On April 25, 2018 GlaxoSmithKline reported financial highlights for the first quarter of 2018 (Press release, GlaxoSmithKline, APR 25, 2018, View Source [SID1234525740]).

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• CER sales growth across all 3 businesses. Pharmaceuticals sales £4.0 billion -4% AER, +2% CER;
Vaccines £1.2 billion +7% AER, +13% CER; Consumer Healthcare £2.0 billion -3% AER, +2% CER
• Adjusted Group operating margin of 26.6%, down 0.2 percentage points AER, up 1.3 percentage points
CER. Pharmaceuticals 33.2%; Vaccines 27.4%; Consumer Healthcare 19.4%
• Total EPS 11.2p, -48% AER, -33% CER, reflecting revaluation of Consumer Healthcare business
following agreement to acquire full ownership
• Adjusted EPS 24.6p, -2% AER, +11% CER driven by continued operating and financial efficiencies
• Q1 free cash flow £324 million -50% primarily reflecting impact of £317 million Vaccine sales milestone
payment to Novartis
• 19p dividend declared for quarter. Continue to expect 80p for FY 2018
• Guidance for CER growth in Adjusted EPS for 2018 maintained
Novartis transaction
• Agreement reached with Novartis to acquire full ownership of Consumer Healthcare business for
$13 billion, subject to shareholder approval
Product and pipeline highlights
• Sales of Ellipta Respiratory products, £386 million +25% AER, +34% CER and Nucala £104 million
+76% AER, +86% CER. Landmark IMPACT data for Trelegy Ellipta published in NEJM. sNDA
approved in US and data submitted to European Medicines Agency to support expanded label.
OSMO study demonstrating Nucala improves asthma control in severe eosinophilic asthma patients
uncontrolled on Xolair presented at AAAAI
• Continued growth from dolutegravir-based HIV products, including new 2 drug regimen Juluca, with
sales of £964 million +15% AER, +23% CER. Positive CHMP opinion received for Juluca in Europe
• Shingrix sales of £110 million; approved in Europe and Japan (23 March)

Emma Walmsley, Chief Executive Officer, GSK said:
"GSK has continued to make good progress in the first quarter with sales growth on a CER basis across all
three businesses. We are strongly focused on commercial execution with encouraging starts for our most
recent new product launches, Shingrix, Trelegy and Juluca. This performance combined with continued cost
discipline has driven a further improvement in the Group’s Adjusted operating margin at CER. We also agreed
to acquire full ownership of the Consumer Healthcare business during the quarter, delivering on one of our key
capital allocation priorities. This will help improve future cash generation and support capital planning for the
Group’s main priority to strengthen the Pharmaceuticals business and R&D pipeline.

2018 guidance
The Group expects to make continued progress in 2018, although the expectation for Adjusted EPS growth
is impacted by a number of factors including, in particular, uncertainties relating to the timing and extent of
potential generic competition to Advair in the US.
In the event that no substitutable generic competitor to Advair is introduced to the US market in 2018, the
Group continues to expect 2018 Adjusted EPS growth of 4 to 7% at CER. In the first quarter, the Group has
made continued progress, with encouraging performances from new launches, Shingrix, Trelegy and Juluca
and other new products, as well as agreeing the buyout of Novartis’ shareholding in the Consumer Healthcare
Joint Venture, subject to shareholder approval. However, the Group has also seen increased pricing and
competitive pressures in the US inhaled respiratory market in the first quarter, and GSK now expects a decline
in 2018 US Advair sales of around 30% at CER.
In the event of a mid-year introduction of a substitutable generic competitor to Advair in the US, the Group
expects full year 2018 US Advair sales of around £750 million at CER (US$1.30/£1), with Adjusted EPS
flat to down 3% at CER.
The effective tax rate for 2018 is expected to be approximately 19-20% of Adjusted profits after the impact
of US tax reform which is expected to benefit the Group effective tax rate by two to three percentage points.
GSK is not able to give guidance for Total results as it cannot reliably forecast certain material elements of
our Total results such as the future fair value movements on contingent consideration and put options. It
should be noted that contingent consideration cash payments are made each quarter primarily to Shionogi by
ViiV Healthcare which reduce the balance sheet liability and are hence not recorded in the income statement.
An explanation of the acquisition-related arrangements with ViiV Healthcare, including details of cash
payments to Shionogi, is set out on page 37.
If exchange rates were to hold at the closing rates on 31 March 2018 ($1.40/£1, €1.14/£1 and Yen 149/£1)
for the rest of 2018, the estimated negative impact on full-year 2018 Sterling turnover growth would be around
5% and if exchange gains or losses were recognised at the same level as in 2017, the estimated negative
impact on 2018 Sterling Adjusted EPS growth would be around 8%