US Healthcare reform and EU austerity measures.
We also remain focused on driving operating leverage through the business. As we have previously signalled, there will be some volatility in quarterly margins during the year as sales from pandemic products, Avandia and Valtrex decrease. Margins for the first quarter are in line with our expectations. We also remain on track to deliver £2.2 billion of annual restructuring savings by 2012.
Adjusted net cash inflow from operating activities in the quarter (excluding legal payments) was £1.4 billion. We continue to focus on improvements in business efficiency, including our working capital reduction programme, to enhance cash conversion. Cash contribution from our ongoing operations is in line with our expectations, inevitably impacted this quarter by the reduction in sales from pandemic products, Avandia and Valtrex.
This quarter we also sold our shareholding in Quest Diagnostics and our remaining commercial interests in topical Zovirax in North America for cash proceeds of £1.2 billion. The Quest, Zovirax and previously announced proposed non-core OTC divestments (2010 sales of ~£500 million) are all examples of our strategy to optimise returns to shareholders.
Increased confidence in the operating performance of the business and resulting cash generation is allowing us to accelerate returns to shareholders. We have increased the dividend by 7% to 16p and we remain committed to further growth. Share buy-backs currently offer attractive returns and we now expect share repurchases this year to be at the top end of the £1-2 billion range we had previously set. In addition, net proceeds from the proposed divestment of our non-core OTC assets will also be returned to shareholders. This divestment is expected towards the end of 2011.
Pipeline delivery continues to be encouraging, with regulatory approvals for three new products so far this year (Benlysta (USA), Horizant (USA) and Trobalt (EU)). We have also received data on three of the 15 assets that we are expecting updates on by the end of 2012. Two studies, one of IPX066 in Parkinson's disease and one of Votrient in sarcoma, were positive. A third study of otelixizumab in Type 1 diabetes failed to show efficacy. We continue to evaluate opportunities for future development of this molecule across multiple indications.
One of our key goals is to increase returns on investment in R&D and we have made fundamental changes within the organisation to achieve this. Our continued progress in both pipeline delivery and cost reduction supports our belief that we can achieve this objective.
In summary, I believe this first quarter performance is positive on many fronts, with good progress made in delivery of our strategy to improve long-term financial performance.
Andrew Witty
Chief Executive Officer
A short video with Andrew Witty discussing today's results and GSK's strategic progress is available on www.gsk.com.
Trading update
Turnover and key product movements impacting growth for the quarter
Total Group turnover for the quarter declined 10% to £6,585 million, with pharmaceutical turnover down 14% to £5,264 million and Consumer Healthcare sales up 7% to £1,321 million.
Reported turnover declined in all pharmaceutical regions except Asia Pacific, which increased 1%: USA fell 13%, Europe 23%, Emerging Markets 1% and Japan 24%. ViiV Healthcare sales declined by 4%.
Pandemic related sales, Avandia and Valtrex
As expected, sales of pandemic related products, Avandia and Valtrex declined significantly from £1,127 million in Q1 2010 to £140 million in Q1 2011. The decline of these products had a significant negative impact on reported pharmaceutical sales growth in all regions.
The quarter-on-quarter negative impact on reported growth related to these products will be lower in future quarters. (Total sales for these products in Q2 2010, Q3 2010 and Q4 2010 were £600 million, £241 million and £317 million, respectively).
Underlying trading performance
The following pharmaceutical sales growth analysis is presented on an underlying basis, see page 8.
Underlying sales
Underlying sales growth (excluding sales of pandemic related products, Avandia and Valtrex) for the Group was 4% (underlying pharmaceutical sales growth was 3%). This was achieved despite the impact of US Healthcare reform and European austerity measures which together reduced sales by approximately £85 million this quarter compared with the same quarter last year.
The full year 2011 incremental negative impact on sales against 2010 of these measures is expected to be approximately £325 million. The industry levy associated with US Healthcare reform will also result in approximately £77 million in additional SG&A costs in 2011, with £19 million recorded in Q1 2011.
Regional underlying pharmaceutical sales
US pharmaceuticals sales were down 4% to £1,571 million, primarily reflecting higher discounts required as a result of US Healthcare reform, generic competition to Hycamtin which began in the fourth quarter of 2010, and the impact of the divestment of Zovirax which was sold during the quarter to Valeant Pharmaceuticals.
