GSK Abbas Hussain President, Emerging Markets. 13 th May 2010 Bank of America Merrill Lynch HealthCare Conference

GSK Abbas Hussain President, Emerging Markets 13th May 2010 Bank of America Merrill Lynch HealthCare Conference 1 GSK 1Q 2010 Turnover £7.4bn +13%...
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GSK Abbas Hussain President, Emerging Markets 13th May 2010

Bank of America Merrill Lynch HealthCare Conference

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GSK 1Q 2010 Turnover £7.4bn +13% (£6.6bn +4% excluding pandemic sales)

+9%

GSK 1Q 2010 +4%

+13% Turnover +16% EPS growth

+45%

Rest of Pharma £0.2bn

Consumer £1.2bn

-1%

Asia Pac/ Japan Pharma £0.89bn

US Pharma £1.9bn

Emerging Markets Pharma £0.87bn

+43%

CER growth rates; Business performance Beginning in 2010, Stiefel sales allocated to regions and all ViiV Healthcare sales shown separately .

Europe Pharma £1.9bn

+16%

ViiV (HIV) £0.4bn

-7%

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GSK “Emerging Markets” business 85 countries

>12,000 sales reps CIS China MENA

India

Mexico

Latin America

SSA

Emerging Markets 1Q10 £866m (+43%)* = 12% of GSK Group Turnover Source: GSK 1Q10 reported turnover including pandemic. Excluding pandemic, turnover was £713m (+17%)

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GSK’s pharma presence in Emerging Markets

CIS

Eastern & Central Europe

China MENA

India

Mexico

Latin America

SSA

Asia Pac (excl Japan, Aus, NZ)

+ Asia Pac (excl Japan, Australia, NZ), Eastern and Central Europe = £1.3bn (+40%) 1Q10 Source: GSK 1Q10 reported turnover including pandemic. Excluding pandemic, turnover was £1.1bn (+19%)

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GSK’s total presence in Emerging Markets

Rx

Cx

+ £1.3bn 1Q10 (+40%)

£0.4bn 1Q10 (+13%)

£1.7bn (+32%) 1Q10 24% of GSK Group Turnover Source: GSK 1Q10 reported turnover including pandemic. Excluding pandemic, total turnover was £1.6m (+17%)

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GSK Emerging Markets 2009 turnover 2009 £3.0bn (+20%) 500

SSA

450

£204m

1

1

50

GSK ranking #

11

5

3

*China includes HK Source: Turnover and growth is GSK 2009 as reported. Growth rates are CER. Rankings are IMS MAT Dec 09

13

7

1

Russia

Latina

Saudi Arabia

0 Mexico

South Asia

Turkey

£604m

100

China*

Mexico

(+22%)

£271m

£214m

Pakistan

150

(+56%)

200

Egypt

CIS

(+28%)

£231m

(+36%)

250

(+6%)

(+10%)

300

Brazil

£m

£983m

(+6%)

350

£461m

India

400

China*

(+16%)

MENA

Top markets

(+24%)

By region

16

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History of EM sales growth GSK is catching up with EM market growth

25%

20% 20%

15%

10%

EM (IMS data) 5%

GSK (IMS data) GSK (reported)

0% 2003

2004

2005

2006

2007

2008

Source: IMS data (Dec MAT) and GSK reported. Note: IMS audits currently do not capture all activities e.g. vaccines, and therefore undervalues sales in EM, particularly for GSK.

2009

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Emerging market characteristics

Large markets

Pay out of pocket

Need for greater access

Smaller products

Untapped potential

Longevity of brands

Fast growing

Evolving healthcare programmes

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Growth in ‘Pharmerging Markets’ IMS Tier 1, 2, 3 Pharmerging Markets Incremental Growth 2009-2013

GDP PPP

China

Russia

+$40bn Growth +$5-15bn Growth

Brazil

India Turkey

Pakistan

Egypt

Ukraine

Venezuela

S. Africa

Mexico

Argentina

Thailand

Vietnam

Indonesia

+$1-5bn Growth

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Need for greater access Total population

Brazil

India

S. Africa

Egypt

180m

1.2bn

49m

82m

33%

1%

4%

2%

42%

45%

51%

38%

26%

51%

32%

58%

A B C+ CD E A/B: No problem paying for any prescription medicine – can afford premium priced branded products (A: Senior managers in business or commerce, top civil servants; B Middle managers in large organisations, owners of small businesses) C+: Have some problems paying for Rx medicines – can usually afford some moderately priced brands or generics but run into cost difficulties if repeat medication is prescribed (Junior managers, owners of small establishments and all others in non-manual positions) C-: Have major problems paying for prescription medicines – can only afford the least expensive medications and only shorter courses of treatment (Skilled manual workers, manual workers with responsibility for others) D/E: Cannot afford prescription medicines – have major difficulties to afford medication of any kind (D: Semi-skilled and unskilled manual workers, apprentices and trainees; E: Unemployed, casual workers without regular income, those dependent on the state)

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GSK’s contribution to EM healthcare

Pre Clinical R&D

Clinical R&D

New Business Models

Post Launch

Health Systems

• R&D PPPs

• R&D PPPs

• Tiered pricing

• Knowledge Pool

• Knowledge Pool

• Price caps

• Open lab

• EM-focused R&D

• MIC Pricing

• Malaria screen

• Malaria vaccine

• Branded generics

• TB, malaria

• HIV

• ViiV Healthcare

• African malaria Partnership

• Brazil JV

• PHASE1

• Advance Market Commitment

• Positive Action and PAFC

• Continuing Medical Education • Voluntary licencing

• 20% reinvestment • Lymphatic Filariasis elimination

• Humanitarian relief

1 PHASE

= Personal Hygiene And Sanitation Education

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LDCs: Price reductions end Q1 2009 lead to more patients affording IP products by end 2009 Francophone Sub Saharan Africa Sales Volume Average Price

