Chairman's and CEO's statement

We knew 2004 would be a challenging year for GSK and we are pleased to report that we have achieved our financial and business objectives

In our last Annual Review, we predicted that 2004 would be a challenging year as we felt the full impact of generic competition to Paxil and the introduction of generic Wellbutrin. GSK managed this year well, thanks to the underlying strength of the business. In fact, GSK is a much stronger company today than it was a year ago.

Our broad-based portfolio of fast-growing products and continued focus on controlling costs enabled us to absorb the loss of more than £1.5 billion of business to generics and still achieve a 1% increase in global pharmaceutical sales. Turnover of £20 billion grew 1% at constant exchange rates (CER), and we achieved our guidance of earnings per share (EPS) at least in line with business performance EPS in 2003 (at CER). Our EPS grew 2% to 75p in 2004.

In 2005, we expect to see faster growth with an EPS percentage CER growth in the low double-digit range on an International Financial Reporting Standards (IFRS) basis. This is being driven by the strong growth of key products and continuing efficiencies in our operations. Our most exciting phase of growth will come when the new compounds and vaccines currently in development start contributing to our performance over the next few years.

GSK has one of the largest and most promising pipelines in the industry, with 140 projects in clinical development (as at the end of February 2005), including 88 New Chemical Entities (NCEs), 32 Product Line Extensions and 20 vaccines. Of these compounds, 43 NCEs have moved into Phase II trials, including compounds to treat HIV, diabetes, blood disorders and multiple sclerosis, and data on at least 15 of these are expected during 2005. In 2005, we also anticipate the launch of six new products, including Rotarix for rotavirus, Vesicare for overactive bladder, Boniva for osteoporosis, Avandaryl for diabetes, Requip for restless legs syndrome and Entereg for post-operative bowel disorders.

Our pipeline is focused on developing new medicines and vaccines to treat diseases of unmet medical need, such as cancer and Alzheimer's disease. Many of these have the potential to be important new products. For example, we believe that Cervarix, our promising vaccine candidate against cervical cancer, has the potential to make a major contribution to healthcare globally and to become our best-selling vaccine. We expect to file Cervarix in the European Union and international markets in 2006.

Great opportunities lie ahead of us. This year, we will work to ensure a greater understanding by key stakeholders of the value of innovative medicines. We will continue our contribution to finding a solution to the healthcare funding crisis, and we will seek new ways of improving access to our medicines for the people who need them most but are least able to pay for them. Our Corporate Responsibility Principles continue to guide the way we do business. A separate 2004 Corporate Responsibility Report explains progress against these Principles during the year.

Acknowledgements
We acknowledge with gratitude the contribution of Sir Christopher Hogg and Sir Peter Job, who retired from the Board at the end of 2004. Sir Christopher chaired GSK through a period that saw the Company derive the full benefits of the merger and meet the challenges caused by the loss of patent protection on major products.

John Coombe, Chief Financial Officer, will retire from the Board of GSK on 31 March 2005. John has served GSK and its predecessor companies in an exemplary manner for more than 18 years, playing a major role in guiding the Company through the post-merger period and establishing GSK as a leader within the global pharmaceutical industry.

We thank all three departing directors for their substantial contributions to GSK and wish them well for the future.

All percentage growth rates are at constant exchange rates (CER), unless otherwise stated. See 'Business operating review'.

Sir Christopher Gent,
Non-Executive Chairman

Jean-Pierre Garnier,
Chief Executive Officer