PHARMACEUTICALS
In the central nervous system therapy area, sales of GlaxoSmithKline’s leading product for depression and anxiety disorders, Seroxat/Paxil, were up 18 per cent in the USA. Paxil CR, launched in the USA in April, continues to gain acceptance due to its strong tolerability profile. International sales of Paxil grew 27 per cent led by continued strong growth in Japan, where the product was launched only two years ago. Sales of Wellbutrin, for depression, grew 42 per cent, reflecting increased physician awareness of the product’s outstanding efficacy and favourable side effect profile. Lamictal, for epilepsy, continued to grow across all regions. In January 2003, the US FDA approved the use of Lamictal for the treatment of partial seizures in paediatric patients aged two years and above.

In respiratory, GlaxoSmithKline continues to be the global leader with sales of its three key products – Seretide/Advair, Flixotide and Serevent – amounting to nearly £3 billion, up 25 per cent. Sales of Seretide/Advair grew 96 per cent and Advair is now the market leader in the US asthma market in new prescriptions after less than two years on the market. The Group expects European marketing authorisation within the next few months for the use of Seretide as a new treatment for Chronic Obstructive Pulmonary Disease.

Anti-viral sales grew across all regions and totalled £2.3 billion, up 12 per cent. Sales of Trizivir, GlaxoSmithKline’s new triple combination therapy for HIV, grew 95 per cent to £315 million. Valtrex for herpes achieved strong sales growth of 26 per cent worldwide. In September 2002, Valtrex was approved by the FDA for the treatment of cold sores in healthy adults and in October 2002, GlaxoSmithKline filed a further application for Valtrex seeking the first-ever indication to reduce the risk of transmission of genital herpes.

Anti-bacterial sales declined 12 per cent worldwide and 22 per cent in the USA as a result of generic competition for Augmentin and Ceftin. In the USA, GlaxoSmithKline’s two new formulations, Augmentin ES for children and Augmentin XR for adults are performing well.

In metabolic and gastro-intestinal the Avandia franchise, Avandia and Avandamet, grew 19 per cent for the year and Avandia is now approved in 81 countries. Avandamet (Avandia and metformin HCI), launched in the fourth quarter, is the first treatment for type 2 diabetes that targets insulin resistance and decreases glucose production in one convenient pill.

Within vaccines, the Hepatitis franchise grew 12 per cent with sales in Europe growing ten per cent. Vaccine sales in the USA were up 16 per cent benefiting from the launch of Twinrix and continued growth in Havrix, driven by new state mandates requiring Hepatitis A vaccination for school age children. In the USA, GlaxoSmithKline’s new Pediarix vaccine was launched in January 2003.

In oncology, Zofran sales grew 22 per cent to £708 million driven by a strong US performance, up 28 per cent to £525 million.

In July, GlaxoSmithKline received approval from the Swedish regulatory authorities for Avodart (dutasteride), a DHT inhibitor for the treatment of symptomatic benign prostatic hyperplasia. GlaxoSmithKline plans to market Avodart in all major European markets with launches in the first half of 2003.

Levitra (vardenafil) a new agent for the treatment of erectile dysfunction has received approval for marketing in Europe and launches are planned for March 2003. Levitra was researched and developed by Bayer AG and will be co-promoted with GlaxoSmithKline.

CONSUMER HEALTHCARE
Over-the-counter sales were £1.6 billion, up four per cent, reflecting strong growth in the smoking control franchise. Nutritional Healthcare grew three per cent due to strong growth in Europe for Lucozade and Ribena, partly offset by the performance of Horlicks in international markets. Oral care sales were down two per cent to £1.1 billion as growth from Sensodyne, Polident and Poligrip was offset by weak sales for Aquafresh.

TRADING PROFIT AND EARNINGS PER SHARE
Business performance trading profit was £6.7 billion with a growth of 15 per cent, greater than sales growth of seven per cent, demonstrating an improved trading margin of 2.1 points to 31.6 per cent compared with 2001. This is mainly due to cost savings derived from merger integration, manufacturing restructuring and other initiatives. Statutory trading profit was £5.7 billion with a growth of 26 per cent.

Full year business performance earnings per share (EPS) of 78.3 pence increased 13 per cent and eight per cent in sterling terms reflecting a weakening of the US dollar and other currencies. Full year statutory EPS was 66.2 pence, an increase of 38 per cent.

IMPLEMENTATION OF NEW FINANCIAL REPORTING STANDARD
The Group has implemented Financial Reporting Standard 19 ‘Deferred tax’ in 2002 which requires deferred tax to be accounted for on a full provision basis, rather than a partial provision basis as before. Comparative information has been restated as necessary. The effect in 2001 is to increase the business performance tax charge by £8 million and the overall tax charge by £6 million. The net deferred tax asset at 31st December 2001 has been reduced by £127 million.

THE SARBANES-OXLEY ACT 2002
Following a number of corporate and accounting scandals in the USA, Congress passed the Sarbanes-Oxley Act 2002 (Sarbanes-Oxley) which took effect on 30th July 2002. Sarbanes-Oxley establishes new or enhanced standards for corporate accountability in the USA. A number of provisions of Sarbanes-Oxley apply to GlaxoSmithKline and, although the company’s corporate governance structure is believed to be robust and in line with best practice, a few changes are necessary to ensure compliance. These are described under ‘Corporate governance’ in the company’s Annual Report for 2002.

LEGAL PROCEEDINGS
The Group is involved in various legal and administrative proceedings principally intellectual property cases, product liability and government investigations. Descriptions of the most significant of those are described under ‘Legal proceedings’ in the‘Notes to the financial statements’ in the company’s Annual Report for 2002.

CAUTIONARY STATEMENT
Under the ‘safe harbor’ provisions of the US Private Securities Litigation Reform Act of 1995, the company cautions investors that any forward-looking statements or projections made by the company, including those made in this Annual Review, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Group’s operations are described under ‘Risk factors’ in the ‘Operating and financial review and prospects’ in the company’s Annual Report on Form 20-F, filed with the US Securities and Exchange Commission.