Final Results

Group performance

Group turnover by division, geographic region and segment

Turnover - 2012

Total Group turnover for 2012 was broadly in line with last year (down 1% to £26,431 million), with a 2% decline in Pharmaceuticals and Vaccines turnover partly offset by flat reported turnover in Consumer Healthcare.  Pharmaceuticals turnover was down 2%, primarily as a result of the increased pressure from austerity measures in Europe.  Vaccines turnover declined 2%, reflecting the impact of lower sales of Cervarix in Japan (2012: £132 million; 2011: £344 million) following the completion of the 2011 HPV vaccination catch-up programme.  Excluding Cervarix, Vaccines turnover increased 4%.  Reported Consumer Healthcare turnover was flat at £5,110 million, but excluding the non-core OTC brands divested in H1 2012, Consumer Healthcare turnover grew 5%.

US Pharmaceuticals and Vaccines turnover declined 2%.  Excluding the impact of Avandia, Pharmaceuticals and Vaccines sales were flat.  Pharmaceuticals turnover fell 2%, as sales declines for Avandia as well as a number of older products including Arixtra and Valtrex, were partly offset by an encouraging performance from new products, particularly in Oncology which grew 18%, a £65 million sales contribution from Benlysta and improved Respiratory sales, which grew 1%.  Turnover also benefited from the net effect of the incremental revenue from the conclusion of the Vesicare co-promotion agreement in Q1 2012.  Vaccines sales were flat as the growth in sales of Infanrix/Pediarix and Boostrix was offset by lower flu vaccines sales and adverse comparisons for Hepatitis vaccines and Rotarix, which benefited from significant CDC stockpile purchases in 2011.

Europe Pharmaceuticals and Vaccines turnover declined 7%, primarily driven by the impact of various ongoing government austerity measures including price cuts, parallel trade and generic substitution.  This decline resulted from adverse pricing effects of 6% and a 1% volume decline.  Pharmaceuticals sales declined 8% and Vaccines sales declined 4%.  Despite a slight reduction in the rate of decline in the fourth quarter, the underlying economic environment continued to be challenging.

EMAP Pharmaceuticals and Vaccines turnover increased 10% as strong growth in Latin America (up 11% to £1,257 million), China (up 17% to £759 million) and India (up 10% to £304 million) was partly offset by the effect of mandatory price reductions in a number of markets, including Turkey and Korea.  Pharmaceuticals turnover increased 8%, with improved momentum after a slow first quarter, as strong growth in Respiratory combined with good performances in a number of established brands and the newer Oncology portfolio.  The Vaccines business recorded a strong performance but with expected uneven delivery across the quarters, reflecting the phasing of tender sales and a particular concentration towards the end of the year.

Japan Pharmaceuticals and Vaccines turnover fell 6% reflecting an adverse comparison with strong Cervarix sales in 2011 despite a material contribution from the third phase of the programme benefiting Q1 2012.  The catch-up programme is now complete.  Excluding Cervarix, Japan Pharmaceuticals and Vaccines turnover increased 5%.  Pharmaceuticals turnover grew 3% with strong growth from the recently launched products, Lamictal, Avodart and Volibris, partly offset by the impact of the mandatory biennial price cuts, which impacted growth by approximately 4 percentage points, and increasing generic competition to Paxil.  The Respiratory portfolio grew 6%, driven by a strong performance from Xyzal, offsetting declines in Flixonase and Zyrtec.  Adoair (Seretide) grew 6% to £309 million.  In Vaccines, Rotarix, which launched in Q4 2011, contributed sales of £44 million.

ViiV Healthcare turnover declined by 10% primarily reflecting generic competition in the US to Combivir and Epivir offsetting growth generated by Epzicom and Selzentry.

Consumer Healthcare turnover, excluding the sales of the non-core OTC brands that were divested in H1 2012, increased 5% with relatively consistent performance over the quarters.  This reflected continued growth in Oral care, Nutrition and Wellness, partly offset by a small decline in Skin health.  On a regional basis, US sales grew 2% and Europe sales were flat, both impacted by continuing economic pressures and the drag from alli.  The Rest of World markets, particularly India, the Middle East and China, continued to make a strong contribution and grew 12%.  Reported turnover for Consumer Healthcare was flat at £5,110 million.

