Final Results

Group performance

Group turnover by division, geographic region and segment

Turnover - 2013

Total Group turnover for 2013 was £26,505 million, up 1%.  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 3%.  Reported Pharmaceuticals and Vaccines turnover grew 1% and excluding disposals, grew 2%.  Pharmaceuticals turnover grew 1% and, excluding disposals, grew 2%, as growth in the US, Japan and EMAP was partially offset by continued pricing pressures and generic competition in Europe. ViiV Healthcare turnover for 2013 was flat.  Vaccines turnover grew 2%, despite the adverse comparison with strong Cervarix sales in Japan in 2012.  Excluding Cervarix in Japan, Vaccines sales grew 5%, reflecting the strong growth in the US of Infanrix/Pediarix and Boostrix, both of which benefited from competitor supply issues, and Fluarix/FluLaval, which benefited from the launch of the new Quadrivalent formulation, as well as a better performance by the business in Europe.  Consumer Healthcare turnover increased 2% to £5,187 million, but excluding the non-core OTC brands divested in H1 2012, turnover grew 4%.

In the US, Pharmaceuticals and Vaccines turnover was up 1%, but grew 4% excluding the impact of the conclusion of the Vesicare co-promotion agreement in Q1 2012.  Pharmaceuticals turnover was down 1% but excluding Vesicare, grew 2%.  Sales of Respiratory products grew 7% to £3,655 million, led by an 8% growth in Advair, although this performance included the benefit of favourable stocking patterns in the fourth quarter.  Oncology products also performed well, growing 17% to £380 million, led by strong performances from Votrient and Promacta and the initial impact of the launches of Tafinlar and Mekinist monotherapies during the year.  Benlysta sales more than doubled to £134 million.  These gains were partially offset by the impact of generic competition to Lamictal, down 18% to £276 million, and a number of Dermatology products, down 40% to £140 million.  The 17% increase in Vaccines sales primarily resulted from the increases in Infanrix/Pediarix sales of 23% to £271 million and Boostrix sales of 23% to £183 million, both of which benefited from competitor supply shortages.  Fluarix/FluLaval sales were also strong, up 65% to £146 million, following the launch of the Quadrivalent flu formulation in 2013.

Europe Pharmaceuticals and Vaccines turnover was £5,166 million, flat compared with 2012, as the benefits of the recent restructuring and refocusing of the business were offset by continued pricing pressures and generic competition to a number of products.  Pharmaceutical sales were down 1% to £4,117 million.  Seretide sales declined 2% to £1,458 million on a 2% volume decline but flat pricing.  Oncology products, particularly Votrient and Promacta, performed well, as did Avodart, but growth from these products was more than offset by lower sales of a number of older products, which were particularly impacted by continued pricing measures and generic competition.  Vaccines sales grew 3%, largely due to an improved tender performance.

EMAP Pharmaceuticals and Vaccines turnover was up 1% to £4,698 million in 2013, adversely affected by the ongoing investigation in China, with Pharmaceuticals up 2% to £3,574 million and Vaccines up 1% to £1,124 million.  In China, Pharmaceuticals and Vaccines sales were down 18%, driven primarily by declines in Respiratory and Hepatitis products.  Excluding China, EMAP Pharmaceuticals and Vaccines sales grew 5% driven by Pharmaceuticals growth in the Middle East/Africa, up 5% to £1,018 million, Latin America, up 6% to £650 million, and South East Asia, up 4% to £257 million, partially offset by declines in India, down 7% to £220 million, and Korea, down 4% to £200 million.  Vaccines sales were up 1% to £1,124 million, and up 3% excluding China, reflecting strong tender performances from Cervarix and Infanrix/Pediarix, which were partially offset by a tough comparison with 2012.

Japan Pharmaceuticals and Vaccines turnover grew 1% to £1,657 million, as a 9% growth in Pharmaceuticals sales was partially offset by a 76% decline in Vaccines sales.  Strong growth in Respiratory products as well as for Relenza, Avodart and Lamictal was partly offset by generic competition to Paxil sales.  Vaccines sales primarily reflected the impact on Cervarix of the suspension of the recommendation for the use of HPV vaccines in Japan during the second half of 2013 and the adverse comparison with 2012, which benefited from the final stages of the catch-up HPV vaccination programme.

ViiV Healthcare turnover was flat at £1,386 million as the growth generated by Epzicom and Selzentry, together with the introduction of Tivicay, was offset by the impact of continued competition to older products.

