Guidance all at CER and excluding COVID-19 solutions

The Total results are presented in summary above and on page 8 and Core results reconciliations are presented on pages 20 and 21. (1) GSK has made an update to its reporting framework in Q1 2024 which is to change the description of Adjusted results to Core results to align with European peers in the pharmaceutical industry but with no change to the basis or figures. Core results are a non-IFRS measure that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. The following terms are defined on page 47: Core results, £% or AER% growth, CER% growth,COVID-19 solutions, turnover excluding COVID-19 solutions; and other non-IFRS measures. GSK provides guidance on a Core results basis only, for the reasons set out on page 18. All expectations, guidance and targets regarding future performance and dividend payments should be read together with 'Guidance and outlooks, assumptions and cautionary statements' on page 49. (2) Contingent consideration liability is abbreviated to CCL.

2024 Guidance

GSK provides its full-year guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions.

GSK has started 2024 strongly, with business momentum across all product areas, particularly in Vaccines and Specialty Medicines, including sales contributions from newly launched vaccines and medicines Arexvy and Ojjaara respectively. General Medicines, particularly Trelegy, also performed better than expected. Along with a favourable product mix, GSK benefitted in the quarter from a successful Zejula royalty dispute appeal, and we also expect royalty income to be slightly higher for the full year. As a result, GSK has upgraded its full-year 2024 guidance.

GSK expects first half 2024 sales growth to be higher than second half 2024 due to the comparator to H2 2023, which benefitted from newly launched vaccines and medicines. In particular, second half 2024, compared to the same period in the prior year, is expected to be influenced by the 2023 launch dynamics and initial channel inventory build attributable to Arexvy. In addition, we expect the majority of Shingrix sales in China in to be in the first half 2024.

This guidance continues to be supported by the following turnover expectations for full-year 2024 at CER:

Core Operating profit is expected to grow between 9 to 11 per cent at CER (previously 7 to 10 per cent increase), despite a 6 percentage point impact to Operating Profit growth following the loss of the majority of Gardasil royalties effective from the beginning of 2024. GSK continues to expect to deliver leverage at a gross margin level due to improved product mix from Vaccines and Specialty Medicines growth and continued operational efficiencies. In addition, GSK continues to anticipate further leverage in Operating Profit due to a step down in SG&A growth to a low single-digit increase. R&D continues to be expected to increase broadly in line with sales to support growth of the pipeline.

Core Earnings per share is now expected to increase between 8 to 10 per cent at CER, reflecting higher operating profit and more favourable net finance costs. Expectations for non-controlling interests remain unchanged relative to 2023, and GSK continues to anticipate an increase in the Core effective tax rate to around 17% following implementation of a global minimum corporate income tax rate aligned with the Organisation for Economic Co-Operation and Development 'Pillar 2' initiative.

2021-26 and 2031 Outlooks

In January 2024 GSK set out improved outlooks for the period 2021-2026 and for 2031. Please see 2023 Full year and fourth quarter results on gsk.com.

Additional commentary

Dividend policy

The Dividend policy and the expected pay-out ratio remain unchanged. Consistent with this, and reflecting strong business performance during the quarter, GSK expects to declare a dividend for Q1 2024 of 15p per share and for the full year 2024 60p.

COVID-19 solutions

For the full year 2024, GSK does not anticipate any further COVID-19 pandemic-related sales or operating profit. Consequently, and in comparison to 2023, it is anticipated that the full year growth in sales and Core operating profit will be adversely impacted by one and two percentage points, respectively.

Exchange rates

If exchange rates were to hold at the closing rates on 31 March 2024 ($ 1.26/£1, € 1.17/£1 and Yen 191/£1) for the rest of 2024, the estimated impact on 2024 Sterling turnover growth for GSK would be -3% and if exchange gains or losses were recognised at the same level as in 2023, the estimated impact on 2024 Sterling Core 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 12 noon BST (US EST at 7am) on 1 May 2024. 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.

In Q1 2024, Vaccine sales increased by double-digits, reflecting US demand for Arexvy and strong market growth for Shingrix in International and European markets. However, the quarter's growth was adversely impacted by six percentage points due to COVID-19 solution sales compared to Q1 2023.

The sales of Shingrix, a vaccine against herpes zoster (shingles), increased in the quarter due to strong demand following public funding expansion in International and European markets, with new national immunisation programmes in Australia and Europe, including the UK, together with earlier than anticipated supply to Zhifei (Chongqing Zhifei Biological Products, Ltd), GSK's co-promotion partner in China. Markets outside the US now represent more than 50% of global sales (Q1 2023: 40%), with Shingrix launched in 39 countries. The majority of these markets have average cumulative immunisation rates below 5%.

