Gsk 2015 review

AN ANALYSIS OF THE PERFORMANCE OF GLAXO SMITHKLINE

(GSK) PLC WITHIN THE HEALTHCARE SECTOR

INTRODUCTION

A critical examination of Glaxo smithkline Plc (GSK) will involve an analysis of the financial and

non-financial performance of the stated company for 3 years to date- 31st Dec, 2015. The financial

performance would involve computation of ratios that are relevant to a potential investor as well as

a consideration of some assumptions that need to be imputed in order to have a better

understanding of the numbers stated in the Financials. The non-financial performance involves the

analysis of factors that will help a potential investor to predict to a reasonable level- the likely

future performance of the company within the Healthcare sector.

A top-down approach was applied for the purpose of this study whereby an analysis of the

healthcare sector was examined first, before the analysis of the company’s specific performance.

NON-FINANCIAL PERFORMANCE

Non-financial performance involves the use of tools to predict the present and potential

performance of the company within a given sector or industry. First, consideration is given to the

general performance of the sector within the economy. Second, the position of GSK is then

analysed in terms of market share within the Healthcare sector and finally, the relative

performance of GSK against leading competitors within the sector was explored.

For the purpose of this study, the tools to be used for the analysis of the non-financial performance

of GSK was GAP ANALYSIS, SWOT ANALYSIS, BENCHMARKING.

1. SECTOR ANALYSIS

GSK operates in a matured but growing market (healthcare sector). Several macro-economic

variables affect the dynamics of this market such as rising consumer incomes, population growth

Etc. The sector’s share of global GDP is increasing due to increase in the healthcare spending

which stood at $8 trillion in 2015 as a result of societal aging in the advanced economies and

rising income as well as rising standard of living in the emerging economies (EM). These factors

have led healthcare analyst to believe that based on the current GDP forecasts, global healthcare

spending should grow more than 6% annually over the next decade.

2. GSK PLC COMPETITIVE STRATEGY

Competitive strategy is a long-term plan designed by management to help a company gain

competitive advantage in the market in which it operates. Accordingly, GSK adopted a cost focus

and divestment strategies. A focus strategy is one of the generic marketing strategy where a

company or a segment of a company (Cash Generating Unit) concentrates on products or portfolio

of products or market where it has core competence and therefore, achieve cost advantage or

differentiation thereby competing profitable for the foreseeable future so as to meet its goals while

a divestment strategy is a strategy in which a part or a segment of a company is sold off (wholly or

partly) so that the company’s resources can be concentrated to areas it has core competence.

In 2014, GSK plc completed the divestment of thrombosis brands and related manufacturing site to

Aspen for a consideration of £700mn and later announced in 2015 that it has just completed a

major three-part transaction with Novartis whereby GSK plc acquired Novartis’ global Vaccines

business, entered into a world-leading Consumer Healthcare joint venture with Novartis and

finally, disposed off its Oncology business to Novartis. This helped GSK create a focused and well

balanced portfolio across Pharmaceuticals, Consumer Healthcare and Vaccines. Furthermore, the

reshaping of GlaxoSmithKline (GSK) continues with its decision in early March to shed 50% of its

share in Aspen Pharmacare, as well as the April announcement that it is closing its Pittsburg office

in the US; this adds credence to the prior statement. As of today, GSK has a well-diversified

geographic spread, with offices in 115 countries, research divisions in the UK, US, Spain, Belgium

and China, and 70 manufacturing operations.

3. SWOT ANALYSIS

An analysis of GSK’s strengths, weaknesses, opportunities and treats are as follows:

The strengths of GSK consists of- but not limited to- the following;

The potentials of GSK’s R&D department in developing and launching new and potentially high

margin products across the three segments of the company’s business cannot be over-emphasized.

Progress is synonymous to launching of new products and improving the existing ones, GSK is

operating a flexible, innovative and idealistic system of organization which co-ordinates diverse

various human activities to produce medicines that improves life of the people. Accordingly, about

£2,300 million was spent in the R&D department in 2015 and around 40 new potential medicines

and vaccines are already profiled in the pharmaceutical segment of the group; £500 million spent

on R&D and around 15 vaccines are already profiled in the vaccines department of the group and

finally, £300 million spent in the R&D department of the consumer healthcare segment of the

group.