Europe pharmaceuticals sales were £1,418 million, down 5%, primarily due to the impact of government austerity measures and a large tender sale of Cervarix in the UK recorded in the first quarter of 2010.
Emerging Markets pharmaceuticals grew 23% to £830 million. Excluding the benefit of bolt-on acquisitions that have not yet reached their first anniversary, the region grew 18%, with strong growth across most product categories. Asia Pacific pharmaceuticals grew 12% to £291 million.
Sales in Japan grew 53% to £465 million, led by strong sales of Cervarix (£70 million), where the product is the only HPV vaccine currently approved by regulators, and of respiratory medicines which benefited from a strong allergy season this year (+50% to £177 million). Growth rates in Q1 2011 also reflected a favourable comparison with Q1 2010 (when underlying sales were £279 million, up 1%) which was negatively impacted by wholesaler de-stocking in anticipation of government price reductions implemented in Q2 2010.
Pharmaceutical products
Respiratory sales grew 3% to £1,815 million, with growth from Flovent (+4% to £202 million), Ventolin (+27% to £146 million) and Avamys/Veramyst (+52% to £72 million), offsetting a 2% decline in Seretide/Advair sales to £1,223 million.
In the USA, reported sales of Advair were down 5% to £586 million. On an underlying basis, sales for the quarter declined approximately 1% (4% volume decline largely offset by 3% positive impact of mix and price). The 4 percentage point difference between underlying and reported growth is primarily due to wholesaler and retail de-stocking that occurred in the quarter. Flovent, the market's leading single agent inhaled corticosteroid, grew 11% to £107 million.
Sales of Seretide in Europe (-4% to £399 million) and Emerging Markets (-6% to £76 million) were negatively impacted by higher levels of discounts (required as a result of austerity measures by European governments) and price cuts in Turkey and Russia. Growth was also affected by comparison with strong performances in Q1 2010 (when Europe grew 10% and Emerging Markets grew 28%). Seretide/Advair's total performance was helped by strong growth in Japan (+30% to £65 million).
Total vaccine sales (excluding pandemic sales) were £753 million (+5%), with strong growth in Japan (£70 million in Q1 2011 compared with £6 million in Q1 2010) and Emerging Markets (+49% to £178 million). In the USA, vaccine sales were £155 million, down 7% compared with a very strong quarter a year ago when reported growth was +55%, which reflected the benefit of supply shortages of competitor products. Vaccine sales in Europe were down 23% to £236 million, primarily as a result of a large tender sale of Cervarix in the UK recorded in the first quarter of 2010.
Dermatology sales were up 3% to £273 million in the quarter. Excluding £10 million of sales from a private business acquired in the fourth quarter of 2010 and the impact of the disposal of Zovirax in North America (sold to Valeant Pharmaceuticals), dermatology sales grew 5%. In addition, GSK's heritage consumer dermatology portfolio, reported within Consumer Healthcare, contributed sales of £68 million (+10%).
Total sales of new products (launched since beginning of 2007 and excluding pandemic vaccine) were £575 million and grew 40% in the quarter. The most significant contributors to this growth were Cervarix, Synflorix and Avamys/Veramyst.
Other strong pharmaceutical performances in the quarter included Augmentin (+19% to £187 million), Avodart (+20% to £166 million) and Lovaza (+21% to £127 million).
Sales of HIV products by ViiV Healthcare were down 4% to £353 million. Growth from Epzicom/Kivexa (+8% to £140 million) and Selzentry (+26% to £23 million) was offset by reductions in the sales from other HIV products including Combivir (-12% to £71 million) and Trizivir (-21% to £30 million).
Consumer Healthcare
Total Consumer Healthcare sales were up 7% to £1,321 million, outpacing estimated market growth of approximately 5% in the quarter.
Sales in Rest of World grew 15% to £605 million, with strong growth in all key markets and all major categories: OTC medicines +14%, Oral healthcare +18% and Nutritional healthcare +12%. Europe sales grew 2% to £475 million, with growth in Nutritional healthcare (+6%), respiratory tract products (+10%) and analgesics (+12%) offsetting the impact of lower sales of alli (£20 million in Q1 2011 compared with £34 million in Q1 2010). The USA grew 1% to £241 million, with strong performances from Sensodyne, Tums, Poligrip, Biotene, and Breathe Right offsetting lower sales of alli and Aquafresh.