In Q1 2024, US sales decreased by 7% at AER and 4% at CER, reflecting the comparison to Q1 2023, which benefitted from the removal of adult vaccine cost-sharing covered under Medicare Part D and expanded coverage of adult vaccines under Medicare following the implementation of the Inflation Reduction Act. In addition, the performance reflected the prioritisation of other adult vaccines for example, influenza and COVID-19 during the viral respiratory season and the increasing challenge of activating harder to reach consumers. The US cumulative immunisation penetration rate at the end of 2023 reached 37% of the more than 120 million US adults(1) currently recommended to receive Shingrix, up seven percentage points since the end of 2022. The US performance in Q1 2024 was partly offset by favourable pricing and prior period channel inventory movements.

Benlysta, a monoclonal antibody treatment for Lupus, continues to grow consistently, representing strong demand and volume growth in European and International markets. Bio penetration rates have increased in certain International markets, particularly in Japan and China.

In Q1 2024, Oncology sales growth increased driven by strong patient growth for Zejula, a PARP(1), Jemperli, a PD-1(2) blocking antibody, and Ojjaara/Omjjara, a daily JAK1/JAK2 and ACVR1(3) inhibitor. Jemperli, a medicine for front-line treatment in combination with chemotherapy for patients with dMMR/MSI-H primary advanced or recurrent endometrial cancer, continued to grow strongly and delivered sales of £80 million in the quarter. Ojjaara/Omjjara, a treatment for myelofibrosis patients with anaemia, launched in the US in Q3 2023 and in the UK and Germany in Q1 2024, has seen strong uptake since launch and delivered £52 million of sales in the quarter.

Zejula delivered double-digit sales growth in the quarter, with strong performances across all regions following increased patient demand and higher volumes. In addition, new launches, particularly in the International region, also contributed to the performance.

Sales include contributions from both the Respiratory and Other General Medicine portfolios. In Q1 2024, sales decreased 4% at AER but increased by 1% at CER. This increase was driven primarily by strong demand across all regions for Trelegy, a chronic obstructive pulmonary disease (COPD) and asthma medicine. The performance also included increased growth for Anoro in Europe and International, and a strong antibiotic performance in International markets. However, this performance was primarily offset by a decrease across the Established Respiratory and Other General Medicine portfolios following the adverse impact of removing the Average Manufacturer Price (AMP) cap on Medicaid drug prices in the US. This removal particularly impacted the performance of Advair, Flovent, and Lamictal in the quarter due to significant pricing reductions, reduced commercial contracting, and the decision to discontinue branded Flovent. However, the increased use of authorised generic versions of Advair and Flovent has partially offset the impact of AMP cap removal while, significantly, continuing to provide access to patients. 

In Q1 2024, the increase in sales growth reflected Trelegy's strong performance in all regions and the increased demand for Anoro, particularly in Europe and International. However, as mentioned above, this was partially offset by the decrease across the Established Respiratory portfolio and the removal of the AMP cap.

Trelegy is the most prescribed single inhaler triple therapy (SITT) treatment worldwide for COPD and asthma. In Q1 2024 sales growth significantly increased across all regions, reflecting strong patient demand, single-inhaled triple therapy class growth, and increased market share.

Seretide/Advair is a combination treatment used to treat asthma and COPD. In Q1 2024, the decrease in sales reflected continued generic erosion from competitor products in Europe and International and the removal of the AMP cap on Medicaid drug prices in the US.

The performance in Q1 2024 was adversely impacted by ongoing generic competition and the removal of the AMP cap on Medicaid drug prices in the US, notably impacting Lamictal's performance. This performance was partially offset by increased antibiotic growth in International markets.

Footnotes:

By Region

Vaccine sales increased by double-digits in Q1 2024, driven by continued strong consumer uptake and Arexvy's leading market share. The decrease in Shingrix sales reflected the comparison to Q1 2023, the prioritisation of other adult viral respiratory season vaccines, and the increasing challenge of activating harder to reach consumers. Favourable pricing and a prior-period channel inventory reduction partly offset this performance.

In Q1 2024, the sales of Specialty Medicines increased, driven by strong HIV and Oncology performances. However, despite increased patient demand, the performances of Nucala and Benlysta remained broadly stable in the quarter, reflecting the impact of channel inventory reductions.