Also, the restructuring and integration programmes embarked upon by the company was a right

step in the right direction to penetrate emerging markets and also consolidate their presence in

matured markets. Though these programmes did cost the company a lot of money, it was a

necessary step because a large chunk of the costs were one off and the benefits derived from the

programmes would eventually increase the company’s bottomline- profit- in the future. Infact, the

restructuring programme allowed GSK to generate £1,000 million incremental annual cost savings

across the Group in 2015 and this amount could increase to £3,000 million of annual cost savings

by end of 2017. Therefore, reduction in spending by the company as a result of the restructuring

and integration programmes, coupled with the introduction of new pharmaceutical products,

vaccines and consumer health care businesses will enhance its financial strength.

Furthermore, the management of GSK overtime had developed expertise in divestment and

acquisition dealings; since its inception, when Glaxo Wellcome and SmithKline Beecham

announced their intention to merge in January 2000 up to 2015 when it announced its 3 phase

transaction with Novartis. The management has looked out for favourable deals that would ensure

the company retains its focus which is to provide value to shareholders through achieving a

reasonable level of Earnings per share (EPS) as well as provide returns in form of dividends to

shareholders.

The weakness of GSK consists of- but not limited- to the following;

A decrease in the company’s turnover as a result of the disposal of its higher margin Oncology

business and the acquisition of the lower margin Vaccines and Consumer Healthcare businesses

from Novartis. Furthermore, there is a need to strategically review the length of time it takes for

the completion of pharmaceuticals as well as vaccine research; approximately, it takes about 10 to

15 years to complete a pharmaceutical research while it takes about 7 to 18 years to complete a

vaccine research. This timeline should be properly managed because of the commitment of

company’s resource and the reality that trials may not meet expectations.

The opportunities inherent in the business environment that GSK plc operates is described as the

potential for growth and expansion that exists in the health care sector as a result of aging society

in the developed economies and rising income and living standards in the EM.

The treats inherent in the business environment that GSK plc operates in are;

Government policies in the developed economies that affect companies operating in the health

sector such as in Europe and United states. For example, Europe rising public debt and government

austerity programmes continue to create pressure on healthcare spending. Slowdown in the growth

rate (in terms of GDP) of emerging economies was also seen as a treat; economic expansion in

these economies have decelerated due to factors such as decrease in the price of crude oil as well

as a reduction in global demand for export and also, the likely effect of foreign currency

devaluation on the value of foreign sales and receivables as well as the effect on translation of

foreign investments to GSK’s functional currency (£).

4. PEER REVIEW (APPENDIX 4)

This peer review was prepared in accordance with the researches carried out by EvaluatePharma-

World Preview 2015 Outlook to 2020. The review is done in relation to individual product,

companies’ performance in different countries as well as the products they offer.

According to EvaluatePharma, in the area of Pharmaceutical R&D Spend (2014), Novartis was

ranked first, followed by Roche while GSK is in the 8th position. In terms of Worldwide

Prescription Drug sales in 2014, where 20 Companies were grouped and analysed; Novartis made

the highest sales, Pfizer came next while GSK ranked 7th.

In the sales of anti-viral drugs worldwide forecast by top 10 companies; Gilead Sciences is ranked

1st, GSK is said to be the next followed by Merck & co. In 2014, 20 companies were ranked based

on their enterprise value as at valuation done for the year ended Dec. 31 2014; Johnson & Johnson

was ranked 1st, at the 2nd position is Roche while GSK was ranked 9th in this standing.

Based on the net income of 20 companies reviewed in 2014; Johnson & Johnson was ranked 1st,

Pfizer was scored to the 2nd while GSK was at the 8th position. Regional prescription of drugs sales

in the USA for the period of 2012-2014 showed that Gilead Sciences was ranked 1st, Johnson &

Johnson came 2nd, Roche was in the third position; GSK was not among the top listed companies

that did well in this period while Pfizer was ranked 3rd in the Japanese market. GSK was not

ranked among the top 10 companies in the Japanese market in terms of prescription drug sales.

In the worldwide prescription drug sales prediction for 2014-2020 among top 20 companies &

their total market; Novartis was at the 1st position, followed by Pfizer at the 2nd position while

GSK is at the 7th position. Ranking was done among top 20 companies with the particular product

having the most valuable R&D projects based on their net present value; Gilead Sciences (GS-

9857/ SOF/GS-5816) was ranked 1st, Novartis (LCZ696) was ranked 2nd while Vertex

Pharmaceuticals (Orkambi) was ranked 3rd. GSK was not listed among top 20 companies focusing

on this R&D project.

