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2005: a year of success and progress
“Thanks to the efforts of our employees around the world, 2005 was a very successful year for GSK,” says JP Garnier, Chief Executive Officer. “Not only was it our best year ever from a financial standpoint, we also made substantial progress with our pipeline of innovative new medicines and vaccines.”
GSK delivered an excellent financial performance in 2005. Turnover of £21.7 billion grew by 7% at constant exchange rates (CER). Earnings per share (EPS) were 82.6p, with growth of 18% at CER, putting GSK in the top tier of global pharmaceutical companies in terms of performance.
“These figures confirm the excellent growth of our key products and the efficiency of our global operations,” says JP.
GSK’s performance was driven by sales of key pharmaceutical products. “Sales of Seretide/Advair, Avandia, Coreg, Lamictal and Valtrex all continued their impressive growth,” says JP. “We also saw good performance from a number of newer products, including Avodart for enlarging prostate, Boniva/Bonviva for osteoporosis and Requip for Restless Legs Syndrome, which all show great promise for the future, both for patients and GSK.
“Looking into 2006, the strong growth seen from key products and from our vaccines business is expected to continue and we anticipate an EPS growth of around 10% at CER.”
Pipeline progress
GSK continues to meet the challenge of increasing Research & Development (R&D) productivity to discover new medicines faster and more economically. The company’s pipeline is one of the largest and most promising in the industry, with 149 projects in clinical development (as at the end of February 2006), including 95 new chemical entities (NCEs), 29 product line extensions (PLEs) and 25 vaccines.
“In 2006, we anticipate further good news on GSK’s late-stage pipeline, which is developing at a fast pace. Eight major new assets are scheduled to enter phase III in 2006, doubling our late-stage pipeline,” says JP.
"The pharmaceutical industry is making a positive improvement to people's lives. It has a noble purpose. It develops medicines and vaccines that save lives and make people feel better."
Year of the vaccine
2005 was a landmark year for GSK’s vaccines business. Sales increased by 15% and the company made a number of significant strategic acquisitions. “The acquisition of ID Biomedical was an important move for GSK,” says JP, “which strengthened our position in the global flu vaccine market, and increased our ability to prepare for and respond to a potential flu pandemic.”
“We also acquired a plant in Marietta, Pennsylvania which will give us access to tissue culture technology in our vaccine manufacturing. The acquisition of Corixa gives us valuable adjuvant technology, enabling us to boost human immune response to our vaccines.”
GSK also made good progress on its pipeline of new vaccines. “We expect five major vaccine launches in the next five years,” says JP. “Perhaps most exciting is Cervarix for cervical cancer, which we expect to file for approval in Europe in March 2006 and in the USA by the end of the year.”
Improving access to medicines
GSK continues to seek new ways of improving access to its medicines for people who need them, but are least able to obtain them. This challenge is particularly acute in the developing world, where GSK has been offering many of its medicines and vaccines at not-for-profit prices for some years.
However, addressing this challenge is something GSK cannot do alone. The work of GSK with organisations such as the Bill & Melinda Gates Foundation highlights the benefits of public-private partnerships. They provide a way for companies such as GSK and the public sector to work together. Typically, GSK provides the R&D, technology, manufacturing and distribution expertise, while other partners and governments help fund the development and delivery costs.
"Public-private partnerships use the respective strengths of the partners and bring out the best of each. Most importantly, it is a model that works."
In 2005, GSK entered three groundbreaking public-private partnerships to develop vaccines against the biggest causes of death in the developing world today – AIDS, malaria and tuberculosis.
Reaching out to patients
In 2005, GSK introduced and strengthened a number of initiatives aimed at improving patients’ understanding of GSK’s medicines, and programmes to help gain access to them. These initiatives include GSK’s pioneering Clinical Trial Register, which was expanded to contain 2,125 summaries of clinical trials by the end of 2005.
In the USA, GSK is placing more emphasis on education and the patient in direct-to-consumer advertising, and providing people with advice on GSK’s programmes and the industry’s Partnerships for Prescriptions Assistance which help people gain access to the medicines they need.
“Through these and other initiatives, we are seeking to differentiate GSK as a company finding solutions to the healthcare challenges that society faces. I believe we are well on the way to achieving that,” says Sir Christopher Gent, Chairman.
A broader contribution
GSK's global community investment activities in 2005 were valued at £380 million, equivalent to 5.6% of Group profit before tax.
The year saw a number of natural disasters, including the Asian tsunami, the Guatemalan hurricane, the New Orleans floods and the earthquake that struck parts of India and Pakistan. GSK was quick to respond to help victims of these tragedies. “My thanks go to our employees for their response to these crises. It makes me proud to lead an organisation with such committed and compassionate people, who can respond so effectively to help people in real need,” says JP.
For these disasters alone, GSK contributed more than £3 million in cash and donated medicines and vaccines valued at over £14 million towards the relief efforts.
“The tragedies during the year brought home to me the extent to which the pharmaceutical industry is making a positive improvement to people’s lives,” says Sir Christopher. “It has a noble purpose. It develops medicines and vaccines that save lives and make people feel better.”
Each day, malaria causes the death of about 3,000 people in sub-Saharan Africa. Most of them are children.
GSK is working in public-private partnerships to create safe and effective vaccines and treatments against malaria.
Islands of hope
In late 2005, JP visited Ghana and South Africa to see some of GSK’s community activities. In Ghana, he heard how villagers cope with lymphatic filariasis (LF or elephantiasis). LF is a disease that the company, working with the World Health Organization, is striving to eradicate by 2020. This LF programme has reached its target in Ghana of treating all ten million people at risk from the disease. In South Africa, JP saw the impact of HIV/AIDS and the work of volunteers in a GSK-supported clinic north of Johannesburg.
“It was shocking and humbling, yet even in this sea of distress there are islands of hope. I was inspired by the people who have dedicated their lives to working in these clinics. I was able to witness the realities of Africa and what’s really important there,” says JP. “I am proud of the role that GSK is playing. I am grateful to have experienced these things and, crucially, to be in a position to do something about it. My determination to do more has never been stronger.”