On a category basis, global Oral healthcare sales grew 12% to £426 million, led by Sensodyne which is benefiting from the launch of Sensodyne Rapid Relief that began during 2010. The launch of the new Sensodyne Repair and Protect product began in certain markets during Q1 2011. Nutritional healthcare sales grew 9% to £254 million, led by growth of Horlicks and Lucozade. Sales of OTC medicines were £641 million, up 3%, with strong growth of Panadol, respiratory tract products, and core gastrointestinal brands Tums and Eno, partly offset by lower sales of alli in both the USA and Europe.
Excluding the OTC brands which have been proposed for divestment (2010 annual sales of approximately £500 million) the remaining portfolio grew approximately 11% in the quarter.
Operating profit and earnings per share commentary
Results before major restructuring
Operating profit before major restructuring for Q1 2011 was £2,170 million, a 5% decline in CER terms and a decrease of 9% in sterling terms. The reduction reflected the decline in higher margin sales of flu pandemic products, Avandia and Valtrex, only partially offset by lower SG&A, legal and R&D costs and higher other operating income in the quarter. The company continues to expect operating margin (excluding legal charges and other operating income) in 2011 to be around 1 percentage point lower than in 2010.
Cost of sales for Q1 2011 increased to 27.0% of turnover (Q1 2010: 26.2%). This reflected the impact of the reduction of higher margin sales of flu pandemic products, Avandia and Valtrex; together with the effect of regional mix during the quarter, particularly the phasing of lower margin vaccine tenders in Emerging Markets, and the impact of US Healthcare reform and European austerity price cuts. These adverse impacts were partially offset by lower inventory write-offs and greater savings from the operational excellence restructuring programme in the quarter compared with Q1 2010. The company continues to expect 2011 cost of sales as a percentage of turnover to be around 26%.
In Q1 2011, SG&A costs as a percentage of turnover were unchanged from Q1 2010 at 31.2%. Excluding legal costs (£nil in Q1 2011, £210 million in Q1 2010), SG&A costs were 2.8 percentage points higher in Q1 2011 than in Q1 2010. This reflected the impact of the reduction in sales of flu pandemic products, Avandia and Valtrex, lower exchange gains on intercompany transactions and a 6% decrease in costs as operational efficiency savings were partially offset by investment in Emerging Markets and the introduction of the US Healthcare reform levy. The company continues to expect 2011 SG&A costs, excluding legal charges, as a percentage of turnover to be around 30.5%.
R&D expenditure in Q1 2011 was 13.6% of turnover (Q1 2010: 12.8%) and included £8 million of intangible asset write-offs (Q1 2010: £32 million). Excluding the impact of the reduction in write-offs, R&D expenditure was broadly in line with Q1 2010 as additional investment was offset by efficiency savings. The company continues to expect 2011 R&D costs as a percentage of turnover to be around 14%.
Other operating income was £317 million (Q1 2010: £199 million) primarily reflecting royalty income of £72 million (Q1 2010: £80 million) and asset disposals of £253 million (Q1 2010: £122 million). The increase compared with Q1 2010 principally reflected the disposal of the rights to the Zovirax brand in the USA and Canada and other non-core product divestments. The company continues to expect other operating income of around £600 million for the year, excluding the profit arising on the proposed Consumer Healthcare divestments of non-core OTC brands.
The pre-tax profit on the disposal of interests in associates was £584 million (£246 million after tax), reflecting the disposal of the remaining shares in Quest Diagnostics.
Tax on profit before major restructuring charges amounted to £901 million and represented an effective tax rate of 34.7% (Q1 2010: 27.7%). Excluding the impact of the tax on the disposals of the Quest shares and Zovirax in North America, the tax rate for the quarter was approximately 27%. The company continues to expect a tax rate for the full year, excluding the Quest disposal and the effect of any tax on the proposed Consumer Healthcare divestments of non-core brands, of around 27%. The overall tax rate for the year, including the Quest disposal, is still expected to be around 29.5%.
EPS before major restructuring for the quarter of 32.2p increased 9% in CER terms and 5% in sterling terms compared with 2010. The adverse currency impact of four percentage points primarily reflected intercompany settlement exchange gains in 2010.
