GSK plc (GSK) Earnings Call Transcript & Summary

Good morning, good afternoon, and thank you, everybody, for joining us. My name is Keyur Parekh, and I cover GlaxoSmithKline for Goldman Sachs with our London offices. It's my pleasure to host Dame Emma Walmsley for this inaugural chat. But before we kick it off, I'm required to make certain disclaimers. Goldman Sachs agrees to host this conference on the basis that no third-party speaker will provide confidential or material nonpublic information. In addition, by attending this confidence, we provide Goldman Sachs the right to record and redistribute the conference information. The views of third-party speakers do not necessarily reflect those of Goldman Sachs. We are required to make certain disclosures in public appearances about Goldman Sachs' relationship with companies that we discuss, the disclosures related to investment banking relationships, compensation received or 1% or more ownership. We are prepared to read aloud disclosures for any issuer upon request. However, these disclosures are available in our most recent reports available to you as clients on our firm portals. Disclosures and updates to our disclosures are also available by ticker on the firm's public website at www.gs.com/research/hedge.html. Also, the views stated of non-Goldman Sachs personnel do not reflect -- necessarily reflect those of Goldman Sachs. With that, Dame Emma, thank you very much for joining us. We really appreciate you taking the time. I know we've had many CEO on this podium before, but I think it's the first time we have Dame or a Sir on this. So thank you again for taking the time. We appreciate it.

I'm really happy to be here. Happy New Year to you, Keyur and to anyone that's joining this call.

Excellent. Emma, I want to spend -- I will spend a lot of time on this conversation focusing kind of on the future. But before we get there, I do want to spend a couple of minutes kind of talking through the many changes at Glaxo over the last 4 years kind of since you've taken over. GSK today, the Board looks very different, the management team looks very different. So just wondering if you can summarize kind of the journey so far for us, kind of what prompted you to go down this road, and how far down the transition do you think we are?

Sure. Well, the shortest answer to that is I think we've made an enormous amount of progress on the priorities I laid out when I started. There's still plenty more to do, and we have a very exciting 18 months ahead of us. When I became CEO, I set out 3 long-term priorities for GSK: innovation, performance and trust. And this was all to be underpinned by a change in culture. GSK has a long history and some great aspects to its culture, a big focus on company values and purpose. And corporate purpose is something we've all been talking about a lot more in the last 12, 18 months. And I've always been clear that we need to retain and build on that, but we definitely needed much from the focus on innovation, the reason we exist as a company; the quality of the pipeline and the competitiveness of the way we execute it; and to bring more agility and courage and performance edge to our company. Having the right leadership, as you alluded to, is a really big part of setting a company's culture. And the choices that I made around the team really reflected that. So I think of the 14 members of the executive team, about 80 are new enrolled since I began, which is about the same proportion as the senior leadership, top 125 in the company. Some of them are internal, but there are many areas where we've recruited externally to bring in fresh perspectives or experience in areas where we wanted to really accelerate investment, particularly in R&D and specialty medicines. So in terms of personnel, I think we stepped up, and it always starts with the quality of people. We've set up the right leadership over the last 3 years. And that's helped us to really achieve, I think, an enormous amount of foundational progress. Perhaps the biggest thing is a real strategic reshaping of the group, with a lot more to play out in the next 18 months. First of all, with the buyout of Novartis, and then the creation of the joint venture with Pfizer in our consumer business and our intention strategically to separate into 2 companies next year. We've refocused the portfolio overall also with a lot of strategic divestments, and we're going to continue to do that to make sure we set up 2 companies for success. In terms of innovation, our first priority under the leadership of Hal, our new Chief Scientific Officer, we made a great deal of progress. And remember, just when I started, I said there were 3 things I really needed to get the approval for, so they can contribute to our near-term growth, and that was Shingrix, Trelegy and 2-drug regimens, all of which are very much key growth drivers for us and absolutely on track to be blockbusters already there. We've specifically stepped up our investment in specialty care, notably oncology, with the acquisition of TESARO. And just in the past year, we had the approval of Zejula in first-line ovarian cancer and BLENREP in multiple myeloma or in homegrown assets. And with the pipeline that we already have in place today, we expect to launch, I think, over 20 new medicines and vaccines by the end of '26 as well as delivering significant developments for products that are already in market with much better life cycle innovation, something we weren't so good at before. And there's been another big change for us with drugs like Nucala or Benlysta. And of course, we hope, at the same time contributing COVID solutions both in vaccines and treatments without slowing down any of this initial critical pipeline work. In terms of the priority of performance under Luke and Deborah's leadership, we've really stepped up our commercial execution. And you will have seen that in Q3 that we're delivering great progress on our new specialty medicines despite the pandemic context, winning share of voice in these key areas and continuing to drive strong double-digit growth. We updated our commercial policies, both in terms of HCP engagement and our sales force incentives to help us be more competitive, but bringing in the right leadership and really focusing our priorities in terms of assets and geographies has been critical for that. We continue to do well in our big consumer business, with Brian and his team driving strong performance and market shares there, with the addition of some really exciting new categories for us with the Pfizer joint venture, for example, in vitamins and minerals but also absolutely critically, as we've seen, again, in the last 12 to 18 months this incredible acceleration of digital channels, be it distribution or marketing or our own ways of working. We have -- over the last few years, we put a very sharp focus on cost management in the company to support a significant reallocation of funds, primarily to R&D, but also to supporting the launch of our new growth drivers. And it made really good progress in extracting the synergies from consumer health care for that great margin progression, but also beginning the future-ready restructuring program for biopharma, which we announced just in February last year to make sure we have the right competitive cost structure post separation with more efficient support functions, the right kind of footprint, and critically, although often invisibly, the manufacturing network we need. We're really starting to see some of the savings here, Keyur. And whilst we continue to invest in R&D right now, you will see margin improvement flow all the way through in 2022 and then beyond that. And then lastly, a quick comment on the trust priority. This is definitely something our company has always been known for, specifically on our starts on global health, and we continue to lead the access to medicine index. But it's not just about global health. We also have an ongoing commitment to responsible pricing and making sure we drive access effectively through that. We've also stepped up commitments on ESG and other areas, whether it be our recent announcement on net 0 impact on climate and net positive impact on nature by 2030, which is, we're sure as we work post pandemic is going to become a much evermore important and critical agenda. And we're working on other targets and various metrics that are increasingly important to investors, but also employees from an ESG perspective. So I could spend our entire slot together on your first question, but I think the summary is we've made some tremendous progress with a very ambitious change agenda that's been undeterred by the recent background context. There's a lot more to do as we work towards the separation and creation of 2 exciting new companies. We're going to be updating you a lot more on that over the course of the coming 18 months or so.