This ranking reveals top 10 companies with total worldwide Anti-Diabetic sales prediction from

2014-2020; Novo Nordisk was ranked 1st, followed by Sanofi at the 2nd position, while Myers &

co was ranked 3rd. GSK was not listed among these top 10 companies in the sales projection of

Anti-Diabetic for 2014-2020. This ranking reveals top 10 companies with their worldwide Anti-

Rheumatic sales projection from 2014-2020; AbbVie was ranked 1st, Johnson & Johnson was

ranked 2nd while Pfizer was ranked 3rd. GSK was not listed among these top 10 companies in the

sales projection of Anti-Rheumatic for 2014-2020.

Based on the ranking above on the performance of companies and their product in the regional

market as well as worldwide market, it is evidently clear that GSK is putting effort to meet up with

the competitors so as to stay relevance in the global market. However, more strategic plans and

execution of these steps must be put in place to dominate the market especially in the area of

research and development of certain aspect of pharmaceuticals, vaccines and healthcare products

and services. For instance, more need to be done in the development of drugs that are considered to

be prevention (anti) of specific diseases or illnesses.

5. RISK ANALYSIS AND MANAGEMENT

DEFINITION OF RISK IN TERMS OF INDUSTRY-WIDE AND COMPANY-SPECIFIC RISK

Industry-wide risks are risks that would affect the global market for healthcare as a whole.

Examples of this type of risk are market risk, currency risk, compliance risk, Etc., while company-

specific risks are risks that specific to a company’s operation and reputation. Examples of this risk

are intellectual property risk, financial control and reporting risk, business risk, Etc., GSK is a

company that engages in effective risk management because of the impact it could have on the

business areas. Here, explanation will be given on various risks and how GSK is planning to

manage each of the risk.

MARKET OR COMPETITIVE RISK

GSK operates in an industry that is both highly competitive and highly regulated. These

competitors may take steps such as product innovations and technical advances which could lead

to intensification in price competition. Considering this competitive climate, GSK will continue to

develop commercially viable new products and develop uses for existing products that are

imperative to its ability to maintain or increase general sales.

CURRENCY RISK

This risk is classified in term of transaction risk, translation and economic. Transaction risk is the

risk derived from dealing in foreign market and thereby receiving proceeds and making payment in

foreign currency. The proportion of GSK total turnover from overseas was £22,817 million in

2015; therefore, this exposes GSK to a gain or loss on these foreign sales especially if the pounds

(£) strengthening against other foreign currencies. Translation risk is the risk a firm face by

converting the value of a foreign investment into its functional currency. GSK faces translation

risk because it major operational base is not only in the UK but also in the US, Belgium and China

as well as offices spread around the world. Economic risk is faced as a result of long term effect of

currency fluctuation which can have an effect on a company’s cashflows. It arises as a result of

government policies, competitive tactics develop by competitors. GSK faces economic risk in the

Europe due to the stringent government policies relating to pricing. GSK decided to pursue a

LEAN and FOCUS strategy to help hedge against this risk.

COMPLIANCE RISK

In some markets, the government structure and the rule of law are less developed, and this has a

bearing on our bribery and corruption risk exposure. In addition to the global nature of our

business, the healthcare sector is highly competitive and subject to regulation. This increases the

instances where we are exposed to activities and interactions with bribery and corruption risk. In

carrying out research, for development of new products or testing of new products, GSK faces

some form of risk of compliance which could subject the company to litigation thereby affecting

the reputation of the company. Non-compliance with the research risk could bring harm to

patients, reputational damage, inability to obtain necessary regulatory approval for products,

government investigation, legal proceedings by government and private plaintiffs and regulatory

action such as fines, penalties or loss of authorization. Testing of new product on animal could also

affect the company if it fails to be in compliance with rules and regulation relating to the use of

animal for drug testing. To tackle this risk, GSK embarks on animal research which provide

critical information about the causes and how they develop; this reduces side effect of the drug on

the animal if there is going to be any. Also, GSK involve in clinical trials in healthy volunteers and

patients to assess and demonstrate an investigational products’ efficacy and safety or further

evaluate the product once it has been approved for marketing. In the same vein, GSK works with

human biological samples for the discovery, development and safety monitoring of it products.