Total results after restructuring
Operating profit after restructuring for Q1 2011 was £2,035 million, an increase of 2% CER (a decrease of 3% in sterling terms) compared with Q1 2010. This included £135 million of restructuring charges (Q1 2010: £301 million): £15 million was charged to cost of sales (Q1 2010: £28 million), £103 million to SG&A (Q1 2010: £52 million) and £17 million to R&D (Q1 2010: £221 million). EPS after restructuring of 30.0p increased 18% in CER terms (an increase of 14% in sterling terms) compared with Q1 2010.
Cash flow and net debt
The adjusted net cash inflow from operating activities in the quarter, before legal settlements of £451 million (Q1 2010: £56 million), was £1,438 million, a 34% decrease in sterling terms over Q1 2010. This primarily reflected the lower contributions from pandemic products, Avandia and Valtrex in the quarter.
Working capital increased by £295 million in the quarter, largely as a result of increased inventory and trade receivables in the growth markets and lower payables arising from reduced levels of expenditure. The cash flow from operations together with asset disposals of £1,295 million enabled the Group to pay dividends (including distributions to non-controlling interests) of over £900 million, spend £303 million on repurchasing shares and reduce net debt by £440 million. At 31st March 2011, net debt was £8.4 billion, comprising gross debt of £15.1 billion and cash and liquid investments of £6.7 billion.
At 31st March 2011, GSK had short-term borrowings (including overdrafts) repayable within 12 months of £258 million with loans of £2,650 million repayable in the subsequent year.
Dividends
The Board has declared a first interim dividend of 16 pence per share (Q1 2010: 15 pence). The equivalent interim dividend receivable by ADR holders is 52.6336 cents per ADS based on an exchange rate of £1/$1.6448. The ex-dividend date will be 4th May 2011, with a record date of 6th May 2011 and a payment date of 7th July 2011.
Currency impact
The Q1 results are based on average exchange rates, principally £1/$1.60, £1/€1.16 and £1/Yen 131. Comparative exchange rates are given on page 22. The period end exchange rates were £1/$1.60, £1/€1.13 and £1/Yen 133. If exchange rates were to hold at these period end levels for the rest of 2011 and there were no exchange gains or losses, the estimated positive impact on 2011 sterling EPS before major restructuring would be approximately 2p.
of underlying sales growth*, cash generation and pipeline visibility
Reported sales -10%; underlying sales* +4%
EPS before major restructuring* 32.2p (+9%); dividend 16p (+7%)
Results before major restructuring*
Q1 2011
Growth
£m
CER%
£%
Turnover
6,585
(10)
(10)
Earnings per share
32.2p
9
5
Total results
Q1 2011
Growth
£m
CER%
£%
Turnover
6,585
(10)
(10)
Restructuring charges
135
Earnings per share
30.0p
18
14
The full results are presented under 'Income Statement' on page 9.
* For explanations of the measures 'Results before major restructuring', 'CER growth' and 'Underlying sales growth', which excludes pandemic products, Avandia and Valtrex, see page 8.
Summary
·
Underlying sales growth across each of Pharmaceuticals, Vaccines and Consumer:
-
Strong underlying pharmaceutical sales growth* in Emerging Markets (+23%) and Japan (+53%) more than offset declines in USA (-4%) and Europe (-5%)
-
Sales of new pharmaceuticals, including vaccines, £575 million (+40%)
-
Consumer sales +7% with growth across all categories (OTC, Oral care, Nutritionals)
-
Reported sales -10% reflecting loss of approximately £1 billion of sales of pandemic products, Avandia and Valtrex
·
Continuing focus on costs, cash generation and capital allocation:
-
Cost and operating margin expectations for 2011 unchanged
-
Annualised restructuring benefits of £1.9 billion delivered; on track for 2012 £2.2 billion target
-
Adjusted net cash inflow from operating activities (excluding £451 million cash outflow for legal matters) £1.4 billion
-
Quest and Zovirax divestments realise cash proceeds of £1.2 billion; net EPS contribution of 7.1p
-
Net debt down £440 million to £8.4 billion
·
Enhancing returns to shareholders:
-
Q1 dividend up 7% to 16p
-
£317 million of shares repurchased in Q1; 2011 share buybacks now expected to be at top end of £1-2 billion range
·
Increasing pipeline visibility:
-
3 product approvals year to date (Benlysta (USA), Trobalt (EU), Horizant (USA)) and one filing (Nimenrix (EU))
-
Positive Phase III studies for IPX066 (Parkinson's disease) and Votrient (sarcoma), Phase III study for otelixizumab (Type 1 diabetes) failed to show efficacy
-
Phase III data expected on an additional ~12 assets by end of 2012
GSK's strategic priorities
GSK has focused its business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve GSK's long-term financial performance:
·
Grow a diversified global business
·
Deliver more products of value
·
Simplify GSK's operating model
Chief Executive Officer's Review
These first quarter results are in line with the expectation that I set out in February that GSK will make significant progress during 2011 to improve sales performance, enhance cash generation and deliver new product approvals and pipeline visibility.
