GSK : Q2 2023 results announcement

Results Summary	Research and	ESG	Total and	Financial	Auditors review
development	Adjusted results	information	report

Issued: Wednesday, 26 July 2023, London, U.K.

Press release

Second quarter 2023

Strong performance and momentum drive upgraded guidance

Sales and earnings growth delivered by key growth drivers

• Q2 2023 sales +4% and +11% ex COVID
• Vaccines sales +18%, +15% ex COVID with Shingrix +20%
• Specialty Medicines sales -7%, +12% ex COVID with HIV +12%
• General Medicines sales +8% with Trelegy +30%
• Strong sales growth of products launched since 2017 including in Vaccines and HIV contributing to step change in performance
• Total operating profit and Total continuing EPS >100% driven by strong operating performance and favourable movements in contingent consideration liabilities
• Adjusted operating profit +11% and Adjusted EPS +16% reflects strong sales ex COVID and higher royalty

income offset by increased investment in R&D and new product launches

(Financial Performance - Q2 2023 results unless otherwise stated, growth % and commentary at CER, ex COVID is excluding COVID-19 solutions as defined on page 54).

					Q2 2023					Year to Date
	£m		% AER		% CER		£m		% AER		% CER
Turnover	7,178	4	4	14,129	-	(2)
Turnover ex COVID-19 solutions	7,137	10	11	13,956	13	11
Total operating profit	2,141	98	>100	4,223	25	23
Total continuing EPS	40.1p	>100	>100		76.9p	40	39
Adjusted operating profit	2,170	8	11	4,262	8	6
Adjusted operating margin %	30.2%		1.3ppts		2.0ppts	30.2%		2.2ppts		2.3ppts
Adjusted EPS	38.8p	12	16		75.8p	13	12
Cash generated from operations	1,620	3			1,907	(52)

R&D innovation continued delivery of organic portfolio and targeted business development

• Arexvy, world's first RSV vaccine in older adults, approved in US and EU
• Shingrix approved, for shingles in at-risk adults aged 18 and over in Japan
• Positive phase III data for MenABCWY vaccine candidate presented at ESPID and supports filing in 2024
• US FDA Fast Track designation granted to gonorrhoea vaccine candidate
• CHMP positive opinion for long-acting treatment cabotegravir in HIV prevention
• Paediatric exclusivity granted for dolutegravir extends US LOE to April 2028
• Completion of Bellus Health acquisition adds camlipixant, a phase III asset for refractory chronic cough
• Next US FDA approval decisions include momelotinib (myelofibrosis) and Jemperli (1L endometrial cancer)
• Development decisions on key phase I/II assets before year end include: bepirovirsen (Hep B), mRNA influenza, CCL17 (pain), IL18 (atopic dermatitis) and therapeutic HSV

2023 guidance upgraded, Q2 2023 dividend of 14p declared, 56.5p expected for full year

• Turnover to increase 8-10% (from 6-8%)
• Adjusted operating profit growth 11-13% (from 10-12%)
• Adjusted EPS growth 14-17% (from 12-15%)

Guidance all at CER and excluding COVID-19 solutions.

Emma Walmsley, Chief Executive Officer, GSK:

"We have delivered another excellent quarter of performance, with strong sales and earnings growth, notably in HIV and Vaccines, and continued strengthening of the R&D pipeline and product portfolio. The approval of Arexvy, the world's first RSV vaccine, was an important milestone for us and is at the forefront of a next wave in vaccine innovation for GSK. Completion of the Bellus Health acquisition also strengthened our late-stage respiratory pipeline. Our momentum supports the upgrade we have made to our financial guidance for 2023 and further increases our confidence in delivering longer-term profitable growth for shareholders."

The Total results are presented in summary above and on page 7 and Adjusted results reconciliations are presented on pages 19, 20, 22 and 23. Adjusted results are a non-IFRS measure excluding discontinued operations and other adjustments that may be considered in addition to, but not as a substitute for, or superior to, information presented in accordance with IFRS. Adjusted results are defined on page 17 and £% or AER% growth, CER% growth, turnover excluding COVID-19 solutions and other non-IFRS measures are defined on page 54, COVID-19 solutions are defined on page 54. GSK provides guidance on an Adjusted results basis only, for the reasons set out on page 17. All expectations, guidance and targets regarding future performance and dividend payments should be read together with 'Guidance, assumptions and cautionary statements' on page 55.

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Results Summary	Research and	ESG	Total and	Financial	Auditors review
development	Adjusted results	information	report

Issued: Wednesday, 26 July 2023, London, U.K.

Press release

Second quarter 2023

2023 guidance

GSK revises its full year guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions.

