Pharmaceuticals/Major
`
`GlaxoSmithKline plc (ADR)
`
`Company Update
`
`Consumer Outlook Healthy; Estimates
`Raised Post Q1 Model Update
`
`The Cowen Insight
`Meeting with head of GSK Consumer highlighted significant potential. Separately, we
`are raising turnover and EPS estimates post Q1 model update.
`
`Consumer Outlook Remains Encouraging
`The new GSK/NVS Consumer segment includes seven “power brands” (Voltaren,
`Panadol, Sensodyne, Theraflu, Otrivin, Paradontax, and Poligrip) and 12 core brands
`which are expected to drive 90%+ of growth (brand loyalty, geographic expansion,
`and line extensions key). These power brands offer above-average gross margins,
`and are key to meeting the 20% operating margin target in 2020. Consumer margins
`in the Developed and Emerging world are not that much different from one another.
`Switch (Rx-to-OTC) product Flonase is off to a very successful start; it was launched
`in February 2015 and is already a top-3 nasal allergy OTC product in the U.S. Private
`label brands (20% share as of Q1:16) and generic Rx Nasonex may add some
`competitive pressure. Glaxo has had 9 switch products over the past 25 years and
`expects to add at least one every 5 years; "switchability" and turnover potential
`are criteria GSK considers when evaluating candidates. Management is targeting
`mid-single turnover growth (at/just ahead of 4% industry growth). Each of the four
`Consumer segments (OTC, Oral Care, Nutrition, Skin Care) deliver similar growth
`and there is not a major difference in profitability. GSK Consumer operates in 160
`countries. Over time, Emerging Markets are expected to become a larger portion of
`total Consumer, and the U.S. is critical to success. China offers the world's largest
`e-commerce opportunity. Expectations for China overall have been rebased. GSK
`operates separate Rx and Consumer sales forces in the majority of markets. We
`estimate Consumer sales of £6.64B (+10%) in 2016, £7.355B in 2018, and £8.795B in
`2022.
`JV With NVS Trending Well; Margin Target Achievable
`The JV (established March 2015, GSK share 63.5%) appears to have met/exceeded
`internal expectations. Integration efforts have progressed quickly. Former Novartis
`executives now represent roughly one-third of the new Consumer division
`management team. The biggest area of focus across the JV is innovation. As an
`example, Glaxo has recently hired a new head of R&D. GSK Consumer operating
`margin expansion is expected to be driven roughly 50% from synergies and the
`remaining 50% from a combination of mix, P&L leverage, improved procurement
`efficiencies, more effective A&P spend (A&P remains critical to Consumer success),
`and COGS benefits (targeted annual 10% SKU reduction, less use of contract
`manufacturing). Future Consumer M&A is a board decision, which involves both GSK
`and NVS representatives.
`
`Equity Research
`
`May 16, 2016
`
`Price: $41.91 (05/13/2016)
`Price Target: $49.00
`
`MARKET PERFORM (2)
`
`Steve Scala, R.Ph., CFA
`617.946.3923
`steve.scala@cowen.com
`
`Kathleen Miner, R.Ph., CFA
`617.946.3857
`kathy.miner@cowen.com
`
`Luca Issi, Ph.D.
`617.946.3716
`luca.issi@cowen.com
`
`Jean Perreault
`617.946.3967
`jean.perreault@cowen.com
`
`Key Data
`NYSE: GSK
`Symbol
`$44.98 - 36.70
`52-Week Range:
`$102,083.4
`Market Cap (MM):
`$10,727.0
`Net Debt (MM):
`NA
`Cash/Share:
`2,435.8
`Dil. Shares Out (MM):
`Enterprise Value (MM): $87,297.0
`ROIC:
`NA
`ROE (LTM):
`NA
`BV/Share:
`NA
`Dividend:
`$2.22
`Yield:
`5.30%
`
`2015A
`FY (Dec)
`Earnings Per Share
`Q1
`Prior Q1
`Q2
`Prior Q2
`Q3
`Prior Q3
`Q4
`Prior Q4
`Year
`Prior Year
`Core EPS
`
`p17.30
`-
`p17.30
`-
`p23.00
`-
`p18.10
`-
`p75.70
`-
`
`2016E
`
`2017E
`
`p19.80A
`-
`p20.00
`-
`p28.50
`p25.90
`p20.70
`p18.70
`p89.00
`p84.40
`
`p21.30
`p18.30
`p20.70
`p18.40
`p28.70
`p26.90
`p21.30
`p20.40
`p92.00
`p84.00
`
`Revenue (MM)
`Year
`Prior Year
`EV/S
`
`£23,923.0
`-
`2.2x
`
`£25,710.0
`£25,150.0
`2.0x
`
`£26,470.0
`£25,810.0
`2.0x
`
`www.cowen.com
`
`Please see pages 33 to 38 of this report for important disclosures.