Emma, just kind of -- obviously, you mentioned the separation a couple of times. Can I just confirm that the second half '22 time line still remains intact kind of relative to that separation? And can you just remind us of your strategic rationale for separating the 2 businesses? Kind of why does it make sense to have 2 independent businesses at all?

Sure. Well, yes, and to be unequivocal, you're absolutely right, we're fully on track to deliver the separation as planned in terms of timing. Pandemic hasn't slowed us down. Although it created some challenges along the way, and we're meeting all of our objectives around that. So we said we were aiming for the separation to take place around 3 years following the close of the JV, which was summer, August, I think, 2019. So a month or 2 either side of that is absolutely what we're aiming for with the precise timing depending on a number of factors, whether it be market conditions or environment at the time. We have flexibility on the day, but make no mistake, our intent is absolutely deliver on the planned initial timing, as you outlined. But big picture, stepping back and thinking why we're doing it, the rationale is pretty simple and continue to be very compelling. It's just a great opportunity to create 2 new leading global companies who unlock value for patients, for consumers and, very importantly, for shareholders, with each company having its own balance sheet and capital allocation policy to support its own specific strategy. We're going to create a leading biopharma company focused on the science of the immune system with a very strong position in infectious diseases, whether that be through prevention with our leading vaccines business, with great platforms in current and new technologies, which I'm sure we'll want to talk about and also treatment in HIV, where we continue to pioneer in innovation as well as accelerating our presence in broader specialty, including oncology, and then all of that with a strong foundation of general medicine, particularly respiratory, where we continue to be world leaders and a sector that remains pretty relevant today. So all of our priorities has been about strengthening this pipeline in biopharma, investing innovation. And with the separation, we'll also be able to increase our balance sheet flexibility with the transfer of debt so that can bring greater optionality also for biopharma. For consumer, quite simply, the separation sets -- I suppose, you say sets free the world's largest and only pure-play-focused consumer health care company with annual sales of around GBP 10 billion. And it gives it the autonomy to have its own access to capital. It would be a priority in terms of capital allocation and have its own governance structures with the right kind of dedicated expertise. This company will be a global leader, addressing consumer needs that have never been more relevant and driving better everyday health and wellness. It's got an incredibly strong portfolio of brands, 9 power brands, of which 8, I think, have been -- up until our latest reporting, have been growing or holding market share really. Granted, we'll be in everybody's bathroom or handbag or desk drawer like Sensodyne or Voltaren, leading positions in the U.S. and the Chinese markets and very well set, including with its digital capability, to -- with confidence to deliver growth that's faster than the markets in which we compete. So we really believe this is the right thing to do for both companies to ultimately succeed and continue to benefit patients and consumers as well as shareholders. It's a very exciting opportunity. We have a company mobilized behind delivering on that, and we're very much on track to deliver it successfully and as planned.

