Glaxosmithkline Regulatory News (GSK)

Issued: 30 March 2020, London, UK - LSE Announcement

GSK publishes Consumer Healthcare product sales category reporting changes

GSK keeps its financial reporting under regular review to ensure that it remains current and in line with both the latest regulatory requirements and developing best practice within the Pharmaceutical industry.

Consumer Healthcare product sales categories updated

Following the closing of the transaction that combined the assets of the legacy GSK Consumer Healthcare business with Pfizer consumer healthcare on 31 July 2019, GSK completed a review of the segment sales disclosures applicable to the new Consumer Healthcare Joint Venture business. A revised and more detailed disclosure of category sales will provide greater transparency to the main drivers of the Consumer Healthcare Joint Venture's performance.

Previously reported Nutrition and Skin health categories will no longer be used as a result of GSK's focus in the portfolio on core categories via targeted divestments. Nutrition, Skin health and the category previously called "Wellness" will be replaced by four more specific categories structured around GSK's global power brand1 portfolio and closely aligned to consumer healthcare industry standard definitions:

· Oral health (unchanged) includes the power brands Sensodyne, Parodontax and the Denture care franchise comprising approximately 85%2 of category sales. GSK leads the therapeutic Oral health segment globally3.

· Pain relief includes the power brands Voltaren, Panadol and Advil comprising 86%2 of category sales with an additional 11% of sales from leading regional brands ('local stars'). GSK holds the global #1 position in this category4.

· Respiratory health includes cold & flu, allergy and cough brands. Combined power brands (Theraflu and Otrivin) and 'local star' brands comprise over 70%2 of category sales. GSK holds the global #1 position in this category4.

· Vitamins, minerals and supplements includes power brand Centrum and 'local stars' Caltrate and Emergen-C as well as smaller brands that were previously reported in the Nutrition category. Power brands and 'local stars' comprise over 70%2 of category sales and GSK holds the global #1 position in this category4.

· Digestive health and other includes 'local star' Digestive health brands Tums, Nexium and Eno; the OTC Smokers' health franchise; small dermatology brands previously reported in Skin health; and any other products not reported elsewhere.

· Brands divested and under review includes those brands that have been divested but remain in the comparative sales disclosures for 2019 and earlier years; previously announced divestments including the sale of the Horlicks and other family nutrition brands in India and certain other markets to Hindustan Unilever Ltd; and brands under review as part of the divestment programme announced at the time of the formation of the joint venture with Pfizer.

The revised Consumer Healthcare turnover tables below set out the new format for reporting Consumer Healthcare product sales that will be used beginning with the Q1 2020 Results Announcement and applied to the 2019 reported and pro forma Consumer Healthcare product sales.

An Excel version of this data is available on www.gsk.com.

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1 GSK Consumer Healthcare has a portfolio of nine global power brands and fifteen leading regional ('local star') brands comprising over 70%2 of total sales excluding brands divested and under review.

2 Percentages are estimated based on 2019 sales of legacy GSK and Pfizer consumer healthcare brands.

3 GSK analysis based on Nielsen, IRI and Euromonitor data.

4 Nicholas Hall's DB6 Consumer Healthcare database 2018.

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Brand names

Brand names appearing in italics throughout this document are trademarks of GSK or associated companies or used under licence by the Group.

This Announcement does not constitute statutory accounts of the Group within the meaning of sections 434(3) and 435(3) of the Companies Act 2006. The information for 2019 and 2018 has been derived from the full Group accounts published in the Annual Report 2019.

CER growth

In order to illustrate underlying performance, it is the Group's practice to discuss its results in terms of constant exchange rate (CER) growth. This represents growth calculated as if the exchange rates used to determine the results of overseas companies in Sterling had remained unchanged from those used in the comparative period.

Pro-forma growth

The acquisition of the Pfizer consumer healthcare business completed on 31 July 2019 and so GSK's reported results for 2019 include five months of results of the former Pfizer consumer healthcare business from 1 August 2019.

The Group has presented pro-forma growth rates at CER for turnover taking account of this transaction. Pro-forma growth rates are calculated for comparing reported results for the periods from 1 August 2019, calculated applying the exchange rates used in the comparative period, with the results for periods from 1 August 2018 adjusted to include the equivalent results of the former Pfizer consumer healthcare business during 2018, as consolidated (in US$) and included in Pfizer's US GAAP results.