Consumer Healthcare turnover, excluding the non-core OTC brands divested in H1 2012, grew 4%, with growth in all four categories.  Growth in the US, up 2%, and Europe, up 3%, primarily arose from Specialist oral health, including Sensodyne, Denture care and the re-stocking of alli, which was out of stock for much of 2012.  Rest of World turnover grew 6% with strong growth in India, the Middle East and Latin America partly offset by a decline in sales in China, driven by the impact of the shelving restrictions on Contac and mandatory price reductions for Fenbid.  Reported Consumer Healthcare turnover grew 2% to £5,187 million.

Turnover - Q4 2013

Total Group turnover for Q4 2013 was £6,906 million, up 5%, with growth across all geographic regions except Europe, which was down 2%.  Disposals did not materially affect the reported growth rate for the Group in the quarter.  Pharmaceuticals and Vaccines turnover was up 6%.  Pharmaceuticals turnover grew 5%, as higher sales in the US, Japan and ViiV Healthcare were partly offset by a decline in sales in Europe and EMAP.  Vaccines turnover grew 12%, as strong performances in the US and EMAP were partially offset by lower sales in Japan.  Consumer Healthcare turnover was flat at £1,218 million.

In the US, Pharmaceuticals and Vaccines turnover grew 5% to £1,850 million, with Pharmaceuticals up 3% and Vaccines up 23%.  Pharmaceuticals and Vaccines turnover in the quarter benefited from re-stocking by wholesalers and retailers from the low levels seen during earlier periods of the year.  This re-stocking, together with the positive impact of a comparison with relatively weak Q4 2012 stocking patterns, is estimated to have benefited reported turnover growth by approximately 5 percentage points, largely in Respiratory.  The underlying performance of US Pharmaceuticals and Vaccines sales primarily reflected volume declines in Respiratory products and Lovaza, offset by price and mix benefits although pricing pressures in the market remain significant.  Reported sales of Advair were up 17%, particularly benefiting from the wholesaler and retailer stocking movements.  The launch of Breo Ellipta began in the quarter and recorded sales of £6 million.  Oncology products contributed strongly to the quarter, with sales up 21% to £102 million, benefiting from strong performances from Votrient and Promacta, and the recent launches of Tafinlar and Mekinist.  Benlysta also reported strong growth, with sales up 26% to £33 million.  Reported Lovaza sales fell 5% to £139 million, due to increased competition as well as a slower overall market.  Generic competition impacted Lamictal, Arixtra and Dermatology products.  The 23% increase in Vaccines sales primarily reflected the benefit of the launch of the new Quadrivalent flu formulation and a 97% increase in Boostrix sales to £65 million, which benefited from a competitor supply shortage.

Europe Pharmaceuticals and Vaccines turnover fell 2% to £1,330 million.  Pharmaceutical sales fell 2% to £1,055 million, reflecting continued pricing pressures and generic competition to a number of older products, partially offset by benefits arising from the recent restructuring and refocusing of the business.  Seretide sales declined 4% to £368 million, with volumes down 5% partially offset by a 1% positive impact of price and mix.  Strong growth in Oncology, up 26% to £89 million, was led by Votrient and Promacta, together with the initial stages of the Tafinlar launch.  Sales of Avodart increased 13% to £72 million.  Vaccines sales were flat, reflecting an adverse comparison with a strong Q4 2012, which benefited from some competitor supply issues.

EMAP Pharmaceuticals and Vaccines turnover increased 5% to £1,306 million, reflecting the net impact of the ongoing investigation in China offset by favourable vaccine tender phasing.  Pharmaceuticals were down 1% and Vaccines up 22%.  Excluding China, EMAP Pharmaceuticals and Vaccines sales grew 11%.  In China, Pharmaceuticals and Vaccines sales were down 29% with Hepatitis and Respiratory products continuing to be particularly affected.  Excluding China, EMAP Pharmaceuticals turnover grew 6% with continued strong growth from Seretide, up 17%, Avodart, up 43% and Oncology, up 16%.  Augmentin grew 5%.  There were strong contributions from Middle East/Africa, Latin America and North Asia.  Vaccines sales were up 22% to £389 million, despite some supply disruptions during the quarter, largely reflecting the phasing of tenders, with strong tender deliveries, particularly of Synflorix in Brazil, and Fluarix/Flulaval in China and Latin America.