Emma, kind of one of the things I want to focus on is kind of the biopharma business. I think the words you used was leading innovative biopharma business. And kind of our analysis kind of shows that the business today is valued like a low-growth business. Kind of if I look at my numbers or if I look at consensus numbers, we are all kind of in the 4% to 5% growth outlook range for the biopharma business, and yet, the implied valuation is a lot lower than what a 4%, 5% growth outlook would warrant. Can you talk to kind of your level of confidence in kind of getting to growth that is in the same ballpark as consensus? I'm not looking for guidance. I'm not asking you for precise numbers, but just your confidence in that biopharma business being a growth business over the next 3 to 5 years.

Sure. Well, per your legacy introductory warnings, I'm not here to give you any scoops on those things today, but let me be unequivocal that we are very confident. As you said, consensus, I think, is post separation of around 4%, and compared to other large-cap biopharma, that would be about mid-pack. But I think we believe that what consensus is missing is the value that we see in our pipeline before you even talk to references that you made around the market valuation. And we are confident that we can deliver growth that's considerably more competitive than current anticipation with our pipeline being the main driver of that upside as we emerge from the split. There are a number of key assets, which we think the market has not fully recognized the potential value, and I can give you a couple of examples. In vaccines, beyond the current challenges, which are obviously operationally real for us, we have a great growth driver with Shingrix. And we now believe we have the next blockbuster vaccine in our pipeline with the RSV vaccine for older adults. It uses the same adjuvant AS01 as Shingrix to drive efficacy in the older population. There are 70 million people aged over 60 in the U.S. alone who could potentially be candidates for this vaccine. RSV leased 14,000 decks, 180,000 hospitalizations just in the U.S. in this age group alone. It could be administered alongside of flu jab, and it is an opportunity with significant multibillion-dollar market potential. After 2020, and even the beginning of '21, I think the importance of vaccines against dangerous respiratory pathogens, particularly in the older population, cannot be overstated. So we're initiating Phase III this quarter, and we're really excited about this opportunity. Another underestimated opportunity is for cabotegravir, both as a treatment and a preventative approach in HIV. We're hoping to get U.S. approval for cab later this quarter, and we'll be filing cab-PrEP in the middle of the year. I think what the market is missing with HIV is just the patient oncology aspect. Many patients really dislike taking daily oral therapy. It reminds them of their HIV status. They might be concealing their conditions with the people they live with. They may struggle with the compliance aspect. For these patients, once monthly or every-other-month injectable dosing is much more appealing than taking oral therapy. There's a sizable percentage of patients opting for long-acting therapy. And we're definitely not alone in recognizing this because all our competitors are also pursuing long-acting approaches. But we are in the lead by some margin and are very excited about bringing this true differentiated approach to the HIV treatment obviously. And then on PrEP, which I don't think the market's valued that at all much. We have absolutely remarkable data in 2 studies, both of which were spotted early in terms of superior efficacy. And we're working now with the FDA to make it [indiscernible]. We've got 66% better efficacy with cab-PrEP in a U.S. study in men and trans women, and nearly 9 -- 89%, I think, better in the sub-Saharan study in women. On top of that, those are 2 of the key ones I've mentioned. We've been making great progress in oncology. We have what we believe is a really exciting portfolio of second-generation IO assets with 9 different approaches in the clinic. We're going to get more data on some of these agents over the course of this year, including ICOS agonist antibody and the multiple myeloma drug in earlier line used in combinations, both gamma secretase and pembro. And we'll be able to give more visibility on the potential care. So -- and then I'll actually add, we're excited about the potential for otilimab in rheumatoid arthritis, where we see a potentially differentiated impact on pain; about gepotidacin, where we can tackle the huge unmet need in resistant urinary tract infections; and maybe in the short term, hopefully, the antibody we're co-developing with Vir as well for the treatment and prevention of COVID where the demand is still high. So some of these assets are being appropriately valued, we think, by the market. They're just some examples. And I think it's really important to the framing of your question that we continue bring more visibility with them and others. So the -- and we'll do that over this coming year, including, I think, with a planned R&D event probably around June.