Q1

Q2

Q3

Q4

Average of Prices Vs Sum of sales volume of AVANDIA, FLIXONASE, FLIXOTIDE & SERETIDE across 4 quarters

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Emerging Markets strategy Scale up our Classic brands business £1.3m +18%

Build and capture the Vaccines market £669m +30% Pandemic

Drive our Innovative brands £967m +17% Source: GSK 09 reported sales; CER growth rates

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13

Bolt-on acquisitions and partnerships 13 deals completed across the business will contribute to the Emerging Markets business Classic business

Pakistan

Near East

Innovative business

EM/AP

Algeria

Vaccines business

Korea

Consumer

Walvax

Dr Reddy’s (ex-India); Laboratoire Pharmaceutique Algérien (LPA Algeria); Walvax (Priorix in China); Neptunus (flu in China); Intercell (needle-free vaccine technology). Note: Lucozade China with Uni-President China Holdings, and Dong-A Pharmaceuticals are outside of GSK’s “Emerging Markets” business.

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Scale up our Classic brands business Our own portfolio

2007 +12%

Growth

2009 +20%

Bolt-on acquisitions

Egypt

Oct 08

Pakistan

Dec 08

Near East

July 09

Portfolio deals

June 09

Licensing - July 08

£45m sales 2009 >350 dossiers to be filed by end 2010

Growth 2007 2009 +5% +11%

EM/AP Mar 09 £46m sales 2009

July 09

Total Classic Business Growth 2007 +5%

2009 +18%

Local Acquisitions Russia Brazil

Dec 09

Mexico

Algeria 15

Ventolin HFA in China: Increasing patient access drives expansion

Chinese government prioritized EDL as a key driver of new healthcare reform in April 2009 Salbutamol has been listed in NEDL since Oct 2009 GSK has been winning tenders in EDL market with Ventolin HFA since early 2010 Plans to expand Ventolin HFA penetration to low tier market Reach 234 cities and over 10,000 hospitals vs current 100 cities & 6,473 hospitals 16

Strategic Collaboration with Aspen

Aspen is Africa’s largest pharmaceutical manufacturer GSK acquired 19% stake (market value of £0.6bn) Establishes “GSK Aspen Healthcare for Africa” brand Brings affordable medicines to sub-Saharan Africa (SSA) Leverages GSK’s infrastructure in SSA and Aspen’s local leadership South Africa Disposal of manufacturing site and tail brands simplify GSK’s operating model Share of after tax profits of associates and joint ventures £21m in 1Q10

Transaction closed 30 November 2009; Market value as at 31 March 2010.

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Drive our Innovative business

Core portfolio

New portfolio

Future portfolio

2009 Turnover

New products: £276m (+21%) £115m (+7%)

£76m

(0%)

£76m (+8%) £51m (+11%)

Votrient Arzerra denosumab Benlysta Horizon darapladib

Targeted R&D developing EMspecific portfolio Tykerb for gastric and H&N cancers Liver cancer Market-specific FDCs 18

Stiefel opportunity is greatest in EM

Stiefel acquisition provides access to ~80% of the EM derms market

Total Stiefel + GSK EM derms sales by market 110

Stiefel Brands ($135m)

100

GSK Brands ($238m)

90 80 70 60 50 40 30 20 10

GSK revenues are for Calendar Year 2008, while Stiefel revenues are for Financial Year 2008.

Other EM

Saudi

Venezuela

Turkey

Pakistan

Mexico

Brazil

Source: IMS

India

0

19

Build and capture the Vaccines market

GSK has 33% of the market and is growing faster

Significant market growth potential Growing government attention to public health agenda

Total EM vaccines market 2009 £2.0bn (+22%)

Large birth cohorts for paediatric vaccines

£669m (+30%) GSK vaccines

Significant GSK growth potential New geographies Broad portfolio, well-positioned to provide for spectrum of needs Local partnership is critical 20 Source: GSK estimates for market; GSK reported sales. (2009 EM vaccines data)

GSK has the broadest vaccine portfolio in EM GSK

HPV

9 9 9 9 9 9 9 9 9

Malaria

d

Dengue

d

DTPw combos DTPa combos MMR / Varicella Hepatitis A Rotavirus Meningococcal Pneumococcal Influenza

9 = available in EM; d = Ph III / registration in EM

Merck

9 9 9

Sanofi

Pfizer

Novartis

9 9 9 9

9

9

d

9 9

9

9 d 21

Strong launches are building the vaccines business

Launched mid 2009 and already £26m in 1Q10 Brazil Fiocruz 10+ year contract Mexico 3 year contract Turkey 70% market share Hong Kong 70% market share AMC 10 year contract for GAVI countries ($1.3bn)

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GSK Emerging Markets in 2015 Outgrow the market IMS projects EM market growth of 13-15%1 Our objective is to grow faster than the market2

Evolve our business Vaccines Classic Innovative

2009 Classic

Vaccines

Innovative

2015 ambition 1 Source: IMS Prognosis through 2013, redefined for GSK EM region. 2 including organic growth and bolt-on acquisition strategy.

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Operating profit margin

2009 Operating Profit Margin1(%)

1

US

66.2

Europe

58.7

EM

35.3

AP/J

52.7

GSK’s reported regional margins exclude R&D and legal expenses which are heavily weighted towards Europe and US EM has been in “investment mode” EM margin expected to remain in mid-30s range

Operating margin excluding R&D, legal and other unallocated pharmaceuticals costs, as well as profit from asset sales, and including pandemic.

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