GSK delivers improvements in sales, margins and cash flow in 2017
Total EPS 31.4p, +67% AER, +36% CER; Adjusted EPS 111.8p, +11% AER,
2017 financial highlights
-- Turnover GBP30.2 billion, +8% AER, +3% CER
-- Sales growth across all 3 businesses: Pharmaceuticals GBP17.3
billion, +7% AER, +3%, CER; Vaccines GBP5.2 billion, +12% AER,
+6% CER; Consumer Healthcare GBP7.8 billion, +8% AER, +2% CER
-- Improved Adjusted Group operating margin of 28.4% (2016: 27.5%).
Pharmaceuticals 34.3%; Vaccines 31.9%; Consumer Healthcare 17.7%
-- Total EPS 31.4p, after accounting charges of GBP1.6 billion related
to US tax reform
-- Adjusted EPS 111.8p, +11% AER, +4% CER, in line with 2017 guidance
-- 2017 free cash flow of GBP3.4 billion (2016: GBP3.0 billion)
-- 23p dividend declared for quarter; 80p for 2017
2018 financial guidance
-- 2018 Adjusted EPS Guidance: Growth is subject to uncertainty
of timing and impact of possible generic competition to Advair
in the US:
- In the event of no substitutable generic competitor to Advair
in the US, expect 2018 Adjusted EPS growth to be 4 to 7% CER
- In the event of a mid-year introduction of a substitutable
generic competitor to Advair in the US, expect full year 2018
US Advair sales of around GBP750 million at CER (US$1.30/GBP1)
with Adjusted EPS flat to down 3% CER
- Both scenarios reflect the benefit of US tax reform with expected
2018 effective tax rate on Adjusted profits of 19-20%
-- Continue to expect 80p dividend for 2018
Product and pipeline highlights
-- New product sales of GBP6.7 billion, +51% AER, +44% CER, driven
by strong performances from Tivicay and Triumeq in HIV, the inhaled
Ellipta portfolio and Nucala in Respiratory and meningitis vaccines
-- Three key approvals: Shingrix vaccine for shingles; Trelegy Ellipta,
once-daily single inhaler triple therapy for COPD; Juluca (dolutegravir
and rilpivirine), first 2-drug regimen, once-daily, single pill
-- Preferential recommendation for Shingrix received from US CDC
-- Trelegy Ellipta approved in Europe for COPD
-- Nucala filed in US for eosinophilic COPD
-- Phase III HIV treatment study initiated investigating long-acting
2-drug regimen of cabotegravir plus rilpivirine administered
every two months
-- In Oncology, Breakthrough Therapy Designation received from FDA
for BCMA antibody-drug conjugate for relapsed and refractory
multiple myeloma. Positive BCMA data presented at ASH meeting
GSK's meningitis B vaccine Bexsero receives breakthrough therapy designation from FDA
GlaxoSmithKline's meningitis B vaccine Bexsero received breakthrough therapy designation from the US Food and Drug Administration for prevention of invasive meningococcal disease in children two to ten years of age. Bexsero is the first vaccine in the world to receive the breakthrough therapy designation (BTD) twice. In 2014, Bexsero received BTD for development in the prevention of invasive meningococcal disease in individuals 10-25 years of age and was subsequently granted Accelerated Approval in January 2015. GSK Vaccines Chief Scientist Rino Rappuoli said: 'This designation emphasises the importance of tackling big scientific challenges like meningitis B and breaking new ground in disease prevention through approaches like reverse vaccinology.' GSK Vaccines Chief Medical Officer Dr Thomas Breuer said: 'Thirty-five percent of all meningitis B cases in the US occur in children under 11 years old.' 'This designation is an important step forward in meningococcal prevention and extending the protection provided by this vaccine to a vulnerable age group in the US.' At 9:24am: (LON:GSK) GlaxoSmithKline PLC share price was +5.8p at 1248.6p Story provided by StockMarketWire.com
You're brave. I had already "topped up" at 1375 !!! my previous entry was at 1425 ! With an average of 1395 now, and a significant exposure to this stock. Looking at their book and their accounts I realised afterwards how leveraged it all is, they have negative NAV if you take out intangibles. And who exactly can price the intangibles...
