GSK delivers 2009 EPS of 121.2p before major restructuring*
and dividend of 61p (+4p)
- Strategy supports return to sales growth (+3%)
- Sustained R&D productivity; with further actions to improve returns.
Results before major restructuring*
2009 Growth Q4 2009 Growth
£m CER% £% £m CER% £%
Turnover 28,368 3 16 8,094 13 17
Earnings per share 121.2p 2 16 35.4p 43 33
Total results
2009 Growth Q4 2009 Growth
£m CER% £% £m CER% £%
Turnover 28,368 3 16 8,094 13 17
Restructuring charges 832 230
Earnings per share 109.1p 8 23 32.1p 82 66

The full results are presented under ‘Income Statement’ on pages 8 and 15.
* For explanations of the measures ‘results before major restructuring’ and ‘CER growth’, see page 7.

Andrew Witty, Chief Executive Officer, said:
“Our strategy is delivering and I believe that GSK is now moving to a position where we can deliver our goal of long-term sustainable financial performance. 2009 saw GSK return to sales growth and I am confident of our prospects in 2010.”

Summary
• Full year sales growth of 3% with successful delivery of diversification strategy
- Consumer Healthcare (+7%), Emerging Markets (+20%), Japan (+22%)
- Sales from ‘white pill/western markets’: 30% of 2009 full year sales (36% in 2008)
• Continued new product delivery
- Total of 12 approvals and 11 new product filings in 2009
- 6 NME/vaccine launch opportunities in next 18 months
• Sustained R&D productivity with ~30 assets in late-stage development
- New R&D model fully operational
• Further actions to improve R&D returns
- Proposed reduction to R&D infrastructure
- Neuroscience research to focus on neurodegeneration and neuroinflammation; proposed cessation of discovery research in selected areas including depression and pain
- New rare diseases unit to be established
• Restructuring programme expanded; additional savings of £500 million by 2012
- R&D (50%); SG&A (50%)
- 70% of savings to enhance profitability; 30% to be reinvested
- Expected additional charges of £0.9 billion
• 2009 EPS before major restructuring of 121.2p, includes:
- Q4 gain relating to formation of ViiV Healthcare of £296 million (4.2p of EPS)
- Q4 legal charge £392 million (5.6p of EPS), with increased provisions for existing cases
• Increased 2009 dividend of 61p, up 7% (Q4: 18p, up 6%)

GSK’s strategic priorities
GSK has focused its business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve GSK’s long-term financial performance:
• Grow a diversified global business
• Deliver more products of value
• Simplify GSK’s operating model
Chief Executive Officer’s review
Our strategy is delivering and I believe that GSK is now moving to a position where we can deliver our goal of long-term sustainable financial performance.
2009 saw GSK return to sales growth and I am confident of our prospects in 2010.
In delivering our strategic priorities we are diversifying and driving growth in key areas such as Emerging Markets, Consumer Healthcare and vaccines.
Sales in our Emerging Market pharmaceuticals business grew 20% and now represent 10% of group turnover. If we use the broader definition of “emerging markets”#, GSK sales grew 28% and represented 24% of group turnover. I think this demonstrates GSK’s potential in these markets.
Looking at our total consumer healthcare business, we saw continued industry-leading performance with sales up 7% for the year compared to overall market growth of around 2%.
This has been driven by sustained investment and brand innovation.
As is demonstrated by the return to sales growth, increased diversification is helping to reduce our volatility - evident when you consider that GSK absorbed the impact of losing more than £1.4 billion of sales to genericisation in the US market in 2009.
Of course, this impact was also offset by sales of our influenza products to governments responding to the H1N1 pandemic.
We have invested for many years in developing our influenza capabilities and five months after the WHO declared H1N1 a global flu pandemic, GSK was able to supply an approved vaccine to governments across the world. We are continuing to work closely with them to respond to their needs. We currently expect roughly the same level of sales for the vaccine in 2010 as for 2009.
It is vital that we underpin our sales progress with dynamic new product contribution.
Last year, GSK received 12 product approvals and completed 11 new filings. In the last 3 years GSK has obtained more FDA approvals for NMEs and vaccines than any other company. Over the next 18 months we have the potential to launch 6 brand new medicines and vaccines, including Benlysta, which would be the first new treatment for systemic lupus in over 50 years.
This delivery is set against a continued goal of maintaining around 30 assets in our late-stage pipeline.
I am very pleased with the significant progress our R&D organisation has made and am convinced that our new DPU model and the strategies we are employing are the right approach to generating greater returns:
We continue to focus strongly on making better decisions around pipeline progression.
In 2009 for example, we elected not to progress 6 assets, which despite passing basic efficacy and safety hurdles, did not meet our new criteria around potential for differentiation.
# Includes Pharmaceutical and Consumer Healthcare sales in GSK’s Emerging Markets region plus Central and Eastern Europe and Asia Pacific markets (excluding Japan, Australia and New Zealand).

We have ‘externalised’ approximately 30% of GSK’s discovery research.
We are already conducting discovery research with 47 external partners. Our goal is to further increase the level of externally sourced compounds in our pipeline, through more option-based agreements. In doing so, we believe that we can lower the risk of our invested capital and are more likely to yield a satisfactory return.
We are allocating capital to areas where we can get the best return on investment.
Today, we are creating a standalone unit to specialise in the development and
commercialisation of rare disease medicines. The profile of investing in this area is attractive for several reasons. Less than 10% of 5,500 identified rare diseases are currently treated, meaning there is a significant medical need. Additionally, the risks associated with product development in these diseases are generally lower as in most cases the target is known; the patient population is identified and clinical trials involve relatively small numbers of patients.
To build our capability in this area, we have entered into new recent alliances with two specialist companies - Prosensa and JCR Pharmaceuticals.
We are proposing to cease research in selected disease areas.
Today, we have announced proposals to cease discovery research in selected neuroscience areas, including depression and pain. These proposals are subject to consultation. We will focus research activities in neurodegenerative and neuroinflammatory diseases (such as Alzheimer’s Disease, Multiple Sclerosis and Parkinson’s Disease) where we believe the prospects for successful registration and launch of differentiated medicines are greater.
We are also looking to reduce R&D infrastructure costs.
Today we have announced an expansion of GSK’s restructuring programme to deliver additional annual pre-tax savings of £500 million by 2012 (R&D 50%; SG&A 50%). A significant proportion of these new cost savings will be generated through reduction of infrastructure. Approximately 70% of these new savings will be directed to the bottom line to enhance profitability.
We remain very conscious of the impact restructuring has on our employees. Where possible, we will continue to try to preserve jobs. As before, we will not be providing targets for job reductions and we will announce restructuring outcomes once employees, relevant works councils and trade unions have been consulted.
These R&D strategies are designed to make us more responsive in our allocation of capital and to deliver greater returns.
We recently analysed the projected rate of return based on the investment made in our latestage pipeline and our expectations regarding future long-term sales performance. We estimate this return to be around 11% which we believe is an improvement on the industry average over the last ten years. Our long-term goal is to go further and improve this return by 25%, equating to an aspirational rate of return for GSK’s R&D of around 14%.
In conclusion, we have seen good progress in our sales performance and we are
maintaining a strong focus on cost reduction. I believe that our strategy is delivering and GSK’s long-term prospects are improving.

Andrew Witty
Chief Executive Officer
Video summaries of Andrew Witty discussing today’s results are available on www.gsk.com