1st Quarter Results

Group performance

Group turnover by division, geographic region and segment

Turnover - Q1 2014

As previously announced, GSK is reporting core results performance for 2014 measured against 2013 core results excluding the results attributable to divestments completed during 2013.  On this basis, Group turnover for Q1 2014 declined 2% to £5,613 million.  Total Pharmaceuticals and Vaccines turnover fell by 3%, excluding 2013 divestments.  Pharmaceuticals turnover fell 4% as growth in Emerging Markets, Japan and Europe was more than offset by lower sales in the US and a decline in Established Products sales.  Worldwide Vaccines turnover grew 3%, as strong performances in the US and Europe were partly offset by lower reported sales in Emerging Markets and Japan.  Consumer Healthcare turnover was flat at £1,127 million in the quarter.

In the US, Pharmaceuticals and Vaccines turnover fell 10% to £1,130 million, with Pharmaceuticals down 15% and Vaccines up 25%.  Pharmaceutical sales in the quarter were impacted by destocking from wholesalers and retailers, including, as expected, the unwinding of the stock builds seen in the prior quarter.  This, in aggregate, is estimated to have reduced reported growth by approximately 7 percentage points.  Continued price and contracting competitor activity also particularly affected the ICS/LABA market where Advair competes and Breo has been recently introduced.  Excluding destocking, underlying US respiratory sales were down 11% as a result, with price after net favourable adjustments to accruals for returns and rebates up 2% and volume down 13%.  Underlying Advair sales were down 20%, reflecting a 13% decline in volume, including the impact of contracting changes in the quarter, and a 7% decline from price and mix.

Oncology products contributed strongly to the quarter, with sales up 31% to £108 million, benefiting from strong performances from Votrient and Promacta, and the recent launches of Tafinlar and Mekinist.  Benlysta sales grew 33%.  Generic competition in the US continued to impact sales of Dermatology products, which declined 58% to £13 million.  The 25% increase in Vaccines sales primarily resulted from doubled sales of Infanrix/Pediarix to £71 million, which benefited from a favourable comparison with Q1 2013 as a result of CDC stockpile movements.

Europe Pharmaceuticals and Vaccines turnover grew 3% to £1,024 million, reflecting the recent restructuring and refocusing of the business.  Pharmaceutical sales grew 2% to £784 million, primarily reflecting strong growth in Oncology, up 23% to £95 million, led by Votrient and Promacta, together with the initial stages of the Tafinlar launch.  Sales of the Avodart franchise increased 9% to £71 million.  Seretide declined 3% to £352 million, with volumes down 1% and adverse price and mix movements of 2%.  Vaccines sales grew 3%, in part due to tender shipments of Rotarix during the quarter, and a strong performance in Germany.

Emerging Markets Pharmaceuticals and Vaccines turnover increased 2% to £691 million, with Pharmaceuticals up 7% and Vaccines down 8%, primarily reflecting the phasing of tender sales of Synflorix.  The ongoing investigation in China adversely impacted Emerging Markets Pharmaceuticals and Vaccines sales growth by two percentage points.  In China, sales excluding Established Products were down 13% to £64 million (including Established Products, down 20% to £137 million).  However, elsewhere there were strong contributions from Brazil, up 12% to £58 million and the remainder of Latin America, up 18% to £142 million.  In Emerging Markets Pharmaceuticals there was continued growth from Respiratory products, up 3% (up 7% excluding China), Oncology, up 35% and the Avodart franchise, up 29%.

Japan Pharmaceuticals and Vaccines turnover grew 13% to £285 million, with Pharmaceuticals sales increasing 15% and Vaccines sales declining by 45%.  The growth in Pharmaceuticals benefited from the government stockpiling of Relenza, with sales more than doubling, and also strong growth in both Adoair, up 29%, and Avodart, up 52%, in part due to wholesaler stocking prior to a local tax increase.  This growth was partially offset by lower sales in the rest of the Respiratory portfolio, which was affected by a weaker allergy season.  The decline in Vaccines sales reflected the impact on Cervarix of the continued suspension of the recommendation for use of HPV vaccines.

ViiV Healthcare turnover grew 4% to £311 million as the growth generated by Epzicom and the recent launch of Tivicay more than offset the impact of generic competition to older ViiV Healthcare products, including Combivir and Trizivir.

Established Products turnover fell 11% to £814 million principally reflecting lower sales of Lovaza, down 25%, and continuing generic competition to a number of products across the portfolio, including Seroxat/Paxil, down 15%, and Malarone, down 34%.

Consumer Healthcare turnover was £1,127 million in the quarter, flat compared with Q1 2013.  Growth in Rest of World markets of 6% was offset by lower sales in the US, down 10%, and Europe, down 4%, which were both impacted by temporary supply issues, primarily in the Wellness category.

Total Group turnover for Q1 2014 compared with Q1 2013 including divestments completed in 2013 was down 6%, with Pharmaceuticals and Vaccines down 5% and Consumer Healthcare down 9%.

Divisional performance

Pharmaceuticals

Respiratory

Q1 2014 (£1,554 million; down 11%)

Respiratory sales in the quarter declined 11% to £1,554 million.  Seretide/Advair sales were down 15% to £1,039 million, Flixotide/Flovent sales decreased 2% to £193 million and Ventolin sales grew 15% to £173 million. Xyzal sales, almost exclusively made in Japan, fell 13% to £38 million.