An interview with Tristan Chapple, Aurora Investment Trust: -
"GlaxoSmithKline (LSE:GSK) continues to reshape itself, as a suite of pharmaceutical products replaces those of the past. Furthermore, the consumer healthcare division has similar characteristics to a branded fast-moving consumer goods business and serves a market with greater long-term demographics as consumers increasingly use the internet to educate themselves and self-medicate. The vaccines business has unusual, significant, and sustainable barriers to entry and hence pricing power."
Odd article, no mention of dividend-cliff or acknowledgment of SP fall over the last 12 months. Would be interesting to know how much of his clients' money Mr Chapple is speculating on Emma Walmsley's efforts?(!).
GlaxoSmithKline has received favorable rulings from European regulators regarding two separate treatments, one for shingles and the other for asthma. The European Medicines Agency's Committee for Medicinal Products for Human Use issued a positive opinion recommending marketing authorisation for Shingrix, a vaccine for the prevention of shingles. The treatment can also be applied to post-herpetic neuralgia, the most common and often painful shingles-related complication in adults aged 50 years or older. "Shingles is a painful and potentially serious condition," chief medical officer for GSK vaccines, Thomas Breuer, said. "The risk of developing shingles increases with age and it is estimated that around one-in-three people will develop shingles in their lifetime." A CHMP positive opinion is one of the final steps before marketing authorisation is granted by the European Commission. A final decision by the commission was anticipated in April 2018, GSK said. In a separate ruling, the CHMP also recommended a label update for the use of once-daily Relvar Ellipta, an inhaled corticosteroid for treating patients with asthma. "We are very excited about achieving this CHMP positive opinion which, if approved, provides an additional option for physicians, who can prescribe once-daily Relvar Ellipta for their asthma patients," GSK senior vice-president and global head of respiratory franchise Jonathan Sweeting said. GSK said a final decision on marketing authorisation was anticipated towards the end of the first quarter. At 1:16pm: (LON:GSK) GlaxoSmithKline PLC share price was +17.2p at 1352.2p Story provided by StockMarketWire.com
Ye - it seems pretty close to reality. The point missed was that the competition re Advair had some delays, so in reality it hasn't yet eperienced it as yet, as far as I know, so the impact could be about to start hitting in 2018.
Then there's the creative accounting highlighted in this article :-
"Dividend growth at Glaxo has ground to a halt in recent years. It has struggled to develop new lucrative products to counter the effect of its existing drug patents coming to an end and, as a result, has found it difficult to grow its profits and to generate enough cash to pay its dividend. This has weighed heavily on the share price - Glaxo shares changed hands for more than £17 last summer compared with just over £13.50 at the time of writing.
Profit growth looks as if it will remain hard to come by over the next couple of years as Advair, the company's top-selling respiratory drug, is now off-patent and faces a growing threat from cheap generic competition. Competitive threats to its HIV drugs also worry some analysts. The pressure is on new chief executive Emma Walmsley to turn things around and get more out of its research and development spending. Cost-cutting may free up some cash to maintain the dividend per share (DPS) at 80p in 2018 (giving a yield of 5.7%), but the future of the payout is less certain from 2019. Optimists point to the profits that could come from a shingles vaccine and the possibility that treatments for blood cancer could turn out well. But overall, Glaxo has to do more to reassure shareholders that their dividend payments are safe."
Per the HL website, in January 3 brokers are saying buy and 2 hold, whereas in December it was 2 hold and 1 underweight, so they have just turned a bit more bullish. In my book, not so good, the more bearish the better in my view. However, we are a long
way off everyone being bullish so not to worry.
I like to look at brokers views (as well as the amount the stock is being shorted). Big however. Having bought into GSK and showing a healthy profit - thus the brokers seem to be correct. With respect to IMB, which I am looking to buy, the broker are mostly promoting as a Buy but the share price continues to slide. So very mixed results.
Assuming outsiders are smarter than the people you've already got and hiring and firing accordingly has a very obvious flaw in that you are biased because you know the failings of your existing employees whereas you are only presented with a positive image of potential new recruits (take a look at the puffed up cvs on linkedin for anyone you know)
The cull sounds ridiculously excessive and might well be an exercise in corporate power politics.
As a shareholder- worrying .