Thank you. Emma, I just want to focus on some of the assets you mentioned there. I want to kick it off with kind of Shingrix. Clearly, a tough 2020 for very kind of understandable reasons. I think you already alluded to your confidence kind of longer-term in the asset. But just help us think about how do you see the longer-term outlook for Shingrix kind of from now to 2024. And then when you get extra capacity, kind of how should we think about your confidence in Shingrix growth longer term?

Yes. So first of all, our confidence is extremely high that this will continue to be a great growth driver for the company, whatever the short-term challenge is. 2020, as you say, was tough with patients in the U.S. particular being unable or reluctant to access immunization from March through to the summer with the first lockdown. And we saw a good recovery in prescription trends since then, but not enough to compensate to the impact we saw in Q2. But up until the end of Q3, we had 6% growth year-to-date, which was definitely lower than we were forecasting in the beginning of year. In terms of '21, probably a bit soon to comment on how the demand is going to hit both with current lockdowns and as we roll out successful COVID vaccinations, particularly in the first half of the year. But it absolutely does not alter at all our confidence on the sort of 3-year outlook that you talked to and particularly beyond that, as we bring new manufacturing online. We're going to continue to support the public health experts as they look at data to see what the right kind of co-administration recommendations are with other vaccines near term. And if we see any continued difficult access for Shingrix in the U.S. in the near term, we're also going to be pretty agile in supplying to other geographies when the conditions are right, so private markets in [indiscernible] Chinese cities, et cetera. So it's definitely going to be -- continue to be a good growth driver for us in coming years. I think I'm right in saying there are like 1 billion adults over 50 in the top 14 vaccines market in the world. So we have plenty room to keep rolling out. We -- on the supply front, we have been actually rather successful in improving our capacity, and we'll continue to make progress on that ahead of the facility coming on at Marburg, as you say, in 2024. So it's just all a question of navigating the near term with absolute confidence in the growth driving ahead of that, certainly, as we come out through the separation of the 2.

And there's kind of 2 other assets which you alluded to, kind of BLENREP and cabotegravir. Can you just help us think about how you see the ultimate commercial potential kind of for these 2 assets? I think you kind of alluded to cabotegravir asset kind of in detail earlier. But just, should we think of those as $1 billion assets? Do you think that's an underestimation? Kind of how would you characterize commercial outlook for BLENREP and cabotegravir?

Well, definitely, with confidence. We are -- we feel very good about both of these assets. In cab, both in treatment and PrEP in the near, mid- and longer term. And both cab and BLENREP, very comfortably, we expect to achieve blockbuster status, as you would term it. I've already spoken quite a lot about cab. But we believe really that it's an important and differentiated option for patients, really pioneering again as we consistently have in HIV, on innovation, dampening patients' options, and it will continue to accelerate our growth outlook in HIV which we know is important. They have, both in treatment and in PrEP, the potential to take a significant percentage of the HIV market and combined, we believe, have multibillion-dollar potential. You just have to look at some of the stats. I think it was nearly -- really 96% or 97% of patients in the studies preferred long-acting regimen versus daily oral therapy in both ATLAS and FLAIR. That's why we're also in PrEP looking at FDA breakthrough therapy designation, and we'll be filing this year. And when you think that you've got 200,000 people currently taking PrEP and the U.S. government's commitment around this believe that 1.2 billion could benefit from it, you've still got 38,000 people being infected in the U.S. every single year. There is a lot of opportunity here with such a differentiated treatment -- medicine and prevention. In terms of BLENREP, well this one had its first approval in August in the U.S. for the treatment of resistant and refractory multiple myeloma, very much in later-line patients who were running out of options with multiple failed prior therapies, including the CD-38 antibody. It's a highly effective drug with really a simple administration. And the more data we see, the more convinced we are of that. So you saw at ASH in second-line patients we had an impressive -- and in ISS, we had an impressive response rate in combination with Pom/Dex, I think, of 88% overall. And so we do know it works. Now obviously, we have a REMS in place to manage the ocular events that we've seen, and so far, that's proven very manageable for patients and physicians, which is clearly critical as we continue to explore efficacy at different dosages, and most importantly, in earlier lines. So we're really making sure -- a lot of time making sure that, that is a seamless process and a link with the ocular exams, all goes smoothly. And so we can get a great reception for the product, and having all the right checks in place and the right kind of dose management, too, so the patients get the best experience possible, which will build confidence and encourage future use, which is really the main question when it comes to the scale-up potential of the product and that's when do we get into earlier lines. So we have lot of studies. As you know, across the DREAMM program in this, we're looking at dose reductions, we're looking at reduced dose frequency. And we have these combination studies ongoing with pembro and SpringWorks, where -- and we're especially excited, I think, about that one, which is where we'll get some data this year. Lots more to see there and plenty of potential.