Compliance and management of the Environmental, Health, and Safety and Sustainability is

germane to internal as well as external operation of the company to the its employee and other

stakeholders. Failure to manage this risk could bring harm to people, the environment and the host

communities in which the company operates; it could lead to fines, litigation or regulatory actions

which have the potential to damage the group’s reputation thereby having negative effect on the

financial result of the company. GSK subjected itself to health, safety and environmental laws of

various jurisdictions in which it operates. Hence, the US identified GSK as a potentially

responsible party under the US Comprehensive Environmental Response Compensation and

Liability Act at a number of sites for remediation costs relating to GSK use and ownership of such

sites.

INTELLECTUAL PROPERTY RISK

This is failure of a company to appropriately secure and protect its intellectual property. This could

have adverse effect on the financial strength of the company. Sometimes, the government forces

the manufacturer to license its patent for specific product to differentiate it from its competitor.

GSK been an innovative company swiftly obtain intellectual property for pharmaceuticals,

vaccines and consumer healthcare products as part of its business strategy to ensure success. GSK

never relent on its effort to protect its products which are the lifeblood of the company. Also, GSK

have team of legal experts on ground to defend any infringement on any of the products in all parts

of the country where it operate.

FINANCIAL CONTROL AND REPORTING RISK

This is failure to be in compliance with the current tax law or witnessing losses due to treasury

activities such as failure to report accurate financial information following the rules and regulation

of accounting standard and applicable legislation; also, derailment in maintaining adequate

governance and oversight over third-party relationships. The group is required by law to disclose

publicly its financial results and events that could materially affect the financial result of the group.

GSK ensure compliance with this law requirement in financial result reporting to avoid restatement

and significant penalties. In the case of third party relationship, GSK are in cordial relationship

with its third party who is an integral part of the solution to improve productivity, quality, service

and innovation. However, caution are been exercised in sharing information with these third

parties who could misuse the information thereby have a significant impact on the business.

BUSINESS RISK

This entails inability to execute business strategies, manage competitive opportunities or threat in

compliance with the letter and spirit of legal, industry, or company requirements. This could lessen

opportunity for diversification and deliver more products on a global scale. GSK is committed to

the ethical and responsible commercialization of its products to support its improvement in the

quality of human life by enabling people to do more, feel better and live longer. GSK ensure that

the Healthcare Professionals (HCPs), patients and consumers have access to information they need

and ensures that products and prescribed, recommended or use in a manner that provides the

maximum healthcare benefits to patients and consumers. Each time GSK makes payment to

researchers, HCPs, healthcare organization (HCOs), and other external experts’ service, it ensures

that the payment are not too exorbitant so it does not perceive to be a bribe or inducement. GSK is

in absolute compliance with its ABAC policies and market’s ABAC laws in case if the recipient is

a government official.

In conclusion, it is evidently clear that GSK is putting up adequate structures and policies to

manage all forms of risks that could ensue from its business operation in all countries where it has

business dealings. It takes into cognizant both industry wide and company specific risks and has

measures in place to mitigate the effect of each of the identified risks. Risk as an uncertain events

therefore there is need for appropriate measures to hedge against them and also the need for a risk

management reporting system to keep stakeholders abreast with these measures. GSK plc keeps

stakeholders informed about their risk management system by publishing a risk management

report as a part of their annual report.

FINANCIAL PERFORMANCE

A potential investor would be interested in the financial performance of the business over a given

period by applying ratio analysis to discover trends relating to efficiency, market performance,

debt and profitability. Usually, potential investors are interested in the natural earnings power of

the business as this is a good indicator of the potential earnings to be generated by the business

into the foreseeable future. These earnings are usually called “Normalised Earnings”. Normalised

earnings is the profits generated from operations after deducting extra ordinary or one off profits or

losses generated from disposal of a part, an asset, segment or cash generating unit (CGU) of the

business. The analysis of the financial performance of GSK is as follow:

1. PROFITABILITY (APPENDIX 1)

Appendix 1 shows that operating profit increased from £ 7,028 million in 2013 to £ 10,322 million

in 2015; an increment of 147%. Further analysis showed that the increment was as a result of an

increase in “other operating income” from £1,511 million to £ 8,044 million in the same year.