It is an interesting link, but the qualitative statement below tells you "nothing" about the valuation of the company, it's financial status, it's portfolio patent risk, it's competitive threats. Rather a useless statement really -- like many trotted out by these articles :-
As one of the largest pharmaceutical companies, GlaxoSmithKline has used its vast resources to create the next generation of healthcare treatments. The company's innovative new product line-up and expansive list of patent-protected drugs create a wide economic moat, in equity analysts opinion.
The magnitude of the company's reach is evidenced by a product portfolio that spans several therapeutic classes, as well as vaccines and consumer goods. The diverse platform insulates the company from problems with any single product."
Hi - for those who haven't seen the broker forecast in 'News' :
'Deutsche Bank today reaffirms its hold investment rating on GlaxoSmithKline PLC (LON:GSK) and raised its price target to 1440p (from 1380p).'
"LONDON (Alliance News) - GlaxoSmithKline PLC's new boss Emma Walmsley has replaced 50 of the 125 top managers at the pharmaceutical giant in a move to shift the company's focus back towards making blockbuster drugs, the Daily Mail newspaper reported yesterday.
According to the newspaper, citing a source, Walmsley is seeking to bring in talent and ideas from world-leading firms to boost sales, development technologies and utilise new ways of using reams of clinical data.
High profile hires from outside include former Walmart Stores Inc Chief Information Officer Karenann Terrell, Google digital chief Marc Speichert, Unilever PLC executive Tamara Rogers and Novartis AG finance chief Tobias Hestler. Glaxo also has poached its Global Pharmaceuticals President Luke Miels from rival Astrazeneca PLC and appointed Tony Mills, from Pfizer Inc, as head of platform technology and science.
Walmsley has promoted internally, as well, with Kate Knobil going from chief medical officer of pharmaceuticals to chief of the entire group, the Daily Mail reported.
I do not know. I am looking at the FTSE / DJ being at their highest ever, and sort of remember summer 2008. I then look at my tiny portfolio and am thinking what's going to happen to these shares when 2008 repeats all over again ?
Almost forgot about the exchange rate effect with the appreciating £. The rest still holds good, however. I did add, in the end today, at 1370, but missed the low point the other week - but not many get it dead right.
Took some profits in RDSB today, not because I'm worried about them, but because I was way over-invested in them %-wise, and you never know what's around the corner - Macondo and all that jazz.
Added to my holding in LLOY, which should be yielding similarly to RDSB this coming year, and I was under-invested in them.
Looks as if I'm more or less in line with your "Ten stocks" list, Bill. Let's hope that we can crack a bottle of bubbly at year end. Actually, I'm only invested in ITV, MKS, GSK, and LLOY in your list.
GlaxoSmithKline executive issues warning as Liberal Democrats say cost of medicine imports has already jumped by £5m
Up to £70m will have to be diverted from developing new cancer drugs in order to prepare for the impact of Brexit, Britains biggest maker pharmaceuticals of has warned.
In a stark intervention over the extra costs being incurred, Phil Thomson, president of global affairs at GlaxoSmithKline (GSK), made clear that something approaching the figure would have to be spent whatever the outcome of trade talks.
In evidence to the Commons health select committee, he said he would rather be spending the money on the companys efforts to find new, life-saving cancer treatments.
He said the company estimated that 1,700 of its products would be directly affected by a chaotic Brexit, with new regulation processes, labs and approval systems costing somewhere between £60m and £70m.
Even if we have a smooth and orderly Brexit process, and we work through with a new [free trade agreement] or a new arrangement, there are going to be costs of that magnitude anyway, but they will probably be more phased, Thomson told the committee.
We will probably be able to reallocate some of those costs elsewhere. It may not be as significant as the contingency plan, but the reality is that we are already going to have to spend some of that.
All I would say to you is that we are going to do everything we can to minimise disruption.
Obviously, that money could though, be being put behind clinical trials, and I can tell you right now that we have a cancer portfolio we are trying to invest in, into which that money should be going, to develop the next generation of cancer medicines.
Phil Thomson, president of global affairs at GlaxoSmithKline says
That is something I will be honest with you that we are wrestling with internally inside GSK.
He added that under some scenarios, products that have been approved in the UK would need to be re-authorised for Europe. Of the products affected, the impact of the testing changes and the reregistration is about 13,000 packs that will have to be updated as a result of what we need to do, he said.
Some money was already being spent, he said. The timeline to implement the laboratories, at a minimum, takes 18 months so, we are already having to initiate cost as a result of this.