Reported sales were down 10%, reflecting a £1 billion reduction in sales of pandemic products, Avandia and Valtrex versus a year ago. This impact is set to decline going forward and we expect underlying sales growth to translate into sustainable reported growth in 2012.
Underlying sales grew 4%, reflecting growth across multiple areas of the business including Emerging Markets, Japan and Consumer Healthcare. On the same basis, US and Europe pharmaceutical sales declined 4% and 5% respectively, primarily as a result of the year-on-year impact of US Healthcare reform and EU austerity measures.
We also remain focused on driving operating leverage through the business. As we have previously signalled, there will be some volatility in quarterly margins during the year as sales from pandemic products, Avandia and Valtrex decrease. Margins for the first quarter are in line with our expectations. We also remain on track to deliver £2.2 billion of annual restructuring savings by 2012.
Adjusted net cash inflow from operating activities in the quarter (excluding legal payments) was £1.4 billion. We continue to focus on improvements in business efficiency, including our working capital reduction programme, to enhance cash conversion. Cash contribution from our ongoing operations is in line with our expectations, inevitably impacted this quarter by the reduction in sales from pandemic products, Avandia and Valtrex.
This quarter we also sold our shareholding in Quest Diagnostics and our remaining commercial interests in topical Zovirax in North America for cash proceeds of £1.2 billion. The Quest, Zovirax and previously announced proposed non-core OTC divestments (2010 sales of ~£500 million) are all examples of our strategy to optimise returns to shareholders.
Increased confidence in the operating performance of the business and resulting cash generation is allowing us to accelerate returns to shareholders. We have increased the dividend by 7% to 16p and we remain committed to further growth. Share buy-backs currently offer attractive returns and we now expect share repurchases this year to be at the top end of the £1-2 billion range we had previously set. In addition, net proceeds from the proposed divestment of our non-core OTC assets will also be returned to shareholders. This divestment is expected towards the end of 2011.
Pipeline delivery continues to be encouraging, with regulatory approvals for three new products so far this year (Benlysta (USA), Horizant (USA) and Trobalt (EU)). We have also received data on three of the 15 assets that we are expecting updates on by the end of 2012. Two studies, one of IPX066 in Parkinson's disease and one of Votrient in sarcoma, were positive. A third study of otelixizumab in Type 1 diabetes failed to show efficacy. We continue to evaluate opportunities for future development of this molecule across multiple indications.
One of our key goals is to increase returns on investment in R&D and we have made fundamental changes within the organisation to achieve this. Our continued progress in both pipeline delivery and cost reduction supports our belief that we can achieve this objective.
In summary, I believe this first quarter performance is positive on many fronts, with good progress made in delivery of our strategy to improve long-term financial performance.
Andrew Witty
Chief Executive Officer
A short video with Andrew Witty discussing today's results and GSK's strategic progress is available on www.gsk.com.
Trading update
Turnover and key product movements impacting growth for the quarter
Total Group turnover for the quarter declined 10% to £6,585 million, with pharmaceutical turnover down 14% to £5,264 million and Consumer Healthcare sales up 7% to £1,321 million.
Reported turnover declined in all pharmaceutical regions except Asia Pacific, which increased 1%: USA fell 13%, Europe 23%, Emerging Markets 1% and Japan 24%. ViiV Healthcare sales declined by 4%.