In the US, Respiratory sales fell 20%, primarily reflecting the continued price and contracting competitor activity which particularly affected the ICS/LABA combination market, where Advair competes, and Breo has been recently introduced.  Underlying US respiratory sales were down 11%, with price, after net favourable adjustments to accruals for returns and rebates, up 2% and volume down 13%.  Advair sales were down 30% to £455 million, with an estimated underlying reduction of 20% for the quarter (13% volume decline and a 7% negative impact of price and mix).  Flovent sales were up 2% to £123 million, compared with an estimated underlying reduction of 4% for the quarter (10% volume decrease and a 6% positive impact of price and mix) and Ventolin grew 29% to £92 million, but the estimated underlying reduction was 4%, primarily due to reduced volumes.  Breo Ellipta for COPD was launched in Q4 2013 and sold £1 million in this quarter.

European Respiratory sales were down 3%, primarily reflecting increasing competition.  Seretide volumes were down 1% and continued pricing/mix pressures of 2% led to a sales decline of 3% to £352 million.  Relvar Ellipta was approved in Europe for both COPD and asthma and launched in Q1 2014, recording sales of £2 million in the quarter.

Respiratory sales in Emerging Markets grew 3% despite a 12% decline in China.  Seretide grew 4% to £97 million (5% excluding China) and Veramyst grew 25% to £17 million.  Ventolin sales increased 7% to £38 million.

In Japan, Respiratory sales overall fell 3% to £148 million despite strong growth in Adoair, up 29%, partly driven by wholesaler stocking prior to a local tax increase in April.  This growth was more than offset by lower sales for the rest of the Respiratory portfolio, principally Xyzal, Veramyst and Zyrtec, which were affected by a weaker allergy season.

Oncology

Q1 2014 (£261 million; up 27%)

Oncology sales in the quarter grew 27% to £261 million.  Votrient sales grew 31% to £87 million and Promacta sales grew 30% to £48 million.  Arzerra sales fell 24% to £16 million and Tykerb/Tyverb sales fell 13% to £42 million.  Generic competition to both Hycamtin and Argatroban was more than offset by new launches as Tafinlar and Mekinist recorded sales of £22 million and £13 million, respectively.

In the US, Oncology grew 31% to £108 million.  Votrient sales grew 18% to £37 million and sales of Promacta grew 19% to £18 million.  Mekinist and Tafinlar sales were £13 million and £11 million, respectively.  Both were launched in late Q2 2013.

In Europe, Oncology grew 23% to £95 million, led by sales of Votrient, which increased by 42% to £37 million in the period.  Promacta grew 45% to £16 million and sales of Tafinlar, which was launched in Q3 2013, were £10 million.

Cardiovascular, metabolic and urology

Q1 2014 (£241 million; up 4%)

Sales in the category grew 4% to £241 million.  The Avodart franchise grew 7% to £199 million, with 21% growth in sales of Duodart/Jalyn and 3% growth in sales of Avodart.  Sales of Prolia grew 70% to £16 million.  Levitra fell 26% to £24 million in the period.

On a regional basis, the main drivers of growth were Japan, up 52% to £31 million, Europe, up 14% to £81 million and Emerging Markets, up 29% to £33 million, partly offset by sales in the US, down 19% to £83 million.

Immuno-inflammation

Q1 2014 (£46 million; up 69%)

Immuno-inflammation sales grew 69% to £46 million.  Benlysta turnover in the quarter was £38 million, up 38%.  In the US, Benlysta sales were £34 million, up 33%.

Other pharmaceuticals

Q1 2014 (£601 million; up 7%)

Other therapy areas grew 7% to £601 million, principally reflecting government stockpiling of Relenza in Japan, which more than doubled to £40 million.  This growth was partially offset by a decline in sales of Augmentin, and by generic competition to Dermatology products, which primarily affected sales of Soriatane in the US.

ViiV Healthcare (HIV)

Q1 2014 (£311 million; up 4%)

ViiV Healthcare sales increased 4%, with the US up 3%, Emerging Markets up 22%, Japan up 28%, and Europe down 2%.  Epzicom/Kivexa sales increased 12% to £177 million and Tivicay, which was launched in the US in Q3 2013 and in Europe in Q1 2014, recorded sales of £31 million.  This growth was partially offset by sales of Selzentry, down 5% to £33 million, and by declines in the mature portfolio, mainly driven by generic competition to both Combivir, down 48% to £16 million, and Trizivir, down 54% to £11 million.

Established Products

Q1 2014 (£814 million; down 11%)

Established Products turnover fell 11% to £814 million with declines in all regions.  Sales in the US were down 17% to £256 million, Europe was down 12% to £167 million, Emerging Markets was down 7% to £264 million, and Japan was down 2% to £116 million. 

Sales of Lovaza fell 25% to £105 million, in part reflecting a decline in the market.  A generic competitor product was approved and launched in April 2014.  Generic competition to Seroxat/Paxil, down 15% to £55 million, and Malarone, down 34% to £16 million, also contributed to the decline in the category.

Vaccines