Annual Review 2004 New Challenges New Thinking
Total Page:16
File Type:pdf, Size:1020Kb
Annual Review 2004 New challenges New thinking Do more, feel better, live longer The world is changing... Today’s global healthcare challenges mean that new thinking is called for by the pharmaceutical industry Healthcare funding crisis R&D productivity The demand for quality healthcare is growing faster than It is getting more difficult and taking longer – currently an average governments’ and healthcare purchasers’ ability to support it. of 12 years – to develop new medicines. Despite a substantial GSK’s challenge is to deliver innovative and affordable medicines increase in global R&D expenditure, fewer novel medicines were that meet the real and unmet needs of people burdened by disease. launched in 2003 than at any time during the last 20 years. By working closely with patient groups, we are able to tailor our GSK’s challenge is to discover new medicines faster and more development process to better meet patient needs and maximise economically. In recent years, we have transformed our R&D the effectiveness of our R&D expenditure. function. The result has been a nearly 80% increase in the number of New Chemical Entities in our pipeline, which is now one of the largest in our industry. Access to medicines Transparency In the developing world, where infectious diseases present an Today, physicians, patients, stakeholders and investors quite enormous burden, there is an urgent need for medicines but rightly demand greater levels of transparency about the safety a lack of resources to pay for them. GSK is the only company and efficacy of medicines. In 2004, GSK started publishing its that is developing medicines and vaccines to treat all three of clinical trial data on the internet for anyone to access. We are the the World Health Organization’s top priority diseases: malaria, first pharmaceutical company to offer this level of transparency. tuberculosis and HIV/AIDS. In 2004, GSK shipped 33 million tablets We have also increased the information made available through of preferentially-priced Combivir (GSK’s HIV treatment) to Africa. our reporting and on our corporate website (www.gsk.com). And we’re changing too... GSK recognises the implications of today’s changing world. We are committed to embracing change, turning challenges into opportunities and new thinking into new ways of working In the past four years, we have transformed our R&D function, introducing innovative ways of working, and advanced technology and automation to help us discover and develop medicines and vaccines more efficiently and effectively. We have sharpened our operations, introducing operational excellence programmes, streamlining our processes, building partnerships with our stakeholders, and focusing on the unmet needs of patients. And we have invested in the communities in which we operate, developing medicines for the developing world, supporting community health education programmes, donating medicines, and introducing preferential pricing for those in need. This is an ongoing challenge and much remains to be done. We are committed to participating in the debate on healthcare reform and playing our part in addressing the key issues. This Annual Review explains how GSK is embracing change and how our efforts are delivering results. Front cover We have chosen the image of a pill Contents for our front cover because it is the essence of what 02 Chairman’s and CEO’s statement 18 The Board we do: discovering, developing, manufacturing and 03 Highlights of the year 19 The Corporate Executive Team delivering medicines to the people who need them. 04 So what is the big challenge? 20 Summary remuneration report And that will not change. It also represents the 06 Transforming R&D 23 Corporate governance global nature of our business and our global 08 Delivering the pipeline 24 Responsibility statements responsibility to provide access to medicines for both 10 Sharpening our operations 25 Summary financial statements the developed and developing world. 12 Contributing to society 27 Shareholder information 14 Business operating review New challenges, new thinking GSK Annual Review 2004 1 Chairman’s and CEO’s statement We knew 2004 would be a challenging year for GSK and we are pleased to report that we have achieved our financial and business objectives In our last Annual Review, we predicted that Our pipeline is focused on developing new 2004 would be a challenging year as we felt medicines and vaccines to treat diseases of the full impact of generic competition to Paxil unmet medical need, such as cancer and and the introduction of generic Wellbutrin. Alzheimer’s disease. Many of these have GSK managed this year well, thanks to the the potential to be important new products. underlying strength of the