Further investigation into the financials showed that this “other operating income” cannot be

catergorised as been a part of the GSK’s normalised earnings because it relates to the proceeds

from disposal of the two of the group’s CGU namely Oncology business and ofatumumab as

well as increase in the liability for the contingent consideration for the acquisition of the former

Shionogi-ViiV Healthcare joint venture in 2015 and also, the divestment of thrombosis brands

and related manufacturing site to Aspen Group in 2013. Acquisitions and disposals are regarded as

management strategic decisions rather than operational decision; any gain or loss on disposal

cannot be regarded as a part of Normalised earnings. Therefore, there was a need to re-compute the

profitability ratios and other ratios based on normalised profits for year 2013-2015.

Appendix 1 showed that normalised earnings reduced by 59%, Earnings before interest and tax

(EBIT) fell by 49% and Earnings before tax (EBT) also fell by 50%; this was as a result of the

computation of normalised earnings; though there was an increase of 18% in Earnings before

interest and tax, Depreciation and amortisation (EBITDA). Furthermore, it was also observed that

all the major profitability ratios has declined from 2013 – 2015, of serious concern, is the profit per

employee which fell by 51% though the number of employees increased by 14% during the year.

GSK plc also witnessed a drop in revenue over the three years period to 2015 from £ 26,505

million - £ 23, 923 million which represent a decrease of 10%. A significant portion of this trend

was as a result of the drop in national turnover by 29%; this helps to corroborate the fact that

healthcare policies rolled out by the USA and EUROPE has affected performance especially that

of the pharmaceutical division of GSK Plc, though this was cushioned by an 8% drop in overseas

turnover. Sales of GSK’s new products amounted to £1,988 million in 2015; about 8.3% of the

group’s turnover. The proportion of new products to group turnover increased from 1.8% in 2014

to 8.3% in 2015. This is a good sign for a potential investor because the survival and strong growth

within the healthcare sector can only be maintained by continued research, development and the

launch of new products within the sector.

Dividends paid during the year 2015 amounted to £ 3,873 million out of the profits generated

during the year, this represented a dividend per share (DPS) of £ 0.80; payments of these dividends

were made out of cash generated from the disposal of GSK’s oncology business to Novartis and

other assets. Since the management of GSK plc had promised to sustain this level of DPS for the

periods to 2017 and the fact that previous payments of dividends were made out one-off disposals,

then it is necessary for the management of the company to generate sufficient cashflows internally

to meet these expectations. This is great news because it demonstrates that a potential investor is

guaranteed a likely return (in terms of dividend) on equity investment made in the shares of GSK

plc for years leading to 2017.

2. DEBT (APPENDIX 2)

An analysis of short term loans and overdraft shows a reduction of 56%; this reduction resulted

from a decrease in other short term loan by 76% though bank overdraft increased by 15% in 2015.

Further investigation revealed that GSK utilized the cash proceeds from the sale of its oncology

business to Novartis to settle its short term debt.

A careful review of the financials of GSK showed an increase in the net current asset by 229%

while working capital needs increased by 103%; there was a finance deficit in working capital of

£1,957 million and this would be financed by long-term borrowing. Further analysis of the

financials showed that the “other long-term liabilities” increased by 457%, also net tangible assets

and intangible assets increased by 18% and 81% respectively. This indicates that GSK has

switched to long-term liabilities has its major source of finance; it has used up these long-term

liabilities to finance investments in both tangible assets and intangible assets. This approach seems

reasonable because investment in tangible long term investments must correlate with long term

finance while short-term investments must be matched with short-term finance according to the

“matching principle” in financial management. GSK has applied this strategy successfully in

financing its investments in 2015. Long-term liabilities to total assets is a measure of the

proportion of a company’s total asset that is financed with financial obligation spanning more than

one year; this proportion was 5.7% and 19.9% for 2014 and 2015 respectively for GSK.

Interest cover is the ability of a company to meet up with all interests on financial obligation (both

short-term and long-term obligation); it is measured in “times”. GSK has a healthy interest cover

of 14.90 in 2015 which is improvement from 9.67 in 2013. Careful assessment of the financials

reveals that GSK has greater debt in its capital structure than equity; the gearing ratio more than

doubled by 206% in 2015. This should be a cause for concern to potential investors as potential

returns in form of dividends could be eroded by interest payments to debt-holders, though the

healthy interest cover proves that the company can meet up with interest payments to debt holders

as long as it can maintain or improve on the earnings it generates before interest and tax. Finally,

GSK has been able to maintain a credit score of 92, this shows that the debts issued by the

company are secured with a probability of default of just under 10%.