Japan Pharmaceuticals and Vaccines turnover grew 17% to £467 million in the quarter, with Pharmaceuticals sales increasing 19% and Vaccines sales declining by 44%.  The growth in Pharmaceuticals reflected particularly strong sales of Respiratory products, up 12%, particularly Adoair, up 11%, and Xyzal, up 19%, together with tender shipments of Relenza.  Relvar was launched in the quarter.  Lamictal grew 26% and Avodart was up 25%, partially offset by a 9% decline in Paxil sales.  The decline in Vaccines sales reflected the impact on Cervarix of the suspension of the positive recommendation for use of HPV vaccines in Japan.

ViiV Healthcare turnover grew 15% to £385 million, including a favourable adjustment to US accruals for returns and rebates.  The growth generated by Epzicom and the recent launch of Tivicay was partially offset by the impact of continued competition to older products and the phasing of tenders.

Consumer Healthcare turnover was flat, but grew 1% excluding disposals made in 2012.  US turnover fell 2% as a strong performance from Sensodyne was offset by decreases in Total wellness sales, impacted by stocking patterns and some supply disruptions.  The 4% decline in Europe turnover was also affected by wholesaler and retailer stocking patterns but also some supply interruptions, particularly for Aquafresh.  Rest of World turnover grew 5%, with strong growth in India, Japan, Middle East and Latin America partly offset by the continuing impact in China of the new shelving requirements for Contac and mandatory price reductions for Fenbid.

Divisional performance

Pharmaceutical sales summary

Respiratory

2013 (£7,516 million; up 4%)

Respiratory sales in 2013 grew 4% to £7,516 million, with the US up 7%, Europe down 3%, EMAP up 4% and Japan up 9%.  Seretide/Advair sales were up 4% to £5,274 million, largely driven by a strong US performance.  Flixotide/Flovent sales increased 2% to £796 million, and Ventolin sales grew 2% to £642 million.  Xyzal sales, almost exclusively made in Japan, grew 26% to £137 million, reflecting a strong allergy season.

In the US, Respiratory sales grew 7%, with Advair up 8% to £2,769 million, compared with 6% estimated underlying growth for the year (5% volume decline more than offset by an 11% positive impact of price and mix).  Flovent sales were up 6% to £482 million with estimated underlying growth for the year up 6% (4% volume decrease offset by a 10% positive impact of price and mix).  Ventolin grew 4% to £291 million, with estimated underlying growth of 8%, driven mostly by improved price realisation in the first half of the year.  The launch of Breo Ellipta began in Q4 2013 with £5 million of sales recorded in the quarter.

European Respiratory sales were down 3% reflecting increased competition in many markets.  Seretide sales were down 2% to £1,458 million, with a 2% volume decrease and no net impact of price and mix.  Serevent and Flovent sales were down 17% and 7% respectively.

Respiratory sales in EMAP grew 4%, but 9% excluding China, led by Seretide, which grew 4% to £429 million (12% excluding China).  Seretide continued to deliver strong growth across many EMAP markets.  Veramyst, grew 16% to £71 million and Ventolin increased 2% to £171 million.

In Japan, Respiratory sales grew 9% to £567 million, with strong growth from both Xyzal and Veramyst.  Adoair sales grew 8% to £277 million.  Relvar Ellipta was launched in December 2013, recording sales of £3 million.

Q4 2013 (£1,982 million; up 7%)

Respiratory sales in the quarter grew 7% to £1,982 million, with the US up 14%, Europe down 4%, EMAP up 5% and Japan up 12%.  Seretide/Advair sales increased 9% to £1,398 million, Flixotide/Flovent sales increased 4% to £209 million, and Ventolin sales grew 1% to £175 million. Xyzal sales grew 22% to £36 million and Relvar/Breo Ellipta was launched in the US and Japan.

US Respiratory sales were up 14% to £975 million.  Reported growth rates for Advair, Flovent and Ventolin were impacted significantly by the benefit from re-stocking by wholesalers and retailers from the low levels seen at the end of Q3 2013 together with the positive impact of comparison with relatively weak Q4 2012 stocking patterns.  Pricing pressure in the market remains significant.  Advair sales were particularly affected by the stocking patterns up 17% to £741 million, compared with an estimated underlying growth of 1%, which represented a 6% volume decline offset by a 7% positive impact of price and mix.  Flovent sales increased 8% to £124 million.  On an estimated underlying basis, Flovent was down 6% (6% volume decline and net zero impact of price and mix).  Ventolin reported sales in the US grew 3% to £80 million, with an estimated underlying decline of 9% (3% volume decrease and a 6% negative impact of price and mix).

