1st Quarter Results

Group performance

Group turnover by division, geographic region and segment

Turnover - Q1 2013

Total Group turnover for Q1 2013 was £6,471 million, down 2%.  Excluding the impact of disposals, primarily the conclusion of the Vesicare co-promotion agreement in the US in Q1 2012 and the non-core OTC brands divested in H1 2012, turnover grew 2%.  Pharmaceuticals and Vaccines turnover fell by 2%, but grew 1% excluding disposals.  Pharmaceuticals turnover declined 1%, but excluding disposals, grew 3%, as continued growth in EMAP and Japan and an improved performance in the US were partly offset by ongoing austerity pressures in Europe.  Worldwide Vaccines turnover fell 11%, reflecting the adverse comparison with strong Cervarix sales in Japan in Q1 2012 that benefited from the final stage of the HPV catch-up vaccination programme.  Excluding Cervarix in Japan, Vaccines sales grew 2%, reflecting continued growth in EMAP and a stronger performance in Europe.  Consumer Healthcare turnover increased 1% to £1,347 million, but excluding the non-core OTC brands divested in H1 2012, turnover grew 6%.

In the US, Pharmaceuticals and Vaccines turnover fell 6%, with Pharmaceuticals down 6% and Vaccines down 3%.  Pharmaceuticals turnover was significantly impacted by the loss of sales of Vesicare following the conclusion of the co-promotion agreement in Q1 2012.  Excluding Vesicare, US Pharmaceuticals turnover grew 5%.  Sales of Respiratory products grew 7% to £920 million, led by an 8% growth in Advair sales.  Oncology products also performed well, growing 24% to £88 million.  Votrient was the main driver, with sales more than doubling to £33 million.  These gains were partially offset by the impact in the quarter of the launch of further generic competition to Lamictal, down 23% to £66 million and Duac, down 75% to £4 million.  The 3% decline in Vaccines sales primarily resulted from lower sales of Hepatitis vaccines following a return to the market of competing vaccines during the second half of 2012.

Europe Pharmaceuticals and Vaccines turnover fell 3% to £1,268 million, with the decline primarily attributable to price reductions.  Pharmaceutical sales fell 4% to £1,031 million.  The Oncology products, particularly Votrient, performed well, as did Avodart, but this growth was offset by generic competition to a number of older products.  Seretide sales declined 2% to £370 million, again primarily driven by price reductions.  Vaccines sales grew 4%, in part due to higher flu vaccines sales during the quarter.

EMAP Pharmaceuticals and Vaccines turnover grew 8% to £1,119 million, with particular contributions from Middle East/Africa, up 15% to £302 million, and China, up 19% to £199 million.  Pharmaceuticals sales grew 8%, led by Augmentin (up 27% to £103 million) which was adversely impacted in Q1 2012 by the phasing of shipments following earlier supply interruptions, and Seretide, up 8% to £106 million.  Vaccines sales increased 7% to £225 million, largely reflecting the phasing of tender deliveries, particularly of Synflorix, in Middle East/ Africa and Brazil.

Japan Pharmaceuticals and Vaccines turnover fell 8% to £447 million, as a 12% growth in Pharmaceuticals sales was more than offset by the 88% decline in Vaccines sales.  Strong growth of the Respiratory products, Xyzal and Veramyst, together with Relenza, was partly offset by continued generic erosion to Paxil.  Vaccines sales were impacted by the adverse comparison of Cervarix with Q1 2012, which benefited from the final stages of the HPV vaccination programme.

ViiV Healthcare turnover fell 5% to £318 million as the impact of continued competition to older products more than offset the growth generated by Selzentry and Epzicom.

Consumer Healthcare turnover, excluding the non-core OTC brands divested in H1 2012, grew 6%, with growth spread evenly across the four categories.  Growth in both the US and Europe was helped by positive stocking patterns in the quarter.  In the Rest of World markets, strong growth in India, the Middle East and Latin America was partly offset by a decline in sales in China, primarily due to new 'behind-the-counter' requirements for Contac.  Reported Consumer Healthcare turnover grew 1% to £1,347 million.

Divisional performance

Pharmaceutical sales summary

Respiratory

Q1 2013 (£1,936 million; up 6%)

Respiratory sales in the quarter grew 6% to £1,936 million, with strong growth in all regions apart from Europe.  Seretide/Advair sales were up 4% to £1,309 million, Flixotide/Flovent sales increased 7% to £213 million, and Xyzal sales grew 64% to £52 million.  Ventolin sales grew 4% to £162 million.

In the US, 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 5% in the quarter.  Advair sales growth for the quarter of 8% was just below estimated underlying growth of 9%, which represented a 2% volume decline offset by an 11% positive impact of price and mix.  (All market growth data based on weekly IMS Health data).

In the US, Flovent sales increased 13% to £129 million with an estimated underlying growth of 11% (flat volume and an 11% positive impact of price and mix).  Ventolin reported sales in the US grew 9% to £76 million, with estimated underlying growth of approximately 18% (8% volume increase plus 10% positive impact of price and mix).