During the first half of 2023, GSK exceeded its full-year guidance expectations with a strong performance. This was due to GSK's strong business momentum across all product areas but particularly in HIV, as well as in General Medicines. The strong allergy season and a favourable post-pandemic recovery in comparison to the first half of 2022 also contributed to the performance. As a result, GSK has upgraded its full-year 2023 guidance at constant exchange rates (CER), excluding any contributions from COVID-19 solutions:

Turnover is expected to increase between 8 to 10 per cent (from 6 to 8 per cent)

Adjusted operating profit is expected to increase between 11 to 13 per cent (from 10 to 12 per cent) Adjusted earnings per share is expected to increase between 14 to 17 per cent (from 12 to 15 per cent)

In the second half of 2023, GSK expects continued strong performance across all three product areas but with lower growth reflecting a tough comparison to the second half of 2022, particularly in HIV and General Medicines. GSK still expects Adjusted operating profit growth to be higher in the second half of 2023 relative to full-year expectations, with growth of investment reducing in the second half, particularly in the fourth quarter.

This guidance is supported by the following turnover expectations for full year 2023 at CER:

Vaccines	- expected increase of mid-teens per cent in turnover (unchanged)
Specialty Medicines	-	expected increase of high single-digit per cent in turnover (from mid to high single-
		digit increase)
General Medicines	-	expected increase of low single-digit per cent in turnover (from broadly flat to slightly
		down)

Adjusted Operating profit is now expected to grow between 11 to 13 per cent at CER (previously 10 to 12 per cent increase), reflecting higher sales and higher royalty income partially offset by cost of sales which is now expected to increase broadly in line with turnover, reflecting a greater contribution from General Medicines. SG&A is anticipated to increase at a rate broadly aligned to turnover, reflecting targeted support for launches and R&D continues to be expected to increase at a rate slightly below turnover. Adjusted earnings per share are now expected to increase between 14 to 17 per cent at CER, reflecting higher operating profit and more favourable net finance costs. Expectations for non-controlling interests and tax rate of around 15% are unchanged.

Additional commentary

Dividend policies and expected pay-out ratios remain unchanged for GSK. The future dividend policies and guidance regarding the expected dividend pay-out in 2023 for GSK are provided on page 36.

COVID-19 solutions

In Q2 2023, turnover increased by 4% at CER reflecting the comparison to Q2 2022. Excluding COVID-19 solutions, turnover increased by 11% at CER. The adverse impact of lower sales of COVID-19 solutions was one percentage point of growth in the quarter on Adjusted operating profit but increased the margin by 1.8 percentage points. GSK does not anticipate further significant COVID-19pandemic-related sales or operating profit in 2023. Consequently, GSK now expects full-year 2023 turnover growth to be impacted by approximately 8%, with Adjusted Operating profit growth being reduced between 4% to 5% versus the prior year.

All expectations, guidance and targets regarding future performance and dividend payments should be read together with 'Guidance, assumptions and cautionary statements' on page 55. If exchange rates were to hold at the closing rates on 30 Jun 2023 ($1.26/£1, €1.17/£1 and Yen 183/£1) for the rest of 2023, the estimated impact on 2023 Sterling turnover growth for GSK would be -2% and if exchange gains or losses were recognised at the same level as in 2022, the estimated impact on 2023 Sterling Adjusted Operating Profit growth for GSK would be -5%.

Results presentation

A conference call and webcast for investors and analysts of the quarterly results will be hosted by Emma Walmsley, CEO, at 12pm BST on 26 July 2023. Presentation materials will be published on www.gsk.com prior to the webcast and a transcript of the webcast will be published subsequently.

Notwithstanding the inclusion of weblinks, information available on the Company's website, or from non GSK sources, is not incorporated by reference into this Results Announcement.

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Results Summary	Research and	ESG			Total and		Financial		Auditors review
development		Adjusted results		information			report
Issued: Wednesday, 26 July 2023, London, U.K.
Press release
Second quarter 2023
Performance: turnover
Turnover							Q2 2023						Year to date
				Growth			Growth					Growth		Growth
		£m		AER%			CER%		£m			AER%		CER%
Shingles		880		20	20	1,713			20	16
Meningitis		266		13	13	546			22	19
Influenza		23		(28)	(28)	35			(30)	(28)
Established Vaccines		812		13	13	1,627			12	8
Vaccines excluding COVID-19
solutions		1,981		16	15	3,921			16	12
COVID-19 solutions: Pandemic
vaccines		41		-			-		142			-		-
Vaccines		2,022		18	18	4,063			20	16
HIV		1,580		13	12	3,048			18	14
Respiratory/Immunology and Other	792		16	16	1,393			16	13
Oncology		151		(2)	(3)	287			2	(1)
Specialty Medicines excluding
COVID-19 solutions		2,523		13	12	4,728			16	12
COVID-19 solutions: Xevudy	-		(100)			(100)		31			(98)		(98)
Specialty Medicines		2,523		(7)	(7)	4,759			(18)	(21)
Respiratory		1,792		9	9	3,559			12	10
Other General Medicines	841		(2)			4		1,748			2		6
General Medicines		2,633		5	8	5,307			8	8
Total		7,178		4			4		14,129			-		(2)
Total excluding COVID-19 solutions	7,137		10	11	13,956			13	11
By Region:
US		3,610		9	7	6,880			-	(5)
Europe		1,644		6	4	3,348			4	1
International		1,924		(7)			-		3,901			(3)		1
Total		7,178		4			4		14,129			-		(2)