General Medicine's growth in Q1 2024 was driven by increased demand for Trelegy and the growth of the SITT market. However, this performance was offset by Established Respiratory and Other General Medicines following the removal of the AMP cap on Medicaid drug prices, which particularly impacted Advair, Flovent, and Lamictal.

In Q1 2024, Vaccine sales growth excluding COVID-19 solutions was broadly stable despite Shingrix growth across several markets following new national immunisation programmes. Lower Bexsero tender deliveries partly offset this performance.

Specialty Medicines sales increased by a double-digit percentage due to the performance in HIV and Oncology. The performance of Benlysta in immunology and Nucala in respiratory, including the impact of new indication launches, also contributed to the sales increase.

General Medicines sales were broadly stable in the quarter, reflecting strong growth in Trelegy and Anoro, offset by a decrease in Established Respiratory.

In Q1 2024, COVID-19 solutions adversely impacted growth by six percentage points. Excluding this impact, European sales increased by 3% at CER.

In Q1 2024, sales excluding COVID-19 solutions increased 11% at AER and 18% at CER, which reflected year-on-year exchange movements in several International markets compared to Q1 2023.

Vaccines' double-digit growth was driven by the expansion of public funding for Shingrix in Australia and Japan, together with earlier than anticipated supply to Zhifei, GSK's co-promotion partner in China. Established vaccines also contributed to growth due to increased demand and supply phasing.

Specialty Medicine's double-digit growth was driven by HIV, Nucala in Respiratory, Benlysta in Immunology, and Zejula in Oncology.

General Medicines sales were broadly stable, with Trelegy and Antibiotics delivering growth offset by a decrease in Other General Medicines and Established Respiratory.

In Q1 2024, COVID-19 solutions adversely impacted growth by two percentage points. Excluding this impact, International sales grew 18% in Q1 2024.

In Q1 2024 other operating expense reflected a charge of £685 million (Q1 2023: £271 million credit) arising from the remeasurement of contingent consideration liabilities primarily reflecting improved longer term HIV prospects and foreign currency movements and the liabilities for the Pfizer, Inc. (Pfizer) put option. This was partly offset by a fair value gain of £57 million (Q1 2023: £65 million loss) on the retained stake in Haleon plc (Haleon) and other net income of £95 million (Q1 2023: £91 million).

Total operating profit margin was lower in Q1 2024 primarily due to unfavourable movements in contingent consideration liabilities reflecting improved longer term HIV prospects and foreign currency movement, partly offset by a fair value gain on the retained stake in Haleon (Q1 2023 fair value loss).

Core operating profit in the quarter benefitted from strong sales, favourable product mix and the reversal of the legal provision taken in Q1 2023 for the Zejula royalty dispute, following a successful appeal. This was partly offset by increased investment in R&D and growth assets, and lower royalty income. The adverse impact of lower sales of COVID-19 solutions was eight percentage points of Core operating profit growth, with minimal impact on Core operating profit margin.

The decrease in net finance costs in Q1 2024 was mainly driven by the net cost of certain bond buybacks completed in Q1 2023 and higher interest income on cash.

The effective tax rate on Core profits is broadly in line with expectations for the year and includes the impact of the  OECD's  BEPS Pillar Two model framework which came into effect from 1 January 2024. Issues related to taxation are described in Note 14, 'Taxation' in the Annual Report 2023. 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.

The decrease in Total profit allocated to NCIs in the quarter was primarily driven by lower ViiV Healthcare profits (including the remeasurement loss on the contingent consideration liability) with an allocation of £28 million (Q1 2023: £140 million), partly offset by higher net profits in some of the Group's other entities.

The increase in Core profit from operations allocated to NCIs in Q1 2024 primarily reflected higher profit allocations from ViiV Healthcare of £147 million (Q1 2023: £120 million), as well as higher net profits in some of the Group's other entities with NCIs.

The increase in the Core EPS in the quarter reflected the growth in Core operating profit as well as lower finance costs, partly offset by higher non-controlling interests and a higher effective taxation rate. Lower sales of COVID-19 solutions reduced Core EPS by nine percentage points.

The decrease in the Q1 2024 Total EPS primarily reflected higher charges related to the remeasurement of contingent consideration liabilities reflecting improved longer term HIV prospects and foreign currency movement partly offset by a fair value gain on the retained stake in Haleon (compared to a fair value loss in Q1 2023) and a favourable benefit from lower non-controlling interests.