3. EFFICIENCY(APPENDIX 3)

A company’s efficiency can be measured in terms of its Cash Conversion Cycle (CCC). CCC is

the length of time (measured in days) it takes a company to convert resource inputs into cashflows.

GSK’s CCC increased from 71 days to 83 days in 2015; this is not good sign since the longer the

days, the more difficult it is for GSK to generate internal funds for financing working capital

though it is necessary to compare this to its industry norm. The revenue per employee decreased by

11% from 2013 to 2015 and this was due to an increase in the number of employees by 14% as

well as a decrease in the turnover by 10% over the same period. Salaries as a percentage of

revenue increased from 28.64% in 2013 to 33.57% in 2015; this increment resulted from an

increase in the average remuneration per employee by 4.3% in 2015 and finally, GSK’s working

capital per employee increased by 4.2% during the stated periods.

4. MARKET PERFORMANCE

A company can be viewed as either a value firm or a growth firm. A vale firm is a company that

has both low price to earnings ratio (P/E) and price to book value ratio (P/BV) while a growth firm

is said to be a firm that has high P/E and P/BV. The distinction between of a value firm from that

of a growth firm lies in how they are perceived by an investor. GSK plc can be viewed as a growth

firm because it has high P/E and P/BV; though, price to earnings ratio closed at 7.94 in 2015 which

was lower than that of 2013 which stood at 14.39. This decrease is attributed to an improvement in

the earnings generated by the company and the drop in the market price per share during the stated

periods. The earnings yields of GSK’s plc stocks closed at 6.95 in 2013 to 12.60 in 2015 while

dividend yield closed higher by 1.09 during the same periods. The market performance of GSK

shows that its shares are suitable for potential investment.

APPENDIX

1. RE-INSTATED PROFIT AND RELATED RATIOS FOR 2013-2015

2013 2014 2015 Change (%)

£’mn £’mn £’mn

Operating profit (A) 7,028 3,597 10,322

Other operating

income (B)

(1,511) (310) (8,044)

Normalised earnings

(A-B)

5,517 3,287 2,278 -59

Total Other Income

& Int. Received (C)

386 98 961

Profit/(loss) before

interest paid (A-B)+

C

5,903 3,385 3,239 -45

Net Interest (£’mn) (706) (659) (653)

Profit/(loss) before

tax (£’mn)

5,197 2,726 2,586 -50

Depreciation (£’mn) 327 880 1,315

Amortisation (£’mn) (1,427) 861 957

EBITDA (£’mn) 4,097 4,467 4,858 18

shareholders’ funds

(£’mn)

6,997 4,263 5,114

Capital Employed

(£’mn)

28,079 27,263 39,771

Total Assets (£’mn) 41,756 40,558 53,188

Return on

shareholders’ funds

(%)

74.75 63.95 50.56

Return on Capital

Employed (%)

18.50 10.00 6.50

Return on Total

Assets (%)

12.45 6.72 4.86

Profit margin (%) 20.81 14.29 9.52

EBIT margin (%) 22.27 14.71 13.54

EBITDA margin (%) 15.46 19.42 20.31

Number of employees 99,817 98,702 101,192 14

Profit per employee

(£)

52,065 27,618 25,555 -51

Turnover (£’mn) 26,505 23,006 23,923 -10

National Turnover

(£’mn)

1,541 1,116 1,106 -29

Overseas Turnover

(£’mn)

24,964 21,890 22,817 8

Sales from new

products (£’mn)

- 429 1,988 463

New sales/total

turnover (%)

- 1.8 8.3

2. DEBT

Short term loans and

overdraft (£’mn)

- 2,943 1,308 -56

Bank overdraft

(£’mn)

- 379 435 15

Other short term

loans (£’mn)

- 2,536 850 -76

Working capital

needs (£’mn) G

- 4,997 5,127 103

Net current asset

(£’mn) F

- (1,383) (3,170) 229

Finance deficit

(£’mn) G-F

- 3,614 1957

Net tangible asset

(£’mn)

- 15, 219 17,937 18

Intangible asset

(£’mn)

- 12,044 21,834 81

Other long-term

liabilities (£’mn)

- 2,318 10,592 457

Other long-term

liabilities/total asset

(%)

- 5.7 19.9

Interest cover (times) 9.67 5.08 14.90

Gearing ratio 341.16 608.56 703.27 206%

3. EFFICIENCY RATIOS

Stock turnover (times) 6.80 5.44 5.07

No. of days in a year

(N)