European Respiratory sales were down 4%, partly reflecting increased competition in many markets.  Seretide sales declined 4% to £368 million, representing a 5% volume decrease, partially offset by a 1% positive impact of price and mix.

Respiratory sales in EMAP grew 5% despite a 22% decline in China, primarily driven by Seretide, which was down 20%.  Excluding China, EMAP Respiratory sales grew 13%, with Seretide up 17% and Ventolin up 8%.

In Japan, Respiratory sales grew 12% to £154 million, with continued growth from Adoair, up 11% to £82 million and from Xyzal, which grew 19% to £31 million.

Anti-virals

2013 (£667 million; down 6%)

The decrease in sales of Anti-virals reflected declines in Zeffix and Hepsera in China partially offset by tender shipments of Relenza in Japan.

Q4 2013 (£202 million; up 10%)

Anti-virals sales increased 10% largely as a result of tender shipments of Relenza in Japan, partly offset by lower sales of Zeffix and Hepsera in China.

Central nervous system

2013 (£1,483 million; down 8%)

Seroxat/Paxil sales fell 16% to £285 million, primarily due to generic competition in Japan and Europe and Requip sales fell 18% to £125 million reflecting generic competition in the US and Europe.  Lamictal sales fell 7% to £557 million, primarily as a result of generic competition to Lamictal XR in the US.

In the US, generic competition to Lamictal XR, which started in Q1 2013, led to the 18% fall in sales of the Lamictal franchise to £276 million.

Q4 2013 (£384 million; down 3%)

Declines in Seroxat/Paxil sales of 14% to £69 million and Lamictal sales of 3% to £152 million, both primarily as a result of generic competition, led to the 3% fall in sales of the category.

Cardiovascular and urogenital

2013 (£2,239 million; down 8%)

Sales in the category fell 8% as a result of the impact of the conclusion of the Vesicare co-promotion agreement in Q1 2012.  Excluding Vesicare, sales declined 1%.

The Avodart franchise grew 10% to £857 million with 31% growth in sales of Duodart/Jalyn.  Avodart sales grew 5% to £648 million.

Lovaza fell 5% to £584 million as a result of increased competition and the decline in the non-statin dyslipidemia prescription market.  Arixtra sales fell 15% to £167 million.

Q4 2013 (£548 million; down 2%)

The 2% decline in the category was primarily driven by sales of Lovaza, down 5% to £140 million, as a result of increased competition and a market decline in the US and Arixtra, down 36% to £33 million.  The Avodart franchise grew 13%, with strong growth in Europe, EMAP and Japan.

Metabolic

2013 (£174 million; up 10%)

The increase in Metabolic product sales primarily reflected higher sales of Prolia in Europe and EMAP.

Q4 2013 (£43 million; up 2%)

The increase in Metabolic product sales in the quarter also reflected higher sales of Prolia in Europe and EMAP.

Anti-bacterials

2013 (£1,239 million; flat)

Augmentin sales grew 5% to £630 million with strong growth in EMAP, reflecting, in part, a comparison with some supply interruptions in 2012.  Zinacef sales fell 14% to £55 million.

Q4 2013 (£309 million; down 5%)

Augmentin sales grew 3% to £165 million as growth in EMAP offset a fall in Europe.

Oncology and emesis

2013 (£969 million; up 22%)

Oncology and emesis sales grew 22% to £969 million, marking the second consecutive year of double digit percentage growth for the business.  US sales were up 17% with strong performances by Votrient, Promacta and Arzerra, but also contributions from the launches of two new metastatic melanoma products Tafinlar and Mekinist.  Sales in Europe grew 28% and EMAP grew 18%.  Votrient sales grew 80% to £331 million, Promacta sales grew 46% to £186 million and Arzerra sales grew 23% to £75 million.  Tykerb/Tyverb sales fell 13% to £207 million due to increased competition.  Both Hycamtin in Europe and EMAP and Argatroban in the US continued to be adversely affected by generic competition.