Turnover excluding COVID-19 solutions is a non-IFRS measure defined on page 54 with the reconciliation to the IFRS measure Turnover included in the table above.

					£m		AER			CER				£m			AER		CER
	Total		Q2 23	2,022	18%		18%		YTD	4,063		20%	16%
Vaccines	Excluding COVID-19		Q2 23	1,981	16%		15%		YTD	3,921		16%	12%
	solutions

Double-digit growth for Vaccines in Q2 23 and YTD was driven by geographical expansion and market growth for Shingrix, favourable US Center for Disease Control (CDC) stockpile movements for Rotarix, and uptake in National Immunisation Programmes for Bexsero.

Shingles

Q2 23

880

20%

20%

YTD 1,713

20%

16%

Shingrix, a vaccine against herpes zoster (shingles), grew in Q2 23 and YTD in International and Europe reflecting geo-expansion and increased demand. Sales outside of the US in the quarter also include stocking for the UK national immunisation programme and channel inventory replenishment in China. US sales declined 10% in the quarter impacted by unfavourable wholesaler and distributor inventory movements plus lower non-retail demand partly offset by strong retail growth and pricing. The US cumulative immunisation rate grew from 30% at year end to 32% at the end of Q1 23 with vaccination in adults 65 and older boosted by co-pay removal in the Inflation Reduction Act. Shingrix is now available in 33 countries.

Meningitis

Q2 23

266

13%

13%

YTD

546

22%

19%

Building upon the momentum from Q1 23, Meningitis vaccines grew again in Q2 23 primarily driven by Bexsero, the vaccine against meningitis B, with higher sales in Europe mainly from inclusion in National Immunisation Programmes and in International due to increased private and public market demand. YTD sales benefitted from the initial stocking of Menveo liquid formulation and higher CDC purchases in the US as well as demand in anticipation of a Bexsero price increase in International in Q1 23.

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	Results Summary	Research and		ESG		Total and		Financial	Auditors review
	development			Adjusted results		information		report
Issued: Wednesday, 26 July 2023, London, U.K.
Press release
Second quarter 2023
				£m		AER	CER		£m	AER	CER
	Established Vaccines		Q2 23	812	13%	13%		YTD 1,627	12%	8%

Established Vaccines growth in Q2 23 was driven by Rotarix, benefitting from the favourable impacts of a US CDC stockpile borrow in 2022 and a replenishment in the current quarter. Cervarix, grew in Q2 23 in International and Europe reflecting higher demand and timing of deliveries. This is partly offset by Infanrix/Pediarix, due to the negative impact of a CDC stockpile borrow in the quarter and continued competitive pressure in the US. Outside of Q2 23 performance drivers, YTD turnover includes growth of Hepatitis vaccines resulting from continued travel market recovery in Europe and International and a decline on Synflorix, reflecting lower demand related to decreased birth cohorts and phasing of public market supply in International.

Specialty	Total	Q2 23	2,523	(7%)	(7%)	YTD	4,759	(18%)	(21%)
Excluding COVID-19
Medicines	Q2 23	2,523	13%	12%	YTD	4,728	16%	12%
solutions

In Q2 23 and YTD there were minimal sales of Xevudy contrasting with strong sales YTD 2022. Specialty Medicines growth excluding COVID-19 solutions reflects consistent performance in Q2 23 and YTD driven by HIV and Respiratory/Immunology and Other categories.

HIV

Q2 23 1,580

13%

12%

YTD 3,048

18%

14%

The performance of HIV benefitted from strong patient demand, driven by the Oral two-drug regimen (Oral 2DR) and Long-Acting medicines which contributed approximately eight percentage points of growth. Pricing favourability driven by the US contributed two percentage points of growth. YTD includes the majority of the inventory depletion now expected from the 2022 build.