Currency impact on results

The results for Q1 2024 are based on average exchange rates, principally £1/$1.27, £1/€1.16 and £1/Yen 187. The period-end exchange rates were £1/$1.26, £1/€1.17 and £1/Yen 191. Comparative exchange rates are given on page 34.

In Q1 2024, the adverse currency impact primarily reflected the strengthening of Sterling against the US Dollar, Euro and Yen, as well as the weakening of emerging market currencies against Sterling. Exchange gains or losses on the settlement of intercompany transactions had an adverse two percentage point impact on Core EPS.

Q1 2024

Cash generated from operations for the quarter was £1,126 million (Q1 2023: £287 million). The increase primarily reflected higher operating profit and higher receivables' collections, driven by the timing of sales and collections particularly for Arexvy, partly offset by timing of returns and rebates.

Total contingent consideration cash payments in the quarter were £309 million (Q1 2023: £291 million), including cash payments made to Shionogi & Co. Ltd (Shionogi) of £300 million (Q1 2023: £287 million). £306 million (Q1 2023: £290 million) of these were recognised in cash flows from operating activities.

Free cash inflow was £289 million for the quarter (Q1 2023: £689 million outflow). In addition to the increase in cash generated from operations the increase in free cash flow in the quarter was primarily driven by lower tax payments, lower net interest paid and lower dividends paid to non-controlling interests. This was partly offset by increased capital expenditure.

Total Net debt

At 31 March 2024, net debt was £14,961 million, compared with £15,040 million at 31 December 2023, comprising gross debt of £17,772 million and cash and liquid investments of £2,811 million. See net debt information on page 36.

Net debt decreased by £79 million primarily due to £289 million free cash inflow and £1,055 million proceeds from the disposal of investments, including the partial sale of the retained stake in Haleon. This was partly offset by the net acquisition cost of Aiolos Bio, Inc. (Aiolos) for £719 million and dividends paid to shareholders of £568 million.

At 31 March 2024, GSK had short-term borrowings (including overdrafts and lease liabilities) repayable within 12 months of £2,616 million with loans of £1,431 million repayable in the subsequent year.

Trust: progress on our six priority areas for responsible business

Building Trust by operating responsibly is integral to GSK's strategy and culture. This will support growth and returns to shareholders, reduce risk, and help GSK's people thrive while delivering sustainable health impact at scale. The company has identified six Environmental, Social, and Governance (ESG) focus areas that address what is most material to GSK's business and the issues that matter the most to its stakeholders. Highlights below include activity since Q4 2023 results. For more details on annual updates, please see GSK's ESG Performance Report 2023. (1)

Access

Commitment: to make GSK's vaccines and medicines available at value-based prices that are sustainable for the business and implement access strategies that increase the use of GSK's vaccines and medicines to treat and protect underserved people.

Progress since Q4 2023:

Global health and health security

Commitment: develop novel products and technologies to treat and prevent priority diseases, including pandemic threats.

Progress since Q4 2023:

Environment

Commitment: committed to a net zero, nature-positive, healthier planet with ambitious goals set for 2030 and 2045.

Progress since Q4 2023:

Diversity, equity and inclusion

Commitment: create a diverse, equitable and inclusive workplace; enhance recruitment of diverse patient populations in GSK clinical trials; and support diverse communities.

Progress since Q4 2023:

Ethical standards

Commitment: promote ethical behaviour across GSK's business by supporting its employees to do the right thing and working with suppliers that share GSK's standards and operate responsibly.

Product governance

Commitment: maintain robust quality and safety processes and responsibly use data and new technologies.

ESG rating performance

Detailed below is how GSK performs in key ESG ratings.

Footnotes:

Total and Core results

Total reported results represent the Group's overall performance.

GSK has made one update to its reporting framework in Q1 2024 which is to change the description of Adjusted results to Core results to align with European peers in the pharmaceutical industry but with no change to the basis or figures. There is no change to Total Results or the definition of Adjusting items.

GSK uses a number of non-IFRS measures to report the performance of its business. Core results and other non-IFRS measures may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. Core results are defined below and other non-IFRS measures are defined on page 47.

GSK believes that Core results, when considered together with Total results, provide investors, analysts and other stakeholders with helpful complementary information to understand better the financial performance and position of the Group from period to period, and allow the Group's performance to be more easily compared against the majority of its peer companies. These measures are also used by management for planning and reporting purposes. They may not be directly comparable with similarly described measures used by other companies.