Sarah Wollaston, the Conservative chair of the health select committee, said it was her personal view that the UK should try to stay inside the European Medicines Agency, to ensure current regulation remained as simple as possible.
The Liberal Democrats said they had uncovered figures suggesting the cost of importing medicines had already jumped by £5m since the Brexit vote. Freedom of information data from 32 NHS trusts found they had spent an extra £1.2m due to the fall in the pound since the referendum the equivalent of an extra £5m across all 135 NHS trusts.
GSK has already announced it is preparing to build new drug testing facilities in Europe as part of contingency plans. The pharmaceutical industry as a whole has been warning about the impact on patients as a result of a chaotic Brexit.
Sheuli Porkess, from the Association of the British Pharmaceutical Industry, said: The way each company is approaching Brexit depends on their own individual circumstances, but weve already seen a number of companies make decisions about their future business.
These decisions are being taken at a cost to replicate important safety and quality assurance processes for medicines in the UK and the EU, and take time to implement.
The sheer scale and complexity of safely ensuring 45m packs of medicine make their way from the UK to Europe each month and over 37m packs coming the other way requires processes to be in place well before March 2019.
"Ah yes, the chart. I'm a very, very basic chartist - W formation, double-top, head and shoulders chap... it's certainly showing signs of a possible recovery in its fortunes. Here's how I see it, and I could be very wrong as I'm merely an old salt."
Lupo - thanks for the "in" to the Barrons piece, and for your own (IMHO better) analysis.
I'm an even more basic chartist, I think... where has it been in the past, both recent and further back, and then consider the question of whether 'tis more likely to recover past highs or test previous lows. Looking at the 5yr picture for GSK, there's a clear cyclical (and unusually symmetrical) £13-£17 range... it tells me that all else equal (it rarely is), we'll most likely see £17 again in due course - but also that another retrace back to £13 beyond that would hardly be shocking. Not an outlook to make anyone rich, but better to enter near £13 than near £17... if you feel you have to get involved at all...
Considering each part of your '5-point prognosis' carefully, I take no real issue with any of your inferences or assumptions. It's already too late for EW to cut the dividend and blame it on her inheritance... debt levels are fine and eminently serviceable, with no immediate threat to (strong) credit ratings. The only reason I can see for cutting - assuming that FCF does continue to improve as projected - is to make a bit more headroom in the balance sheet for "the big deal", but if they do take the plunge there, that's exactly when they'll need to cultivate shareholder loyalty and patience.
The Barrons piece is interesting enough but ultimately suffers from the typical flaw culturally inherent to much US analysis... for all the expertise and industrial wisdom, the valuation conclusion is ultimately predicated on a random and poorly supported target metric. In this case, a +40% projected total return based on 15x P/E by 2020... why not 10x? Why not 8x... or 18x for that matter? It makes all the difference... and then there's the question of which earnings figure is actually appropriate (before Games jumps in, resplendent in his finest Terry Smith cheerleader garb).
But FWIW, however thinly substantiated, I don't think they're a million miles away. And it betrays the current comfort, that you don't actually need much at all by way of SP appreciation to deliver very reasonable total returns, as long as the 6% divi yield is indeed defended, as I think it will be. EW will still want to actually grow the divi before the end of her tenure, but that could be tougher trick to pull off... she might think about curing cancer as an 'encore' (and for once - quite literally!!)
Ah yes, the chart. I'm a very, very basic chartist - W formation, double-top, head and shoulders chap.
Aside from that, it's certainly showing signs of a possible recovery in its fortunes. Here's how I see it, and I could be very wrong as I'm merely an old salt.
1. The Directors will, or da mn well should, do everything in their power to at least hold the dividend.
2. For a company of GSK's size, would reducing the dividend to 75 - 50% really make much difference to their growth ambitions?
3. Investors are looking for recovery stocks, and GSK fits reasonably well there.
4. The chart looks as if it's seen its low point.
5. With an ageing and increasingly wealthy (generally) global population, drugs and stuff has got to be a growth industry, and if EW and co are unable to take advantage of that situation, I'd be very surprised.
Guess whether Lupo's going to add to his holding tomorrow.
That's weird, it's the same as TS's. Tell you what, type in Barrons Glaxo in your browser and click on the link headed, "Glaxo: expect a speedy recovery - Barrons". That'll do it; although I expect most have already.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.