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1082, p. 1 of 2
`
`
`
`GlaxoSmithKline plc (ADR)
`
`Company Update
`
`Consumer Outlook Healthy; Estimates
`Raised Post Q1 Model Update
`
`The Cowen Insight
`Meeting with head of GSK Consumer highlighted significant potential. Separately, we
`are raising turnover and EPS estimates post Q1 model update.
`
`Consumer Outlook Remains Encouraging
`The new GSK/NVS Consumer segment includes seven “power brands” (Voltaren,
`Panadol, Sensodyne, Theraflu, Otrivin, Paradontax, and Poligrip) and 12 core brands
`which are expected to drive 90%+ of growth (brand loyalty, geographic expansion,
`and line extensions key). These power brands offer above-average gross margins,
`and are key to meeting the 20% operating margin target in 2020. Consumer margins
`in the Developed and Emerging world are not that much different from one another.
`Switch (Rx-to-OTC) product Flonase is off to a very successful start; it was launched
`in February 2015 and is already a top-3 nasal allergy OTC product in the U.S. Private
`label brands (20% share as of Q1:16) and generic Rx Nasonex may add some
`competitive pressure. Glaxo has had 9 switch products over the past 25 years and
`expects to add at least one every 5 years; "switchability" and turnover potential
`are criteria GSK considers when evaluating candidates. Management is targeting
`mid-single turnover growth (at/just ahead of 4% industry growth). Each of the four
`Consumer segments (OTC, Oral Care, Nutrition, Skin Care) deliver similar growth
`and there is not a major difference in profitability. GSK Consumer operates in 160
`countries. Over time, Emerging Markets are expected to become a larger portion of
`total Consumer, and the U.S. is critical to success. China offers the world's largest
`e-commerce opportunity. Expectations for China overall have been rebased. GSK
`operates separate Rx and Consumer sales forces in the majority of markets. We
`estimate Consumer sales of £6.64B (+10%) in 2016, £7.355B in 2018, and £8.795B in
`2022.
`JV With NVS Trending Well; Margin Target Achievable
`The JV (established March 2015, GSK share 63.5%) appears to have met/exceeded
`internal expectations. Integration efforts have progressed quickly. Former Novartis
`executives now represent roughly one-third of the new Consumer division
`management team. The biggest area of focus across the JV is innovation. As an
`example, Glaxo has recently hired a new head of R&D. GSK Consumer operating
`margin expansion is expected to be driven roughly 50% from synergies and the
`remaining 50% from a combination of mix, P&L leverage, improved procurement
`efficiencies, more effective A&P spend (A&P remains critical to Consumer success),
`and COGS benefits (targeted annual 10% SKU reduction, less use of contract
`manufacturing). Future Consumer M&A is a board decision, which involves both GSK
`and NVS representatives.
`
`Equity Research
`
`May 16, 2016
`
`Price: $41.91 (05/13/2016)
`Price Target: $49.00
`
`MARKET PERFORM (2)
`
`Steve Scala, R.Ph., CFA
`617.946.3923
`steve.scala@cowen.com
`
`Kathleen Miner, R.Ph., CFA
`617.946.3857
`kathy.miner@cowen.com
`
`Luca Issi, Ph.D.
`617.946.3716
`luca.issi@cowen.com
`
`Jean Perreault
`617.946.3967
`jean.perreault@cowen.com
`
`Key Data
`NYSE: GSK
`Symbol
`$44.98 - 36.70
`52-Week Range:
`$102,083.4
`Market Cap (MM):
`$10,727.0
`Net Debt (MM):
`NA
`Cash/Share:
`2,435.8
`Dil. Shares Out (MM):
`Enterprise Value (MM): $87,297.0
`ROIC:
`NA
`ROE (LTM):
`NA
`BV/Share:
`NA
`Dividend:
`$2.22
`Yield:
`5.30%
`
`2015A
`FY (Dec)
`Earnings Per Share
`Q1
`Prior Q1
`Q2
`Prior Q2
`Q3
`Prior Q3
`Q4
`Prior Q4
`Year
`Prior Year
`Core EPS
`
`p17.30
`-
`p17.30
`-
`p23.00
`-
`p18.10
`-
`p75.70
`-
`
`2016E
`
`2017E
`
`p19.80A
`-
`p20.00
`-
`p28.50
`p25.90
`p20.70
`p18.70
`p89.00
`p84.40
`
`p21.30
`p18.30
`p20.70
`p18.40
`p28.70
`p26.90
`p21.30
`p20.40
`p92.00
`p84.00
`
`Revenue (MM)
`Year
`Prior Year
`EV/S
`
`£23,923.0
`-
`2.2x
`
`£25,710.0
`£25,150.0
`2.0x
`
`£26,470.0
`£25,810.0
`2.0x
`
`www.cowen.com
`
`Please see pages 33 to 38 of this report for important disclosures.