Pandemic related sales, Avandia and Valtrex
As expected, sales of pandemic related products, Avandia and Valtrex declined significantly from £1,127 million in Q1 2010 to £140 million in Q1 2011. The decline of these products had a significant negative impact on reported pharmaceutical sales growth in all regions.
The quarter-on-quarter negative impact on reported growth related to these products will be lower in future quarters. (Total sales for these products in Q2 2010, Q3 2010 and Q4 2010 were £600 million, £241 million and £317 million, respectively).
Underlying trading performance
The following pharmaceutical sales growth analysis is presented on an underlying basis, see page 8.
Underlying sales
Underlying sales growth (excluding sales of pandemic related products, Avandia and Valtrex) for the Group was 4% (underlying pharmaceutical sales growth was 3%). This was achieved despite the impact of US Healthcare reform and European austerity measures which together reduced sales by approximately £85 million this quarter compared with the same quarter last year.
The full year 2011 incremental negative impact on sales against 2010 of these measures is expected to be approximately £325 million. The industry levy associated with US Healthcare reform will also result in approximately £77 million in additional SG&A costs in 2011, with £19 million recorded in Q1 2011.
Regional underlying pharmaceutical sales
US pharmaceuticals sales were down 4% to £1,571 million, primarily reflecting higher discounts required as a result of US Healthcare reform, generic competition to Hycamtin which began in the fourth quarter of 2010, and the impact of the divestment of Zovirax which was sold during the quarter to Valeant Pharmaceuticals.
Europe pharmaceuticals sales were £1,418 million, down 5%, primarily due to the impact of government austerity measures and a large tender sale of Cervarix in the UK recorded in the first quarter of 2010.
Emerging Markets pharmaceuticals grew 23% to £830 million. Excluding the benefit of bolt-on acquisitions that have not yet reached their first anniversary, the region grew 18%, with strong growth across most product categories. Asia Pacific pharmaceuticals grew 12% to £291 million.
Sales in Japan grew 53% to £465 million, led by strong sales of Cervarix (£70 million), where the product is the only HPV vaccine currently approved by regulators, and of respiratory medicines which benefited from a strong allergy season this year (+50% to £177 million). Growth rates in Q1 2011 also reflected a favourable comparison with Q1 2010 (when underlying sales were £279 million, up 1%) which was negatively impacted by wholesaler de-stocking in anticipation of government price reductions implemented in Q2 2010.
Pharmaceutical products
Respiratory sales grew 3% to £1,815 million, with growth from Flovent (+4% to £202 million), Ventolin (+27% to £146 million) and Avamys/Veramyst (+52% to £72 million), offsetting a 2% decline in Seretide/Advair sales to £1,223 million.
In the USA, reported sales of Advair were down 5% to £586 million. On an underlying basis, sales for the quarter declined approximately 1% (4% volume decline largely offset by 3% positive impact of mix and price). The 4 percentage point difference between underlying and reported growth is primarily due to wholesaler and retail de-stocking that occurred in the quarter. Flovent, the market's leading single agent inhaled corticosteroid, grew 11% to £107 million.
Sales of Seretide in Europe (-4% to £399 million) and Emerging Markets (-6% to £76 million) were negatively impacted by higher levels of discounts (required as a result of austerity measures by European governments) and price cuts in Turkey and Russia. Growth was also affected by comparison with strong performances in Q1 2010 (when Europe grew 10% and Emerging Markets grew 28%). Seretide/Advair's total performance was helped by strong growth in Japan (+30% to £65 million).
Total vaccine sales (excluding pandemic sales) were £753 million (+5%), with strong growth in Japan (£70 million in Q1 2011 compared with £6 million in Q1 2010) and Emerging Markets (+49% to £178 million). In the USA, vaccine sales were £155 million, down 7% compared with a very strong quarter a year ago when reported growth was +55%, which reflected the benefit of supply shortages of competitor products. Vaccine sales in Europe were down 23% to £236 million, primarily as a result of a large tender sale of Cervarix in the UK recorded in the first quarter of 2010.
Dermatology sales were up 3% to £273 million in the quarter. Excluding £10 million of sales from a private business acquired in the fourth quarter of 2010 and the impact of the disposal of Zovirax in North America (sold to Valeant Pharmaceuticals), dermatology sales grew 5%. In addition, GSK's heritage consumer dermatology portfolio, reported within Consumer Healthcare, contributed sales of £68 million (+10%).