Turnover - Q4 2012

Total Group turnover for Q4 2012 was flat at £6,802 million.  Pharmaceuticals and Vaccines turnover was also flat in the quarter.  Pharmaceuticals turnover fell 1% with continued austerity pressures in European markets, generic competition to Paxil in Japan and weaker than expected stocking patterns in the US offsetting strong growth in EMAP.  The Vaccines business was up 10% to £864 million in the quarter, reflecting strong performances in EMAP, including delivery of substantial tender volumes, and the US.  Vaccines also continued to be impacted by declining Cervarix sales (down 53% to £44 million).  Excluding Cervarix, Vaccines sales increased 19%.  Reported Consumer Healthcare turnover was flat at £1,249 million, but excluding the non-core OTC brands that were divested in H1 2012, turnover increased 7%.

In the US, Pharmaceuticals and Vaccines turnover declined 2%, with Pharmaceuticals down 5% and Vaccines up 27%.  Pharmaceuticals turnover was impacted by the loss of sales of Vesicare following the conclusion of the co-promotion agreement in Q1 2012 and a further decline in Avandia sales.  Excluding these items, sales declined 1% with a strong performance from Oncology products, up 21% to £86 million and a £27 million sales contribution from Benlysta, offset by a 6% reduction in Respiratory sales.  The reported growth of Respiratory products was negatively impacted in the quarter by both refinements to previous accruals for returns and rebates and wholesaler/retailer stocking patterns, but estimated underlying growth for the key products Advair, Flovent and Ventolin continued to be positive.  During the quarter there were some adjustments, (both positive and negative) to previous accruals for returns and rebates that impacted reported growth for several other products.  Overall, the net effect of these adjustments combined with some unfavourable stocking patterns was not significant.  There was a strong contribution from Vaccines in the US with growth of 27%, primarily reflecting a strong performance from Infanrix/Pediarix (sales more than doubled to £69 million) which also benefited from a competitor supply issue.

Europe Pharmaceuticals and Vaccines continued to suffer from government austerity measures, although the impact was reduced this quarter as the phasing of some of these measures, including price cuts to Seretide and Vaccines products, started to annualise.  Price reductions of 5% combined with a flat volume led to a decline in Pharmaceuticals and Vaccines turnover of 5% to £1,311 million.  Pharmaceuticals turnover declined 5% to £1,045 million.  Vaccines sales were also down 5% to £266 million.

EMAP Pharmaceuticals and Vaccines sales rose 16% with growth generated across a number of markets, primarily Latin America (up 23% to £321 million), the Middle East and Africa (up 12% to £385 million) and China (up 14% to £210 million).  Pharmaceuticals grew 11%, primarily reflecting strong growth in Respiratory and CNS products, together with continued momentum in other established brands.  Vaccines grew 39%, primarily as a result of the delivery of expected tender shipments for Synflorix and Infanrix/Pediarix, particularly in the Middle East/Africa.

Japan Pharmaceuticals and Vaccines turnover fell 4% in the quarter reflecting an adverse comparison with strong Cervarix sales in Q4 2011 which benefited from the HPV vaccination catch-up programme.  Excluding Cervarix, Japan Pharmaceuticals and Vaccines turnover increased 4% in the quarter.  The Pharmaceuticals business grew 2% despite the impact of the mandatory biennial price cuts and increased generic competition to Paxil (down 28% to £47 million).  The Respiratory portfolio grew 10% to £170 million and there were strong contributions from a number of recently launched products, including Lamictal and Avodart.

ViiV Healthcare turnover declined by 14% primarily due to the continued effect of generic competition in the US to Combivir and Epivir, which more than offset growth of Epzicom and Selzentry.

Consumer Healthcare turnover, excluding the sales of the non-core OTC brands that were divested in H1 2012, increased by 7%.  This reflected relatively strong growth across all four categories: Oral care, Nutrition, Wellness and Skin health.  On a regional basis, ongoing growth was driven by the Rest of World markets (up 13%), particularly India, the Middle East and China.  Europe reported a 2% increase in sales in the face of continued economic pressures and the adverse impact of alli.  The US increased 6%, with organic growth improved by promotional phasing and retailer stock movements.  Reported Consumer Healthcare turnover was flat at £1,249 million.

Divisional performance

Pharmaceutical sales summary

Respiratory

2012 (£7,291 million; +1%)

Respiratory sales increased 1%, with growth in the US, EMAP and Japan offset by a decline in Europe.  Total sales of Seretide/Advair grew 1% to £5,046 million, Ventolin sales increased 6% to £631 million while Flixotide/Flovent sales fell 4% to £779 million.  Xyzal sales, almost exclusively made in Japan, doubled to £129 million.

In the US, sales of Advair were £2,533 million, up 1% compared with 2% estimated underlying growth for the year (5% volume decline more than offset by a 7% positive impact of price and mix).  Flovent sales declined 1% to £448 million, compared with estimated underlying growth of 3% (4% volume increase partly offset by a 1% negative impact of price and mix).  Ventolin grew 14% to £277 million, while estimated underlying growth was 11%, driven mostly by volume.