Emma, the other thing you kind of flagged was the RSV vaccine. You guys are starting a Phase III study kind of this quarter. Kind of from an external perspective, it feels like a very competitive feel. People trying different kind of approaches, antibody, vaccines. Kind of what gives you confidence that your approach to this is going to be the right approach? And how would you characterize the competitive landscape there?

Well, we're very excited about these programs. RSV is something we've been looking at for some time now, and we're really pleased with the progress we've made in recent years across different technologies. We're moving both the adult and the maternal candidates into Phase III. That's a great milestone to hit, but we've still got work to do. We are the only company that's packing the burden of the disease across all age groups. That will be from birth, 2 years in pediatric, and critically through to older adults as well. And we've got these very large-scale Phase III trials that we expect data to bring up for both in the second half of '22. So relatively near term for the new biopharma company. In older adults, we think this is the -- by far, the biggest opportunity, and it will be targeted to those over 60. Our candidate is specifically designed to counteract the typically lower immune response that we're all familiar with now in this age group. And we are using the AS01 adjuvant technology, which generates stronger T-cell responses as evident with Shingrix. We saw in our Phase II study, which we presented in October -- the 1-month post-immunization results saw both a robust antibody anti-cell immunity compared with the base. And we're also on track to bring out the late-stage work, and I'll comment more on that this quarter. So we believe with older adults, we have the chance to be both first and best-in-class and are very well positioned [indiscernible]. In terms of the maternal vaccine candidate, this is -- as we've mentioned in the lots of different approaches here, ours is a one-dose regimen administered during the third trimester -- maybe actually the late second trimester. And that is to confirm maternal antibodies of protection to the newborn, right from birth, and after first 6 months of life. And that is a time at which the RSV disease burden is very significant, and all parents will know, particularly frightening. So again, we had good immune response data presented in October, and we've already commenced Phase III on this one. We think from a portfolio position, we're very well positioned here because of our other vaccine offerings to pregnant women. That's already part of our portfolio and [ specifically ] flu. The fact that we are already an important player in maternal vaccines in our history is an advantage here. And then if you compare with an antibody approach, there are a couple of things I would say have potential advantages looking at how the data plays out. One is that we think we would induce potentially polyclonal immunity. So again, it's a wider range of strains, which could help [indiscernible] against the emergence of mutating viruses. Or actually, maybe even more foundationally is the math. I think many women would prefer to opt for a maternal vaccination rather than administering a monoclonal antibody to their newborn baby. We know already that about 2/3 of pregnant women already opt for a vaccine against flu, so this is precedent there as well. But let's see. We've been very good about our approach here, and we're looking forward to [indiscernible].

Emma, just sticking with vaccines. Your COVID vaccines effort, possibly the one kind of partnering with Sanofi, recently had a production setback. Can you provide a bit more color around that and kind of why you still remain confident in that program?