GSK encourages investors and analysts not to rely on any single financial measure but to review GSK's quarterly results announcements, including the financial statements and notes, in their entirety.

GSK is committed to continuously improving its financial reporting, in line with evolving regulatory requirements and best practice. In line with this practice, GSK expects to continue to review and refine its reporting framework.

Core results exclude the following items in relation to our operations from Total results, together with the tax effects of all of these items:

Costs for all other ordinary course smaller scale restructuring and legal charges and expenses from operations are retained within both Total and Core results.

As Core results include the benefits of Major restructuring programmes but exclude significant costs (such as significant legal, major restructuring and transaction items) they should not be regarded as a complete picture of the Group's financial performance, which is presented in Total results. The exclusion of other Adjusting items may result in Core earnings being materially higher or lower than Total earnings. In particular, when significant impairments, restructuring charges and legal costs are excluded, Core earnings will be higher than Total earnings.

GSK has undertaken a number of Major restructuring programmes in response to significant changes in the Group's trading environment or overall strategy or following material acquisitions. Within the Pharmaceuticals sector, the highly regulated manufacturing operations and supply chains and long lifecycle of the business mean that restructuring programmes, particularly those that involve the rationalisation or closure of manufacturing or R&D sites are likely to take several years to complete. Costs, both cash and non-cash, of these programmes are provided for as individual elements are approved and meet the accounting recognition criteria. As a result, charges may be incurred over a number of years following the initiation of a Major restructuring programme.

Significant legal charges and expenses are those arising from the settlement of litigation or government investigations that are not in the normal course and materially larger than more regularly occurring individual matters. They also include certain major legacy matters.

Reconciliations between Total and Core results, providing further information on the key Adjusting items, are set out on pages 20 and 21.

GSK provides earnings guidance to the investor community on the basis of Core results. This is in line with peer companies and expectations of the investor community, supporting easier comparison of the Group's performance with its peers. GSK is not able to give guidance for Total results as it cannot reliably forecast certain material elements of the Total results, particularly the future fair value movements on contingent consideration and put options that can and have given rise to significant adjustments driven by external factors such as currency and other movements in capital markets.

ViiV Healthcare

ViiV Healthcare is a subsidiary of the Group and 100% of its operating results (turnover, operating profit, profit after tax) are included within the Group income statement.

Earnings are allocated to the three shareholders of ViiV Healthcare on the basis of their respective equity shareholdings (GSK 78.3%, Pfizer 11.7% and Shionogi 10%) and their entitlement to preferential dividends, which are determined by the performance of certain products that each shareholder contributed. As the relative performance of these products changes over time, the proportion of the overall earnings allocated to each shareholder also changes. In particular, the increasing proportion of sales of dolutegravir and cabotegravir-containing products has a favourable impact on the proportion of the preferential dividends that is allocated to GSK. Adjusting items are allocated to shareholders based on their equity interests. GSK was entitled to approximately 84% of the Total earnings and 83% of the Core earnings of ViiV Healthcare for 2023.

As consideration for the acquisition of Shionogi's interest in the former Shionogi-ViiV Healthcare joint venture in 2012, Shionogi received the 10% equity stake in ViiV Healthcare and ViiV Healthcare also agreed to pay additional future cash consideration to Shionogi, contingent on the future sales performance of the products being developed by that joint venture, dolutegravir and cabotegravir. Under IFRS 3 'Business combinations', GSK was required to provide for the estimated fair value of this contingent consideration at the time of acquisition and is required to update the liability to the latest estimate of fair value at each subsequent period end. The liability for the contingent consideration recognised in the balance sheet at the date of acquisition was £659 million. Subsequent remeasurements are reflected within other operating income/(expense) and within Adjusting items in the income statement in each period.

Cash payments to settle the contingent consideration are made to Shionogi by ViiV Healthcare each quarter, based on the actual sales performance and other income of the relevant products in the previous quarter. These payments reduce the balance sheet liability and hence are not recorded in the income statement. The cash payments made to Shionogi by ViiV Healthcare in the three months ended 31 March 2024 were £300 million.

As the liability is required to be recorded at the fair value of estimated future payments, there is a significant timing difference between the charges that are recorded in the Total income statement to reflect movements in the fair value of the liability and the actual cash payments made to settle the liability.

Further explanation of the acquisition-related arrangements with ViiV Healthcare are set out on pages 84 and 85 of the Annual Report 2023.

Adjusting items

The reconciliations between Total results and Core results for Q1 2024 and Q1 2023 are set out below.

Three months ended 31 March 2024