European Respiratory sales were down 5% reflecting the impact of ongoing austerity measures.  Over the whole year, Seretide sales were down 4% to £1,447 million, as price cuts more than offset volume growth of approximately 2%.

In EMAP, Respiratory sales grew 13%, with growth across most products in the portfolio.  Seretide grew 12% to £417 million with strong growth in China and Latin America offsetting the impact of some price reductions, principally in Turkey.  Ventolin sales increased 10% to £171 million.

Q4 2012 (£1,903 million; -1%)

Respiratory sales in the quarter fell 1% to £1,903 million, as declines in the US and Europe offset growth in EMAP and Japan.  Seretide/Advair sales declined 1% to £1,309 million and Flixotide/Flovent sales fell 10% to £206 million, but Xyzal sales grew 68% to £36 million.  Ventolin sales grew 5% to £177 million.

In the US, as the clear market leaders in their respective categories, Advair (ICS/LABA combination) and Flovent (single agent ICS) have both benefited from overall prescription volume growth in the controller market (LABA, ICS and anti-cholinergic products) which grew 3% in the quarter.  The underlying growth for key respiratory products Advair, Flovent and Ventolin continued to be positive; however, reported growth for all three products was significantly negatively impacted in the quarter by both adjustments to previous accruals for returns and rebates and wholesaler/retailer stocking patterns.  Reported sales of Advair fell 6% to £635 million.  On an underlying basis, sales for the quarter grew approximately 4% (3% volume decline offset by a 7% positive impact of price and mix).  (All market growth and share data based on weekly IMS Health data).

In the US, Flovent declined 13% to £116 million with an estimated underlying growth of 7% (2% volume increase and a 5% positive impact of price and mix).  Ventolin reported sales in the US grew 10% to £79 million, with estimated underlying growth of approximately 20% (11% volume increase plus 9% positive impact of price and mix).

European Respiratory sales were down 3% reflecting the impact of ongoing austerity measures.  Seretide sales were down 1% to £374 million, as price cuts more than offset volume growth of approximately 3%.

Respiratory sales in EMAP grew 16%.  Seretide grew 18% to £118 million with strong growth in China, Saudi Arabia and Latin America and Ventolin sales increased 9% to £47 million.

Anti-virals

2012 (£753 million; -11%)

The 11% decline in Anti-virals sales largely resulted from generic competition to Valtrex, which was down 25% to £252 million.

Q4 2012 (£203 million; +3%)

Valtrex sales declined 3% to £71 million, as a favourable adjustment to previous accruals for returns and rebates in the US, was offset by the effects of generic competition in Europe and price cuts in Japan.

Central nervous system

2012 (£1,670 million; -2%)

Declines in Seroxat/Paxil sales of 14% to £374 million and Requip sales of 22% to £164 million, primarily as a result of generic competition, were only partially offset by the 14% growth of Lamictal to £610 million.

In the US, the Lamictal franchise increased 18% to £332 million as strong growth of Lamictal XR, approximately 45% of the US franchise, more than offset the impact of generic competition to the immediate release (twice a day) formulation.  Generic competition to Lamictal XR is now expected to start in the first quarter of 2013.  In Japan, sales of Lamictal IR grew 88% to £78 million, in part due to sales for the recently launched bipolar indication. 

Q4 2012 (£423 million; -2%)

The 2% decline in CNS sales was primarily attributed to declines in Seroxat/Paxil, particularly in Japan, and Requip, impacted by both generic competition and price cuts, offsetting the 18% increase in sales of Lamictal.

Cardiovascular and urogenital

2012 (£2,431 million; flat)

Sales in the category were flat as the net benefit of the conclusion of the Vesicare co-promotion agreement combined with growth in sales of Avodart and Lovaza were offset by the impact of generic competition to Arixtra and Coreg.

The Avodart franchise grew 7% to £790 million with growth driven by strong contributions from the recent launches of the combination product Duodart/Jalyn in Europe and of Avodart in Japan.  In the US, the decline in Avodart sales, in part due to the impact of labelling changes implemented in 2011 and the availability of a generic competitor in the same class, was partially offset by growth in Jalyn, and combined sales fell 5%.

Lovaza grew 5% to £607 million primarily reflecting the benefit of improved pricing.  Lovaza continues to hold broadly flat market share in a market which has declined approximately 7% compared with 2011, as economic pressures have resulted in fewer doctor visits and reduced testing for asymptomatic conditions such as very high triglycerides.