In the US sales growth of 17% reflects continued strong growth contributions from Votrient (up 56% to £144 million) and Promacta (up 33% to £73 million), which benefited from a new indication for thrombocytopenia associated with Hepatitis C received during Q4 2012.  Arzerra grew 18% to £46 million.  The US performance also reflects contributions totalling £21 million from Tafinlar and Mekinist, which were both launched in Q2 2013 as monotherapy treatments and achieved strong uptake in the BRAF V600 melanoma market during the first few months on the market.  In January 2014, Tafinlar and Mekinist were approved by the FDA for combination use.

In Europe, sales grew 28% to £339 million, led by sales of Votrient, which increased by 91% to £130 million, as it continued to build market share in many markets.  Revolade received approval in Europe for use in thrombocytopenia associated with Hepatitis C at the end of Q3 2013 and sales in the year increased by 47% to £55 million.  Tafinlar was launched in Q3 2013 in certain markets and has achieved strong uptake in these early launch markets.

EMAP sales grew 18% to £149 million led by strong growth of Votrient (up 77% to £37 million) and Promacta (up 92% to £22 million).  In the region Tykerb was down 9% to £47 million, and Hycamtin was down 36% to £7 million.

Q4 2013 (£266 million; up 24%)

In the quarter, Oncology sales were £266 million, up 24%.  US sales were £102 million, up 21%, Europe sales were £89 million, up 26% and EMAP sales were £46 million, up 22%.

Votrient, up 48% to £90 million, and Promacta, up 42% to £52 million, continued to drive the growth in Oncology.  Tafinlar and Mekinist sales also contributed to this positive result.  Tykerb/Tyverb sales fell 18% to £49 million as a result of increased competition.  Both Hycamtin in Europe and Argatroban in the US continued to be adversely affected by generic competition.

Dermatology

2013 (£770 million; down 8%)

Sales declined 8% to £770 million, primarily as a result of the decline in the US, down 40% to £140 million, which continued to suffer from the impact of generic competition, particularly to Bactroban, Duac and Soriatane, together with the effect of the disposal of a number of tail brands in Q2 2013.  EMAP sales grew 6% to £397 million, reflecting strong growth in Bactroban, Dermovate and Duac particularly in Middle East/Africa and Latin America.  European sales grew 5% to £170 million.

Q4 2013 (£171 million; down 19%)

Sales declined 19% to £171 million, principally driven by the impact of generic competition, together with the effect of the disposal of a number of tail brands in Q2 2013 in the US, down 66% to £21 million.  European sales fell 4% to £42 million and EMAP sales fell 1% to £93 million.

Rare diseases

2013 (£495 million; up 7%)

Volibris, up 21% to £147 million, and Mepron, up 8% to £101 million, were the main drivers of the 7% growth in the category.  Flolan sales fell 16% to £103 million, primarily as a result of the biennial price reduction in Japan in Q2 2012 and continued generic competition in the US and Europe.

Q4 2013 (£130 million; down 1%)

Flolan sales fell 21% to £23 million, largely as a result of continued generic competition in the US and Europe, and Mepron sales fell 19% to £25 million.  Volibris partially offset these declines, with growth of 23% to £40 million, led by a strong performance in Japan.

Immuno-inflammation

2013 (£161 million; up >100%)

Benlysta turnover in the year was £146 million, with £134 million in the US.  Total in-market sales of Benlysta in the US in 2012 were £96 million.

Q4 2013 (£46 million; up 59%)

Benlysta sales were £37 million, up 28%.  In the US, Benlysta sales in the quarter were £33 million, up 26%.

ViiV Healthcare (HIV)

2013 (£1,386 million; flat)

ViiV Healthcare sales of £1,386 million were flat as sales in the US were up 5%, Europe down 3% and EMAP down 12%.  Epzicom/Kivexa sales increased 14% to £763 million and Selzentry was up 10% to £143 million.  Tivicay recorded sales of £19 million from the early stages of its launch in the US, which started in August 2013.  Tivicay was approved in Europe in January 2014 and launches are planned in several markets throughout 2014.  Growth contributions within this business were offset by declines in the mature portion of the portfolio, mainly Combivir, down 36% to £116 million.

Q4 2013 (£385 million; up 15%)

ViiV Healthcare sales increased 15%, with the US up 30%, including a favourable adjustment to US accruals for returns and rebates, Europe up 1%, and EMAP up 7%.  Sales growth in Epzicom/Kivexa, up 28% to £211 million, and the newly-launched Tivicay, with sales of £15 million, were partially offset by declines in the mature portfolio.

Vaccines sales