Total sales of new products (launched since beginning of 2007 and excluding pandemic vaccine) were £575 million and grew 40% in the quarter. The most significant contributors to this growth were Cervarix, Synflorix and Avamys/Veramyst.
Other strong pharmaceutical performances in the quarter included Augmentin (+19% to £187 million), Avodart (+20% to £166 million) and Lovaza (+21% to £127 million).
Sales of HIV products by ViiV Healthcare were down 4% to £353 million. Growth from Epzicom/Kivexa (+8% to £140 million) and Selzentry (+26% to £23 million) was offset by reductions in the sales from other HIV products including Combivir (-12% to £71 million) and Trizivir (-21% to £30 million).
Consumer Healthcare
Total Consumer Healthcare sales were up 7% to £1,321 million, outpacing estimated market growth of approximately 5% in the quarter.
Sales in Rest of World grew 15% to £605 million, with strong growth in all key markets and all major categories: OTC medicines +14%, Oral healthcare +18% and Nutritional healthcare +12%. Europe sales grew 2% to £475 million, with growth in Nutritional healthcare (+6%), respiratory tract products (+10%) and analgesics (+12%) offsetting the impact of lower sales of alli (£20 million in Q1 2011 compared with £34 million in Q1 2010). The USA grew 1% to £241 million, with strong performances from Sensodyne, Tums, Poligrip, Biotene, and Breathe Right offsetting lower sales of alli and Aquafresh.
On a category basis, global Oral healthcare sales grew 12% to £426 million, led by Sensodyne which is benefiting from the launch of Sensodyne Rapid Relief that began during 2010. The launch of the new Sensodyne Repair and Protect product began in certain markets during Q1 2011. Nutritional healthcare sales grew 9% to £254 million, led by growth of Horlicks and Lucozade. Sales of OTC medicines were £641 million, up 3%, with strong growth of Panadol, respiratory tract products, and core gastrointestinal brands Tums and Eno, partly offset by lower sales of alli in both the USA and Europe.
Excluding the OTC brands which have been proposed for divestment (2010 annual sales of approximately £500 million) the remaining portfolio grew approximately 11% in the quarter.
Operating profit and earnings per share commentary
Results before major restructuring
Operating profit before major restructuring for Q1 2011 was £2,170 million, a 5% decline in CER terms and a decrease of 9% in sterling terms. The reduction reflected the decline in higher margin sales of flu pandemic products, Avandia and Valtrex, only partially offset by lower SG&A, legal and R&D costs and higher other operating income in the quarter. The company continues to expect operating margin (excluding legal charges and other operating income) in 2011 to be around 1 percentage point lower than in 2010.
Cost of sales for Q1 2011 increased to 27.0% of turnover (Q1 2010: 26.2%). This reflected the impact of the reduction of higher margin sales of flu pandemic products, Avandia and Valtrex; together with the effect of regional mix during the quarter, particularly the phasing of lower margin vaccine tenders in Emerging Markets, and the impact of US Healthcare reform and European austerity price cuts. These adverse impacts were partially offset by lower inventory write-offs and greater savings from the operational excellence restructuring programme in the quarter compared with Q1 2010. The company continues to expect 2011 cost of sales as a percentage of turnover to be around 26%.
In Q1 2011, SG&A costs as a percentage of turnover were unchanged from Q1 2010 at 31.2%. Excluding legal costs (£nil in Q1 2011, £210 million in Q1 2010), SG&A costs were 2.8 percentage points higher in Q1 2011 than in Q1 2010. This reflected the impact of the reduction in sales of flu pandemic products, Avandia and Valtrex, lower exchange gains on intercompany transactions and a 6% decrease in costs as operational efficiency savings were partially offset by investment in Emerging Markets and the introduction of the US Healthcare reform levy. The company continues to expect 2011 SG&A costs, excluding legal charges, as a percentage of turnover to be around 30.5%.
R&D expenditure in Q1 2011 was 13.6% of turnover (Q1 2010: 12.8%) and included £8 million of intangible asset write-offs (Q1 2010: £32 million). Excluding the impact of the reduction in write-offs, R&D expenditure was broadly in line with Q1 2010 as additional investment was offset by efficiency savings. The company continues to expect 2011 R&D costs as a percentage of turnover to be around 14%.