business. In fact, For example, we believe that Cervarix, our GSK is a much stronger company today than promising vaccine candidate against cervical it was a year ago. cancer, has the potential to make a major contribution to healthcare globally and to Our broad-based portfolio of fast-growing become our best-selling vaccine. We expect Sir Christopher Gent, Non-Executive Chairman products and continued focus on controlling to file Cervarix in the European Union and costs enabled us to absorb the loss of more international markets in 2006. than £1.5 billion of business to generics and still achieve a 1% increase in global Great opportunities lie ahead of us. pharmaceutical sales. Turnover of £20 billion This year, we will work to ensure a greater grew 1% at constant exchange rates (CER), understanding by key stakeholders of the and we achieved our guidance of earnings value of innovative medicines. We will per share (EPS) at least in line with business continue our contribution to finding a performance EPS in 2003 (at CER). Our EPS solution to the healthcare funding crisis, grew 2% to 75p in 2004. and we will seek new ways of improving access to our medicines for the people who In 2005, we expect to see faster growth need them most but are least able to pay for with an EPS percentage CER growth in the them. Our Corporate Responsibility Principles low double-digit range on an International continue to guide the way we do business. Financial Reporting Standards (IFRS) basis. A separate 2004 Corporate Responsibility Jean-Pierre Garnier, Chief Executive Officer This is being driven by the strong growth of Report (available from the GSK website) key products and continuing efficiencies in explains progress against these Principles our operations. Our most exciting phase of during the year. growth will come when the new compounds and vaccines currently in development start Acknowledgements contributing to our performance over the We acknowledge with gratitude the next few years. contribution of Sir Christopher Hogg and Sir Peter Job, who retired from the Board GSK has one of the largest and most at the end of 2004. Sir Christopher chaired promising pipelines in the industry, with GSK through a period that saw the Company 140 projects in clinical development (as at derive the full benefits of the merger and the end of February 2005), including 88 meet the challenges caused by the loss of New Chemical Entities (NCEs), 32 Product patent protection on major products. Line Extensions and 20 vaccines. Of these compounds, 43 NCEs have moved into John Coombe, Chief Financial Officer, will Phase II trials, including compounds to treat retire from the Board of GSK on 31 March HIV, diabetes, blood disorders and multiple 2005. John has served GSK and its sclerosis, and data on at least 15 of these predecessor companies in an exemplary are expected during 2005. In 2005, we also manner for more than 18 years, playing a anticipate the launch of six new products, major role in guiding the Company through including Rotarix for rotavirus, Vesicare for the post-merger period and establishing overactive bladder, Boniva for osteoporosis, GSK as a leader within the global Avandaryl for diabetes, Requip for restless pharmaceutical industry. legs syndrome and Entereg for post-operative bowel disorders. We thank all three departing directors for All percentage growth rates are at constant exchange rates (CER), unless otherwise stated. their substantial contributions to GSK and See ‘Business operating review’ on page 15 wish them well for the future. 2 GSK Annual Review 2004 New challenges, new thinking HIGHLIGHTS OF THE YEAR GSK’S BUSINESS STRATEGY FINANCIAL PERFORMANCE PRODUCT PIPELINE GSK’s business strategy – developed projects in 2001 at the time of the merger – in clinical is delivering results: £20bn 140 development Total turnover grew 1% despite Our promising product pipeline is one • To build the best product pipeline a £1.5 billion loss of sales to generics of the largest in the industry in the industry • To achieve commercial and operational excellence spent each day on R&D • To improve access to medicines £8m for those who cannot afford them £6bn GSK spends more on R&D than any other UK company • To make GSK the best place for the Profit before tax grew 2% best people to do their best work • To contribute to investment in communities around the world 04 £X.Xbn Nearly 80% increase in New Chemical Entities • To ensure our business decisions take (NCEs) in pipeline since merger into consideration ethical, social and 75p environmental concerns Earnings per share grew 2% in 2004, in line with our BEST PEOPLE earnings guidance CARING FOR THE ENVIRONMENT 82% of managers surveyed believe that GSK employees are committed and enabled 2nd to make meaningful contributions 7% largest pharmaceutical