Oral 2DR and Long-Acting

Q2 23

805

46%

44%

YTD 1,502

53%

47%

Oral 2DR (Dovato, Juluca) and Long-Acting medicines (Cabenuva, Apretude) sales growth continues and now represent 51% of the total HIV portfolio compared to 39% for Q2 22, driven by market share growth of 4 percentage points versus Q2 22. Long-Acting medicines sales in the quarter were £212 million, growing £128 million versus Q2 22 and £61 million versus Q1 23, with approximately three quarters of sales coming from patient switches from competitor products.

Respiratory/Immunology and Other Q2 23

792

16%

16%

YTD 1,393

16%

13%

This therapy area includes sales of Nucala and Benlysta plus Duvroq (Daprodustat) in Japan. Growth in Q2 23 exceeds YTD reflecting the impact of wholesaler inventory movements in US and International regions in Q1 23.

Nucala

Q2 23

424

16%

15%

YTD

771

16%

13%

Nucala is a IL-5 antagonist monoclonal antibody treatment for severe asthma, with additional indications including chronic rhinosinusitis with nasal polyps, eosinophilic granulomatosis with polyangiitis (EGPA) and hypereosinophilic syndrome (HES). Strong growth in all regions in Q2 23 reflected patient demand in severe eosinophilic asthma and for the new indications with ongoing launches. YTD growth is slightly lower due to impact of US inventory depletion in Q1 23 and an unfavourable prior period Return and Rebates (RAR) adjustment.

Benlysta

Q2 23

358

21%

19%

YTD

611

19%

15%

Benlysta, a monoclonal antibody treatment for Lupus, continues to show consistent growth representing strong demand in US and Europe alongside biological penetration and volume uptake in China and Japan. US growth in Q2 23 shows an acceleration following wholesaler inventory movements in Q1 23.

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Results Summary

Research and

ESG

Total and

Financial

Auditors review

development

Adjusted results

information

report

Issued: Wednesday, 26 July 2023, London, U.K.

Press release

Second quarter 2023

£m

AER

CER

£m

AER

CER

Oncology

Q2 23

151

(2%)

(3%)

YTD

287

2%

(1%)

In Q2 23 and YTD sales were impacted by the withdrawal of Blenrep from the US market in November 2022. Jemperli grew strongly in Q2 23, achieving £25 million sales driven by increasing new patient starts in the US, and is now available in 18 markets worldwide.

Zejula

Q2 23

117 (3%) (2%)

YTD

231

6%

4%

In the US, growth of the first line indication of Zejula, a PARP inhibitor treatment for ovarian cancer, was more than offset by reduction in use in second line following the update to prescribing information agreed with the FDA in Q4 2022. Zejula delivered strong sales growth in Europe and International markets in both Q2 23 and YTD.

General Medicines

Q2 23 2,633

5%

8%

YTD 5,307

8%

8%

Growth driven in Q2 23 and YTD by both Respiratory and Other General Medicines categories, with ongoing demand for Trelegy in all regions. YTD benefitted from a strong allergy season in Japan and continued post pandemic recovery of the antibiotic market in Europe and International regions.

Respiratory

Q2 23 1,792

9%

9%

YTD 3,559

12%

10%

Performance in Q2 23 and YTD reflects growth of Trelegy and the single inhaled triple therapy (SITT) class across all regions and of Anoro in Europe and International. YTD growth also includes the benefits of a strong allergy season in Japan. In Q2 23 and YTD favourable US prior period RAR adjustments to Seretide/Advair and Trelegy were offset by adverse adjustments to Relvar/Breo and Flixotide/Flovent.

Trelegy

Q2 23

611

31%

30%

YTD 1,076

33%

29%

Trelegy is the most prescribed SITT treatment for COPD and asthma. Trelegy grew in Q2 23 and YTD with strong performance across all regions, reflecting increased patient demand and growth of the SITT market. Favourable US prior period RAR adjustments contributed 7 percentage points of growth in Q2 23 and 3 percentage points YTD.

Seretide/Advair

Q2 23

322

23%

26%

YTD

661

17%

16%

Seretide/Advair is an ICS/LABA treatment for asthma and COPD. Growth in Q2 23 and YTD reflected targeted promotion in certain International markets and the benefit of favourable US prior period RAR adjustments which contributed 16 percentage points in Q2 23 and 14 percentage points YTD. Growth was partially offset by the ongoing impact of generic competition in Europe, US and certain International markets.

Other General Medicines

Q2 23

841

(2%)

4%

YTD 1,748

2%

6%

Growth in Q2 23 reflects ongoing post pandemic demand for anti-infectives in Europe and International, and certain third party manufacturing agreements. Ongoing generic competition continues to impact this product group in Q2 23 and YTD.

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