Cautionary statement regarding pro-forma growth rates

The pro-forma growth rates at CER in the press release have been provided to illustrate the position in Q3 2019, nine months 2019, Q4 2019 and year-ended 31 December 2019 relative to the position in Q3 2018, nine months 2018, Q4 2018 and year-ended 31 December 2018 as if, for the purposes of the Q3 2018, nine months 2018, Q4 2018 and year-ended 31 December 2018, the acquisition of the Pfizer consumer healthcare business had taken place as at 31 July 2018. Accordingly, two months of results of the former Pfizer consumer healthcare business were included in Q3 2018 and nine months 2018, three months of results of the Pfizer consumer healthcare business were included in Q4 2018 and five months of results of the former Pfizer consumer healthcare business were included in the year-ended 31 December 2018. The results of the former Pfizer consumer healthcare business included for Q3 2018, nine months 2018, Q4 2018 and year-ended 31 December 2018 are as consolidated (in US$) and included in Pfizer's US GAAP results. The results for Q3 2019, nine months 2019, Q4 2019 and the year-ended 31 December 2019 used to calculate the pro-forma growth rates are as reported at CER.

The pro forma growth rates have been provided for illustrative purposes only and, by their nature, address a hypothetical situation and therefore do not represent the Group's actual growth rates. The pro-forma growth rates do not purport to represent what the Group's results of operations would have actually been if the Pfizer acquisition had been completed on the date indicated, nor do they purport to represent the results of operations at any future date. In addition, the pro-forma growth rates do not reflect the effect of anticipated synergies and efficiencies or accounting and reporting differences associated with the acquisition of the Pfizer consumer healthcare business.

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Revised format for reporting Consumer Healthcare product sales

The revised format for the reporting of Consumer Healthcare product sales applied to the 2019 quarterly and 2018 full year Consumer Healthcare sales is as follows:

2019

Reported

Pro-forma

£m

Growth

Growth

Growth

£%

CER%

CER%

Oral health

2,673

7 

7 

7 

Pain relief

1,781

24 

24 

4 

Respiratory health

1,186

9 

8 

(2)

Vitamins, minerals and supplements

611

>100

>100

(3)

Digestive health and other

1,646

15 

13 

- 

7,897

20 

20 

3 

Brands divested and under review

1,098

- 

(1)

(4)

8,995

17 

17 

2 

Q4 2019

Reported

Pro-forma

£m

Growth

Growth

Growth

£%

CER%

CER%

Oral health

651

4 

7 

7 

Pain relief

501

42 

45 

2 

Respiratory health

354

21 

22 

(3)

Vitamins, minerals and supplements

332

>100

>100

(7)

Digestive health and other

473

35 

38 

2 

2,311

41 

43 

1 

Brands divested and under review

260

(3)

- 

(10)

2,571

35 

37 

- 

Consumer Healthcare turnover - nine months ended 30 September 2019

9 months 2019

Reported

Pro-forma

£m

Growth

Growth

Growth

£%

CER%

CER%

Oral health

2,022

8 

6 

6 

Pain relief

1,280

18 

17 

5 

Respiratory health

832

5 

3 

(2)

Vitamins, minerals and supplements

279

>100

>100

2 

Digestive health and other

1,173

8 

5 

(1)

5,586

14 

12 

3 

Brands divested and under review

838

1 

(1)

(3)

6,424

12 

10 

2 

Q3 2019

Reported

Pro-forma

£m

Growth

Growth

Growth

£%

CER%

CER%

Oral health

709

14 

10 

10 

Pain relief

526

43 

40 

6 

Respiratory health

344

15 

12 

(1)

Vitamins, minerals and supplements

224

>100

>100

2 

Digestive health and other

425

20 

15 

(3)

2,228

33 

29 

4 

Brands divested and under review

298

8 

3 

(3)

2,526

30 

25 

3 

Consumer Healthcare turnover - six months ended 30 June 2019

6 months 2019

Reported

£m

Growth

Growth

£%

CER%

Oral health

1,313

5 

5 

Pain relief

754

5 

5 

Respiratory health

488

(1)

(3)

Vitamins, minerals and supplements

55

2 

4 

Digestive health and other

748

2 

1 

3,358

3 

3 

Brands divested and under review

540

(2)

(3)

3,898

2 

2 

Q2 2019

Reported

£m

Growth

Growth

£%

CER%

Oral health

651

7 

5 

Pain relief

383

11 

10 

Respiratory health

197

4 

2 

Vitamins, minerals and supplements

29

7 

11 

Digestive health and other

398

4 

2 

1,658

7 

5 

Brands divested and under review

259

(5)

(7)

1,917

5 

4 

Consumer Healthcare turnover - three months ended 31 March 2019

3 months 2019

Reported

£m

Growth

Growth

£%

CER%

Oral health

662

4 

4 

Pain relief

371

(1)

- 

Respiratory health

291

(5)

(5)

Vitamins, minerals and supplements

26

(4)

(4)

Digestive health and other

350

- 

- 

1,700

- 

- 

Brands divested and under review

281

- 

1 

1,981

- 

1 

2018

£m

Oral health

2,496

Pain relief

1,440

Respiratory health

1,085

Vitamins, minerals and supplements

103

Digestive health and other

1,435

6,559

Brands divested and under review

1,099

7,658