Other operating income was £317 million (Q1 2010: £199 million) primarily reflecting royalty income of £72 million (Q1 2010: £80 million) and asset disposals of £253 million (Q1 2010: £122 million). The increase compared with Q1 2010 principally reflected the disposal of the rights to the Zovirax brand in the USA and Canada and other non-core product divestments. The company continues to expect other operating income of around £600 million for the year, excluding the profit arising on the proposed Consumer Healthcare divestments of non-core OTC brands.
The pre-tax profit on the disposal of interests in associates was £584 million (£246 million after tax), reflecting the disposal of the remaining shares in Quest Diagnostics.
Tax on profit before major restructuring charges amounted to £901 million and represented an effective tax rate of 34.7% (Q1 2010: 27.7%). Excluding the impact of the tax on the disposals of the Quest shares and Zovirax in North America, the tax rate for the quarter was approximately 27%. The company continues to expect a tax rate for the full year, excluding the Quest disposal and the effect of any tax on the proposed Consumer Healthcare divestments of non-core brands, of around 27%. The overall tax rate for the year, including the Quest disposal, is still expected to be around 29.5%.
EPS before major restructuring for the quarter of 32.2p increased 9% in CER terms and 5% in sterling terms compared with 2010. The adverse currency impact of four percentage points primarily reflected intercompany settlement exchange gains in 2010.
Total results after restructuring
Operating profit after restructuring for Q1 2011 was £2,035 million, an increase of 2% CER (a decrease of 3% in sterling terms) compared with Q1 2010. This included £135 million of restructuring charges (Q1 2010: £301 million): £15 million was charged to cost of sales (Q1 2010: £28 million), £103 million to SG&A (Q1 2010: £52 million) and £17 million to R&D (Q1 2010: £221 million). EPS after restructuring of 30.0p increased 18% in CER terms (an increase of 14% in sterling terms) compared with Q1 2010.
Cash flow and net debt
The adjusted net cash inflow from operating activities in the quarter, before legal settlements of £451 million (Q1 2010: £56 million), was £1,438 million, a 34% decrease in sterling terms over Q1 2010. This primarily reflected the lower contributions from pandemic products, Avandia and Valtrex in the quarter.
Working capital increased by £295 million in the quarter, largely as a result of increased inventory and trade receivables in the growth markets and lower payables arising from reduced levels of expenditure. The cash flow from operations together with asset disposals of £1,295 million enabled the Group to pay dividends (including distributions to non-controlling interests) of over £900 million, spend £303 million on repurchasing shares and reduce net debt by £440 million. At 31st March 2011, net debt was £8.4 billion, comprising gross debt of £15.1 billion and cash and liquid investments of £6.7 billion.
At 31st March 2011, GSK had short-term borrowings (including overdrafts) repayable within 12 months of £258 million with loans of £2,650 million repayable in the subsequent year.
Dividends
The Board has declared a first interim dividend of 16 pence per share (Q1 2010: 15 pence). The equivalent interim dividend receivable by ADR holders is 52.6336 cents per ADS based on an exchange rate of £1/$1.6448. The ex-dividend date will be 4th May 2011, with a record date of 6th May 2011 and a payment date of 7th July 2011.
Currency impact
The Q1 results are based on average exchange rates, principally £1/$1.60, £1/€1.16 and £1/Yen 131. Comparative exchange rates are given on page 22. The period end exchange rates were £1/$1.60, £1/€1.13 and £1/Yen 133. If exchange rates were to hold at these period end levels for the rest of 2011 and there were no exchange gains or losses, the estimated positive impact on 2011 sterling EPS before major restructuring would be approximately 2p.
Opdateret regneark vedlagt.
6% stigning ifht sidste kvartal er sjovt nok på linie med Rituxan (efter samme periode på markedet), men det skal man nok ikke lægge for meget i
mvh
McJanus
Arzerra_sales_quaterly_Q1_2011.xls
6% stigning ifht sidste kvartal er sjovt nok på linie med Rituxan (efter samme periode på markedet), men det skal man nok ikke lægge for meget i
mvh
McJanus
Arzerra_sales_quaterly_Q1_2011.xls