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1082, p. 1 of 2
`
`
`
`Cowen and Company
`Equity Research
`
`GlaxoSmithKline plc (ADR)
`May 16, 2016
`
`GlaxoSmithKline Annual Product Sales Buildup (£MM) (continued)
`
`Source: Company data, Cowen and Company estimates
`
`
`
`
`
`
`
`www.cowen.com
`
`
`
`29
`
`2015
`
`2016E
`
`2017E
`
`2018P
`
`2019P
`
`2020P
`
`2021P
`
`2022P
`
`50
`
`50
`
`75
`
`75
`
`100
`
`100
`
`2016-20
`
`2016-22
`
`CGR
`
`NM
`
`NM
`
`CGR
`
`Comment
`
`NM NY-ESO-1 T cell receptor; cancer; Phase II
`
`NM Anti-notch 2/3 mAB; pancreatic and ovarian cancer; Phase II
`
`3377794
`
`Tarextumab
`
`Other Oncology/emesis
`
`Oncology
`
`% Change
`
`Flolan - U.S. (lc, ex fx)
`
`Flolan - U.S.
`
`Flolan - EU (lc, ex fx)
`
`16
`
`216
`
`-82%
`
`17
`
`20
`
`25
`
`30
`
`20
`
`25
`
`25
`
`50
`
`35
`
`25
`
`100
`
`150
`
`200
`
`NM
`
`NM Sold to Novartis for $16B, $1.5B of which was keyed to COMBI-d trial; closed
`
`3/2/15
`
`40
`
`30
`
`45
`
`35
`
`50
`
`40
`
`19%
`
`16%
`
`32%
`
`26%
`
`Flolan - EU
`
`Flolan - EM
`
`Flolan - ROW
`
`Flolan
`
`Volibris - U.S. (lc, ex fx)
`
`Volibris - U.S.
`
`Volibris - EU (lc, ex fx)
`
`Volibris - EU
`
`Volibris - EM
`
`Volibris - ROW
`
`8
`
`33
`
`58
`
`91
`
`61
`
`10
`
`35
`
`65
`
`110
`
`75
`
`15
`
`40
`
`80
`
`130
`
`100
`
`45
`
`95
`
`50
`
`110
`
`55
`
`125
`
`60
`
`140
`
`65
`
`155
`
`12%
`
`18%
`
`11%
`
`16% Pulmonary arterial hypertension
`
`150
`
`120
`
`270
`
`170
`
`140
`
`310
`
`190
`
`160
`
`350
`
`210
`
`180
`
`390
`
`230
`
`15%
`
`13%
`
`200
`
`430
`
`21%
`
`17%
`
`18%
`
`15% Pulmonary arterial hypertension
`
`Volibris
`
`2696273
`
`2998728
`
`2696274
`
`2696275
`
`2398852 + 23156898
`
`Other
`
`152
`
`185
`
`230
`
`25
`
`25
`
`161
`
`175
`
`190
`
`500
`
`200
`
`615
`
`50
`
`50
`
`25
`
`25
`
`25
`
`210
`
`805
`
`75
`
`75
`
`50
`
`50
`
`50
`
`220
`
`995
`
`100
`
`100
`
`75
`
`75
`
`75
`
`230
`
`1,185
`
`125
`
`125
`
`100
`
`100
`
`100
`
`240
`
`1,375
`
`NM
`
`NM
`
`NM
`
`NM
`
`NM
`
`6%
`
`24%
`
`NM Ex-vivo stem cell gene therapy; ADA-SCID; EU filed 5/15; U.S. Phase II/III
`
`NM Transthyretin-mediated amyloidosis; Phase III
`
`NM Ex-vivo stem cell gene therapy; metachromatic leukodystrophy; Phase II
`
`NM Ex-vivo stem cell gene therapy; Wiscott-Aldrich syndrome; Phase II
`
`NM SAP mAB + SAP depleter; amyloidosis; Phase II
`
`5%
`
`22%
`
`Rare Diseases
`
`% Change
`
`Avodart - U.S. (lc, ex fx)
`
`Avodart - U.S.
`
`Avodart - EU (lc, ex fx)
`
`Avodart - EU
`
`Avodart - EM
`
`Avodart - Japan
`
`Avodart - ROW
`
`Avodart
`
`371
`
`-11%
`
`425
`
`15%
`
`18%
`
`23%
`
`31%
`
`24%
`
`19%
`
`16%
`
`166
`
`254
`
`237
`
`657
`
`5
`
`0
`
`0
`
`285
`
`190
`
`100
`
`215
`
`505
`
`195
`
`385
`
`175
`
`275
`
`0
`
`50
`
`155
`
`205
`
`0
`
`25
`
`135
`
`160
`
`0
`
`10
`
`115
`
`125
`
`0
`
`5
`
`NM
`
`NM Patent expired 2015; generic launched 10/15
`
`-46%
`
`-49% Patent expires 2017
`
`95
`
`100
`
`-11%
`
`-25%
`
`-13%
`
`-24% BPH; good growth despite finasteride generics; prostate cancer filing withdrawn
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1082, p. 2 of 2
`
`
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