Sure. Well, I think as was made extremely clear at the time of the announcement, the results of the Phase I/II study were definitely not what we were hoping for because of a lower immune response to the concentration of the antigen. But based on all of our previous experience and other collaborations that we have on COVID, whether that be with Medicago or with Clover, we're confident that our antigen system when it's booked with an effective antigen, emits a robust immune response with a very acceptable [indiscernible] in both. So on that basis, we are working really closely with Sanofi to develop a vaccine with an improved antigen formulation on their side, so that we can make a meaningful contribution together here on COVID-19. I mean, I think it's still extremely clear that the world needs multiple vaccines in order to contain this pandemic. It's still extremely clear there's a lot to learn on how it's going to evolve. One of the things that's helpful is that we are planning our Phase IIb study to be actually in a direct comparison with one of the authorized -- already authorized and approved COVID-19 vaccines, which I think will be very helpful to be able to go against a whole different set of questions. And then the Phase III, if that's successful, will initiate in Q2, so we'll have data later in the year. And yes, as I said, we continue to progress on our other 2 partnerships as well. I would also mentioned that we have what we believe is potentially a best-in-class monoclonal antibody approach in collaboration with Vir. This is one that's particularly interesting because it has a very high barrier to resistance, particularly a hot topic at the moment as well as other characteristics, such as high potency, high bioavailability in the lung and an extended half life. So we've got data coming out from that in the COMET-ICE study, which is about preventing hospitalization of at-risk patients later this quarter. And we also have started a study for more severe hospitalized patients as well. So more news on that coming out quite soon.

One of the things, kind of, we've all been amazed by, and frankly, kind of I think has been a godsend is the emergence of mRNA as an optionality or technology from a vaccines perspective. Can you share with us your perspective on kind of where GSK stands kind of on that front? Do you see that as addition to your longer-term vaccines growth outlook as competition for some of your existing vaccines? Just kind of the broader mRNA landscape and your interest in it.

Well, I'm not sure this one was God. I think it was science, but I agree, it's something that is tremendously exciting. Well, so phasing into this real challenge that we have, but it's also extremely exciting for GSK, and we think we're very well placed to participate in the mRNA revolution. It's a really important technology that we've been investing in for some time. And I think it's safe to say that there's tremendous news, but there were few that's anticipated for totally new technology, this kind of efficacy rate at this kind of pace. But it definitely sets a new opportunity for those of us that are involved. Now our investments have been in self-amplifying mRNA, our own in-house platform, which is a next-generation approach. We also invested rather productively in a very strategic partnership with CureVac right at the beginning of the year, which has given us exciting optionality on new assets, and we've already been progressing the development of a world-class GMP manufacturing mRNA capability in-house as well. There's no question this technology has the potential to help speed up programs as you move into clinical development, which means they're able to start faster. And after initial investments are laid out, and they're not without their price tag, you can employ then more efficient and flexible manufacturing, too. So the experience with COVID, the successes we've seen with the mRNA vaccines recently are really giving us a proof of concept, I suppose, that allow us and others to accelerate development. So we are aiming to take a number of mRNA assets into the clinic in the next 18 months, but -- and this is really important, we do not believe that one technology is going to dominate all vaccines at all, and it's important to be invested in a range of platforms in terms of capability. And this is really where GSK is very, very well placed. Beyond our mRNA, where we are in a position of strength, we're also uniquely positioned with our antigen platforms, with our bioconjugate platform, which is really important for AMR, which -- it's going to come rocketing off the agenda again, and bacterial threats, too. And we also have viral vector capabilities in our current pipeline. So it's -- mRNA is not applicable for all disease areas, we know that. But there is the potential to advance in infectious disease areas where there are some unmet medical needs, flu, for example. And we're going to apply all the learnings from COVID-19 to accelerate development where that's appropriate. So we're very confident in our portfolio and the potential for the combination of technology platforms as they come through. And this is really a key part of the new GSK biopharma kind of growth outlook, both vaccines and specialty medicines, this leading position in infectious diseases under a foundation, a [ structure ].

Emma, kind of moving away from vaccines for a minute and kind of from the corporate level, one of the issues we think that has plagued kind of the performance of the stock over the last kind of 12 months or so is the concerns around the sustainability of the dividend. Kind of, in fact, our analysis and some have indeed argued that the stock already reflects kind of a dividend cut, given where you're creating twice the dividend yield of the sector. You're creating at historic highs kind of compared to the U.K. yields, et cetera, kind of -- and that the downside might be somewhat limited if you were to reset the dividend. I'm not looking for you to tell me you're going to do it or not do it or do it when or not. But how would you characterize your priorities kind of from a capital allocation perspective between now and the split?