European Respiratory sales were down 3% reflecting the impact of ongoing austerity measures.  Seretide sales were down 2% to £370 million, reflecting pricing reductions of 2% and flat volume.

Respiratory sales in EMAP grew 8%.  Seretide grew 8% to £106 million with strong growth in China, Brazil and Saudi Arabia, and Ventolin sales were flat at £41 million.

In Japan, Respiratory sales grew 24% to £188 million, with strong growth from Xyzal, up 72% to £49 million, and Veramyst, up 64% to £32 million, driven by a strong start to the pollen season.  Adoair sales grew 4% to £63 million.

Anti-virals

Q1 2013 (£183 million; up 3%)

The 3% growth in Anti-virals sales largely resulted from increased sales of Relenza in Japan

Central nervous system

Q1 2013 (£362 million; down 8%)

Declines in Lamictal sales of 9% to £133 million, Seroxat/Paxil sales of 15% to £73 million and Requip sales of 29% to £31 million, all primarily as a result of generic competition, led to the 8% fall in sales of the category.

In the US, as expected, generic competition to Lamictal XR started in the quarter and the Lamictal franchise fell 23% to £66 million.  In Japan, continued generic competition to Paxil resulted in a 13% decline in the category.

Cardiovascular and urogenital

Q1 2013 (£558 million; down 24%)

Sales in the category fell 24% as a result of the impact of the conclusion of the Vesicare co-promotion agreement in Q1 2012.  Excluding Vesicare, sales were flat.

The Avodart franchise grew 10% to £203 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 more than offset growth in Jalyn, and combined sales fell 3%.

Lovaza fell 3% to £148 million primarily as a result of a continued decline in the non-steroidal dyslipidemia prescription market.

Metabolic

Q1 2013 (£45 million; up 42%)

The increase in Metabolic product sales primarily reflected higher sales of Avandia (£5 million in Q1 2013 compared with net returns of £8 million, driven by the US, in Q1 2012) and higher sales of Prolia in Europe and EMAP.

Anti-bacterials

Q1 2013 (£339 million; up 7%)

Anti-bacterials sales grew 7%, almost entirely driven by Augmentin in EMAP, which grew 27% to £103 million, in part due to the phasing of shipments in Q1 2012 as a result of some earlier supply interruptions.

Oncology and emesis

Q1 2013 (£221 million; up 23%)

Three new products, Votrient (more than doubling to £71 million), Promacta (up 48% to £40 million) and Arzerra (up 67% to £21 million) all continued to drive the category growth.  Tykerb/Tyverb sales fell 13% to £52 million and both Hycamtin in Europe and Argatroban in the US were adversely affected by generic competition.

In the US, Votrient (more than doubling to £33 million) benefited from the recent launch of a new indication for use in advanced soft-tissue sarcoma.  Sales of Promacta grew 45% to £16 million, reflecting the continued effect of longer-term use data that was added to the label in 2011 and the benefit of a new indication for thrombocytopenia associated with Hepatitis C received during Q1 2013.

Dermatology

Q1 2013 (£199 million; down 6%)

Sales declined 6% to £199 million, primarily as a result of the decline in the US (down 32% to £41 million) which continued to suffer from the impact of generic competition to Evoclin, Extina and Duac.  European sales (up 11% to £42 million) benefited from the acquisition of Toctino (£6 million of sales in Q1 2013) in H2 2012.  EMAP sales grew 6% to £99 million, reflecting strong growth in the promoted brands of Dermovate and Bactroban.

Rare diseases

Q1 2013 (£113 million; up 12%)

Volibris grew 25% to £34 million, led by a strong performance in Japan.  Mepron sales increased 44% to £23 million helped by a favourable adjustment to US accruals for returns and rebates recorded in the quarter.  Flolan sales fell 20% to £27 million, largely as a result of the biennial price reduction in Japan in Q2 2012 and continued generic competition in Europe.

Immuno-inflammation

Q1 2013 (£29 million; up >100%)

Benlysta sales were £29 million, of which £27 million arose in the US.  Total in-market sales of Benlysta in Q1 2012 were £21 million (£20 million in the US). In the US, prior to completion of the acquisition of Human Genome Sciences (HGS) in Q3 2012, HGS was responsible for 50% of the commercial effort for Benlysta.  The post-acquisition restructuring of the commercial organisation supporting Benlysta has been significant and was substantially completed by the end of Q1 2013.

ViiV Healthcare (HIV)

Q1 2013 (£318 million; down 5%)

ViiV Healthcare sales declined by 5%, with the US down 10%, Europe down 6%, and EMAP up 2%.  Sales growth in Epzicom/Kivexa (up 6% to £169 million) and Selzentry (up 28% to £37 million) were more than offset by declines in the mature portfolio, including Combivir (down 6% to £33 million), Trizivir (down 11% to £24 million) and Epivir (down 15% to £11 million).  Reported growth for both Combivir and Epivir in the US included a net benefit from stocking patterns and favourable adjustments to previous accruals for returns and rebates.

Vaccines sales