Q4 2012 (£571 million; -10%)

The 10% sales decline primarily reflected the loss of sales of Vesicare following the conclusion of the co-promotion agreement in Q1 2012.  Lovaza sales fell 6% in the quarter reflecting the negative impacts of both adjustments to previous accruals for returns and rebates and wholesaler/retailer stocking patterns.  Coreg sales declined 22% primarily as a result of generic competition.

Metabolic

2012 (£171 million; -47%)

The decline in Metabolic product sales continued to reflect the loss of sales of Avandia, and the impact of declining sales of Bonviva in Europe following the change in the deal structure.

Q4 2012 (£48 million; -45%)

The decline in Metabolic product sales continued to reflect the loss of sales of Avandia, and the impact of declining sales of Bonviva in Europe following the change in the deal structure.

Anti-bacterials

2012 (£1,247 million; -7%)

Anti-bacterials sales grew 5% in EMAP, primarily from Augmentin, but this was more than offset by the impact of austerity measures in Europe, which encouraged pharmacy-level generic substitution, and generic competition in both Europe and the US.

Q4 2012 (£337 million; -2%)

Anti-bacterial sales growth in EMAP of 3% was offset by the impact of austerity measures in Europe and generic competition in both Europe and the US.

Oncology and emesis

2012 (£798 million; +19%)

Three new products, Votrient (up 88% to £183 million), Promacta (up 76% to £130 million) and Arzerra (up 36% to £60 million) all continued to grow strongly in the US, Europe and EMAP.  Tykerb/Tyverb also grew (up 6% to £239 million), with growth in the US, EMAP and Japan offsetting a small decline in Europe.  Both Hycamtin in Europe and Argatroban in the US were adversely affected by generic competition.

In the US, Votrient (up 59% to £91 million) benefited from the launch of a new indication for use in advanced soft-tissue sarcoma.  Sales of Promacta grew 66% to £54 million, reflecting the continued effect of longer-term use data that was added to the label in 2011.

Q4 2012 (£219 million; +26%)

Growth in the category in the quarter was driven by new products Votrient (more than doubling to £62 million), Promacta (up 67% to £38 million) and Arzerra (up 17% to £14 million).  Argatroban sales fell 45% to £11 million as a result of generic competition in the US.

Dermatology

2012 (£850 million; -2%)

Sales declined 2% to £850 million, primarily as a result of the decline in the US (down 14% to £228 million) which suffered from the impact of generic competition to Evoclin, Extina and Duac.  European sales (up 5% to £156 million) benefited from the acquisition of Toctino in the second half of the year.  EMAP sales grew 7% to £388 million, reflecting strong growth in the promoted brands of Dermovate and Bactroban.

Q4 2012 (£226 million; +5%)

Sales were up 5% in the quarter as growth in EMAP (up 13% to £104 million), together with the benefit of the acquisition of Toctino in Europe, was only partially offset by a decline in the US (down 5% to £61 million).  EMAP performance continued to be impacted by ongoing supply issues, which are now close to resolution.  Supply of a generic version of Bactroban cream started in the US in January 2013.

Rare diseases

2012 (£495 million; +8%)

Volibris grew 35% to £127 million, led by a strong performance in Japan.  Mepron sales increased 26% to £93 million primarily as a result of a favourable adjustment to US accruals for returns and rebates recorded in the fourth quarter.  Flolan sales fell 25% to £135 million, largely as a result of the biennial price reduction in Japan and generic competition in Europe.

Q4 2012 (£142 million; +17%)

Mepron sales increased 60% to £31 million in the quarter primarily due to a favourable adjustment to US accruals for returns and rebates and Volibris sales grew 29% to £35 million, while Flolan sales declined 20% to £34 million.

Immuno-inflammation

2012 (£70 million; +>100%)

Reported Benlysta turnover was £70 million, of which £65 million arose in the US.  Total in-market sales of Benlysta in the US for the year were £96 million.

Q4 2012 (£29 million; +>100%)

Reported Benlysta turnover was £29 million in the quarter, representing £27 million of sales in the US and £2 million of sales in Europe.

ViiV Healthcare (HIV)

2012 (£1,374 million; -10%)

ViiV Healthcare sales declined by 10%, with the US down 22%, Europe down 3%, and EMAP up 3%.  Sales growth in Epzicom/Kivexa (up 10% to £665 million) and Selzentry (up 20% to £128 million) were more than offset by a 30% decline in the mature portfolio, primarily as a result of generic competition in the US to Combivir and Epivir.

Q4 2012 (£338 million; -14%)

Sales in the quarter fell 14%, with the US down 25%, Europe down 2% and EMAP down 17%.  Epzicom grew 1% to £166 million and Selzentry grew 21% to £38 million, but the mature portfolio declined 33%.

Vaccines sales