So there's no change to our capital allocation priorities. Our #1 priority is to invest in strengthening the pipeline. That's through supporting our most promising programs with acceleration in R&D and through targeted business development which we expect to continue. That's been our first priority since I became CEO, and it will remain our priority. We know the dividend is important for a lot of our shareholders. And post separation, we expect that both companies are going to be stronger and able to resume their own distinct dividend policies. We've already said that consumer business will have a payout ratio of 30% to 50%. And rightly, you don't expect me to announce the biopharma dividend policy today, but we will update you at our full year '20 results in February on key actions and events leading up to separation. So that timetable is going to include timing of detailed announcements of each new company's future prospects and policies, including distribution policies. So our focus then is going to be all about aligning to capital allocation priorities, investing for growth and generating investment returns for shareholders. So the answer probably to the question you're most asking there is come and listen to us in February, and we'll lay out a very precise timetable, including for when we will be specific on distributions.

And then, Emma, kind of moving on to the separation itself, kind of do you have a preference for the structure of the separation and just kind of technically, should we think of it as a spin, a partial spin, an IPO, a part IPO? Just how are you kind of thinking about the structure and kind of the decision-making criteria around that?

Those are obviously broad decisions, and the mechanism has not yet been decided. We're looking at all the options that are available, and we're working to find the one with the best -- the greatest benefit for shareholders and other key stakeholders. So we're retaining flexibility right now, but we'll let you know as soon as it's...

And how ready do you think the 2 businesses are kind of for this separation in terms of kind of the systems, manufacturing, management teams? Kind of how much progress have you made over the last kind of '18 months? And what are some of the steps that still need to happen before you can separate?

Yes. Well, as I mentioned earlier, the simple answer is that we are completely on track to deliver separation as planned for summer '22. And this is an enormous amount of complex work that is largely not visible because, frankly, I don't want to distract from our mission-critical work of growing and developing the pipeline and making sure we keep building our trust agenda. But there's been a tremendous amount achieved during 2020, whether it's setting up biopharma business for success or setting up the consumer business with separate technology platforms and the right kind of planned corporate structures it needs to operate competitively and as a stand-alone entity. We're absolutely on track to deliver the cost savings we outlined in February '20, so we can free up cash to fund investments in innovation and sustainable growth. And we are fundamentally reshaping parts of our company, whether it's putting resources behind long-term growth drivers or really simplifying structures and ways of working, including all of our support functions and very significant changes in our manufacturing network. So just some examples, in the last 6 months, we set up a new global capability center in India. We expanded all our tech ops in Poland. We've launched a new operating model for a number of our smaller markets. We're completely transforming through technologies as we've all learned, recently the way we run some of our support functions. We've built new capabilities, layed out one development organization across vaccines and pharma R&D. We have new AI hubs, which are -- and I know people want to just listen to the near term in terms of pipeline development, but nobody should be under any illusion about how much technology is going to transform with a combination of biology, how productive R&D can be. And we continue -- as I said, both our pharma and our consumer manufacturing networks will be reduced by 1/3 by 2022 over a small -- and that's really foundational in terms of making sure we have effective capacity, the right kind of return on invested capital. It helps you to manage working capital, CapEx deployments. And there's a tremendous amount of work that's going on there. The integration of Pfizer is a critical step. And we've made -- over 95% of our consumer revenues are now -- from Pfizer are now on GSK systems. We had 71 markets made the cutover transition since the pandemic, so all done remotely. We've had GBP 1 billion of proceeds from divestments in the consumer portfolio over 15 noncore brands to make sure we're focused with a competitive portfolio for growth. And we've started prepping some of the corporate function kind of planning for a stand-alone company, whether that's hiring a -- [ by us or ] consumer or we're being very careful about how we set up in a lean and a competitive way. But again, I think at our full-year results in February, we'll lay out really clear roadmaps where we'll be showing more detail in all sort of aspects of the separation and [indiscernible] investments.

Emma, I think we are kind of close to time or a couple of minutes over time. So look, thank you very much for your thoughts. I don't know if you want to make any closing remarks before we wrap this session up.

No, no. I don't want to use up anyone's time, but I would just leave you with a sense of optimism and ambition. I know in January, and particularly with some of the recent news we've had, whether it's here in London or other parts of the world, it can feel a bit dark. And I think it may be that we have a tough few months ahead, but we're incredibly optimistic and ambitious for the relevance of our industry, the importance and success of 2 growth companies, and we're looking forward to a very exciting next 18 months.

Emma, with that, thank you very much. Thank you all for listening, and this kind of wraps up our first session of the day. So thank you again, all, and have a good rest of the day. Thanks, Emma.

Take it easy.