GSK achieves excellent performance across Vaccines, Specialty and General Medicine

GSK plc (LON:GSK) has announced its 1st quarter results.

Q1 2023 performance highlights:

· Sales performance reflected lower COVID-19 solutions sales versus Q1 2022. Excluding COVID-19 solutions, sales grew +10% CER with strong performance across Vaccines, Specialty and General Medicines

· Key growth drivers included Shingrix for shingles, meningitis vaccines, oral two-drug regimen and long-acting HIV medicines, Benlysta in immunology, Nucala and Trelegy in respiratory, which combined contributed more than 40% of sales

· Total operating profit and total EPS performance reflected the comparison to Q1 2022 which included the one-off income benefit of the Gilead settlement and higher Xevudy sales

· Adjusted operating profit was stable at CER, predominately reflecting a 5% adverse impact following expected lower COVID-19 solutions sales and 4% from legal provisions primarily relating to royalties

· Adjusted EPS increased +7% CER due to lower non-controlling interests, a lower effective tax rate, and strong sales growth excluding lower COVID-19 solutions (which impacted performance by 7%)

· Cash generated from operations £0.3 billion; free cash outflow (£0.7) billion lower than Q1 2022 primarily due to Gilead settlement income received in Q1 2022 and timing of profit share payments

· Full-year 2023 guidance affirmed. Dividend of 14p declared for Q1 2023. 56.5p expected for the full-year 2023

(Financial Performance – Q1 2023 results unless otherwise stated, growth % and commentary at CER)

R&D delivery and targeted business development support future growth

· Innovative pipeline of 68 vaccines and specialty medicines based on the science of immune system with 17 in Phase III/registration; four anticipated 2023 approvals (daprodustat in anaemia due to chronic kidney disease, RSV older adults vaccine, momelotinib in myelofibrosis and Jemperli in first-line endometrial cancer)

· Four positive phase III/IV data readouts in Q1 2023, including pentavalent Meningitis ABCWY vaccine candidate; gepotidacin for uncomplicated urinary tract infections; Jemperli for first-line endometrial cancer and Cabenuva for HIV treatment

· Proposed acquisition of Bellus Health – provides access to camlipixant, potential best-in-class and highly selective P2X3 antagonist currently in phase III development for treatment of refractory chronic cough; exclusive license agreement signed with Scynexis for Brexafemme, a US FDA approved, first-in-class antifungal for treatment of vulvovaginal candidiasis

Emma Walmsley, Chief Executive Officer, GSK:

“We have made a strong start to 2023, with excellent performance across Vaccines, Specialty and General Medicines. We are very focused on our upcoming launches, including our potential RSV older adult vaccine, and on continuing to strengthen our pipeline – both organically with several positive late-stage read-outs already this year, and through targeted business development. This continued momentum is also supporting our confidence in delivering our medium and long-term growth ambitions.”

2023 guidance

The Company affirms its full-year 2023 guidance at constant exchange rates (CER). All expectations and full-year growth rates exclude any contributions from COVID-19 solutions:

Turnover is expected to increase between 6 to 8 per cent

Adjusted operating profit is expected to increase between 10 to 12 per cent

Adjusted earnings per share is expected to increase between 12 to 15 per cent

Taking Q1 2023 performance and the latest expectations for Q2 2023 into account, GSK now expects first half and second half turnover growth to be broadly similar and for General Medicines to be broadly flat to slightly down this year. GSK expects Adjusted operating profit growth to be lower in the first half of 2023 and higher in the second half, relative to full-year expectations.

Despite the recovery of healthcare systems, uncertain economic conditions prevail across many markets in which GSK operates and we continue to expect to see variability in performance between quarters.

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

Specialty Medicines – expected increase of mid to high single-digit per cent in turnover

General Medicines – expected to be broadly flat to slightly down

Adjusted Operating profit is expected to grow between 10 to 12 per cent at CER reflecting Cost of sales and R&D increasing at a rate slightly below turnover, while SG&A is anticipated to increase at a rate broadly aligned to turnover, reflecting targeted support for launches and potential launches including the RSV older adult candidate vaccine. Adjusted earnings per share is expected to increase between 12 to 15 per cent at CER reflecting favourable net finance costs and non-controlling interests plus an expected lower tax rate, at around 15%.

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 30.

COVID-19 solutions

In Q1 2023, turnover decreased by 8% at CER reflecting the comparison to Q1 2022, which included £1,307 million of COVID-19 solutions sales in the period. Excluding COVID-19 solutions, turnover increased by 10% at CER. In Q1 2023, Adjusted Operating profit was stable at CER reflecting a 5% adverse impact from expected lower COVID-19 solutions sales. Based on known binding agreements with governments, GSK does not anticipate further significant COVID-19 pandemic-related sales or operating profit in 2023. Consequently, the Company now expects full-year 2023 turnover growth to be impacted by approximately 9%, with Adjusted Operating profit growth being reduced between 5% to 6% 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 pages 45 and 46. If exchange rates were to hold at the closing rates on 31 March 2023 ($1.24/£1, €1.14/£1 and Yen 165/£1) for the rest of 2023, the estimated impact on 2023 Sterling turnover growth for GSK would be stable 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 -1%.

Results presentation

A conference call and webcast for investors and analysts of the quarterly results will be hosted by Emma Walmsley, CEO, at 12pm GMT on 26 April 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.