365 365 365

Inventory holding

(days)

53.67 67.09 71.99

Debtors collection

(days)

54.62 56.42 58.34

Creditors payment

(days)

37.72 44.26 47.60

Cash conversion cycle 70.57 79.25 82.73

(days)

Turnover/employee

(£’mn)

265.536 233.085 236.412 -11

Salaries/turnover (%) 28.64 32.69 33.57

Average

remuneration/employee

(UNITS)

76,049 76,189 79,354 4.3

Working

capital/employee

(UNITS)

51,364 50,627 53,562 4.2

S/N VARIABLES 1st POSITION 2nd POSITION 3rd

POSITION

1.

Pharmaceutical R&D

Spend (2014 & 2020): Top

20 Companies & Total

Market

NOVARTIS ROCHE GSK

2. Worldwide Prescription

Drug Sales in 2014: Top 20

Companies

NOVARTIS PFIZER GSK

3. Top 10 Companies & Total Merck & Co + Pfizer GSK

Worldwide Vaccine Sales

(2014-2020)

50% Sanofi

Pasteur MSD

4. Top 10 Companies & Total

Worldwide Anti-viral Sales

(2014-2020)

Gilead Sciences GSK Merck & Co

5. 2020: Top 50 Selling

Products in the World

AbbVie + Eisai

(Humira)

Celgene

(Revlimid)

(Tivicay)

6. Top 20 Companies in 2014:

Ranked by Enterprise

Value

(based on valuation on 31

DEC 14)

Johnson &

Johnson

Roche GSK

7. Net Income in 2014: Top 20

Companies

Johnson &

Johnson

Pfizer GSK


Products in the World

AbbVie + Eisai

(Humira)

Gilead Sciences

(Sovaldi)

GSK

(Seretide/Adv

air)


Products in the USA

Gilead Sciences

(Sovaldi)

AbbVie (Humira) GSK

(Seretide/Adv

air)

10. Regional Prescription Drug

Sales:

USA (2012-2014)

Gilead

Sciences

Johnson &

Johnson

Roche

11. USA Prescription Drug

Sales (2012-2014): Top 20

Companies

(Pro-forma adjusted for

M&A)

Gilead Sciences Johnson &

Johnson

GSK

12. European Prescription


Companies

Novartis Sanofi GSK

13. Europe Prescription Drug

Sales (2012-2014): Top 20

Companies

Novartis Sanofi GSK

14. Japanese Prescription Drug

Sales in 2014: Top 10

Companies

Takeda Astellas

Pharma

Pfizer

15. Japanese Prescription Drug

Sales (2012-2014): Top 20

Companies

Takeda Astellas

Pharma

GSK



Companies

Novartis Pfizer GSK


Drug Sales (2014 - 2020):

Top 20 Companies & Total

Novartis Pfizer GSK

Market


Drug Sales from

Biotechnology in 2020:

Top 10 Companies

Roche Novo Nordisk Sanofi

19. Top 20 Most Valuable

R&D Projects (Ranked by

Net Present Value)

Gilead Sciences

(GS-9857/ SOF/

GS-5816)

Novartis

(LCZ696)

Vertex

Pharmaceutic

als (Orkambi)

20. Top 10 New Molecular

Entities in 2014: Ranked on

USA

Consensus Sales in 2019

Bristol-Myers

Squibb (Opdivo)

Gilead Sciences

(Harvoni)

Merck & Co

(Keytruda)


Worldwide Oncology Sales

(2014-2020)

Roche Celgene Bristol-Myers

Squibb


Worldwide Anti-Diabetic

Sales (2014-2020)

Novo Nordisk Sanofi Merck & Co


Worldwide Anti-

Rheumatic Sales (2014-

2020)

AbbVie Johnson &

Johnson

Pfizer

Reference

http://www.buschinvestments.com/Growth-Stocks-vs--Value

Stocks.c1022.htm?ContentID=1022&PrinterFriendly=1

Jason, M. & Stephen, H. (2016). Global Health Care Outlook

EvaluatePharmaWorld- Preview 2015, Outlook 2015 – 2020, 8th Ed.

IFC Guide for Investors in Private Health Care in Emerging Markets- Opportunities and Trends

in Investing in the Health Sector

https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jhtml?ta

b=industries&sector=35

Business

Gsk 2015 review