Assumptions related to 2019 guidance and 2016-2020
outlook
In
outlining the expectations for 2019 and the five-year period
2016-2020, the Group has made certain assumptions about the
healthcare sector, the different markets in which the Group
operates and the delivery of revenues and financial benefits from
its current portfolio, pipeline and restructuring
programmes.
For the
Group specifically, over the period to 2020, GSK expects further
declines in sales of Seretide/Advair. The introduction of a generic
alternative to Advair in the US has been factored into the Group's
assessment of its future performance. The Group assumes no
premature loss of exclusivity for other key products over the
period.
The
assumptions for the Group's revenue, earnings and dividend
expectations assume no material interruptions to supply of the
Group's products, no material mergers, acquisitions or disposals,
except for the acquisition of Tesaro, the proposed divestment of
Horlicks and other Consumer Healthcare products to Unilever and the
proposed formation of a new Consumer Healthcare Joint Venture with
Pfizer, all announced in December 2018, no material litigation or
investigation costs for the Company (save for those that are
already recognised or for which provisions have been made), no
share repurchases by the Company, and no change in the Group's
shareholdings in ViiV Healthcare. The assumptions also assume no
material changes in the macro-economic and healthcare environment.
The 2019 guidance and 2016-2020 outlook have factored in all
divestments and product exits since 2015, including the divestment
and exit of more than 130 non-core tail brands (£0.5 billion
in annual sales) as announced on 26 July 2017 and the product
divestments planned in connection with the proposed Consumer
Healthcare transaction with Pfizer.
The
Group's expectations assume successful delivery of the Group's
integration and restructuring plans over the period 2016-2020,
including the extension and enhancement to the combined programme
announced on 26 July 2017 as well as the new major restructuring
plan announced on 25 July 2018.
They
also assume that the proposed Consumer Healthcare nutrition
disposal closes by the end of 2019 and the proposed Consumer
Healthcare Joint Venture with Pfizer closes during H2 2019 and that
the integration and investment programmes following the Tesaro
acquisition and the proposed Consumer Healthcare Joint Venture with
Pfizer over this period are delivered successfully.
Material
costs for investment in new product launches and R&D have been
factored into the expectations given. Given the potential
development options in the Group's pipeline, the outlook may be
affected by additional data-driven R&D investment decisions.
The expectations are given on a constant currency basis (2016-2020
outlook at 2015 CER).
Subject
to material changes in the product mix, the Group's medium-term
effective tax rate is expected to be around 19% of Adjusted
profits. This incorporates management's best estimates of the
impact of US tax reform on the Group based on the information
currently available. As more information on the detailed
application of the US Tax Cuts and Jobs Act becomes available, the
assumptions underlying these estimates could change with consequent
adjustments to the charges taken that could have a material impact
on the results of the Group
.
Cautionary statement regarding forward-looking
statements
The
Group's reports filed with or furnished to the US Securities and
Exchange Commission (SEC), including this document and written
information released, or oral statements made, to the public in the
future by or on behalf of the Group, may contain forward-looking
statements. Forward-looking statements give the Group's current
expectations or forecasts of future events. An investor can
identify these statements by the fact that they do not relate
strictly to historical or current facts. They use words such as
'anticipate', 'estimate', 'expect', 'intend', 'will', 'project',
'plan', 'believe' and other words and terms of similar meaning in
connection with any discussion of future operating or financial
performance. In particular, these include statements relating to
future actions, prospective products or product approvals, future
performance or results of current and anticipated products, sales
efforts, expenses, the outcome of contingencies such as legal
proceedings, and financial results. Other than in accordance with
its legal or regulatory obligations (including under the UK Listing
Rules and the Disclosure and Transparency Rules of the Financial
Conduct Authority), the Group undertakes no obligation to update
any forward-looking statements, whether as a result of new
information, future events or otherwise. The reader should,
however, consult any additional disclosures that the Group may make
in any documents that it publishes and/or files with the SEC. All
readers, wherever located, should take note of these disclosures.
Accordingly, no assurance can be given that any particular
expectation will be met and shareholders and investors are
cautioned not to place undue reliance on the forward-looking
statements.
Forward-looking
statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the
Group's control or precise estimate. The Group cautions investors
that a number of important factors, including those in this
document, could cause actual results to differ materially from
those expressed or implied in any forward-looking statement. Such
factors include, but are not limited to, those discussed under
'Principal risks and uncertainties' on pages 257-266 of the GSK
2018 Annual Report. Any forward-looking statements made by or on
behalf of the Group speak only as of the date they are made and are
based upon the knowledge of and information available to the
Directors on the date of this report.
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