葛蘭素史克 (GSK) 2008 Q2 法說會逐字稿

Good afternoon, everybody. Welcome to this Q2 results meeting. Before I ask Julian to come up and give you a little bit more detail on the quarter's numbers, let me just describe to you a little bit what we plan to do over the next little while.

First of all, Julian is going to update you. Secondly, I'm going to come up and talk about the strategic priorities that I have laid out in the press release we issued at 12 o'clock. And then we will have a Q&A session after that for both Julian and I together. So you will have got Q2; then you will have got a chance to hear from me directly on the strategic priorities.

Before introducing Julian, though, I just want to make a couple of comments about the quarter, because I'm going to mainly focus on the strategy going forward in my presentation. As far as I'm concerned, I think this quarter has been a robust one and it has been a very busy one, robust in the sense of the performance of the numbers. I think you can see the underlying performance of the business continuing to really counteract those anticipated negatives which we knew were coming through U.S. genericizations and, of course, the decline in Avandia, which we continue to see the year-on-year adverse, even though Avandia is beginning to stabilize at its new levels.

So first of all, we've seen that robust performance. Secondly, R&D has had another good quarter. So we have included in the press releases for you today an update on our advanced Phase III programs. And you can see there that those programs continue to develop very positively. And of course, during the quarter we successfully licensed in almorexant from Actelion, which I think many of you know was one of the most competitively fought opportunities out there for late-stage development assets. We're very pleased to get it in, and I am delighted with the early signs of the partnership that is evolving with Actelion. So, R&D also very positive.

We have been busy as well in starting to reshape our portfolio from the other end. Obviously, we are interested in acquiring and developing new products. We are also committed to start to jettison some of the anchors from the portfolio and the divestment of those four old products, old, off-patent, not growing, complicated manufacturing, all qualified themselves as ideal candidates for disposal. And you saw that happen. And of course, we also closed out the Sirtris acquisition in Boston in terms of bringing into the R&D organization a new, important platform for potential drug discovery around diseases of aging.

So it has been a busy quarter. Obviously, there's a lot of information in the press releases we have issued, both in terms of short term, also in terms of our strategy going forward. I'm going to ask Julian now to come up here and really take you through the detail of the quarter, and then we will get into the strategy. Julian?

Thanks, Andrew, and good afternoon. I would like to start by summarizing the performance for the quarter and half year, and I'm going to focus pretty much all the way through on the business performance results -- that is, excluding the operational excellence costs, the restructuring costs and also the restructuring relating to the Reliant acquisition. I will come back to those on one occasion.

As you can see, we delivered 2% turnover growth -- turnover decline, sorry -- in the quarter and half year. And I will cover that in some more detail later. EPS growth in the quarter was 5%, but declined 3% for the half year.

Two factors I would highlight -- one, we had lower legal charges; and two, we had the Aspen disposal profit. And those two factors had a significant favorable impact on the first quarter and the second quarter, but to a lesser extent on the half year.

I would now like to look at the pharmaceutical turnover analysis. What I have done is split the pharmaceutical turnover into three categories. The second line shows you Avandia sales, the third the top five products impacted by generic competition, and the balance I've called the core.

What you can see from this slide is that the core grows well, by about 9%, but the declines in those other two categories of circa 45% is what brings the overall portfolio down to that net 2% decline.

If you look at it geographically and start with the US, you see the US was down 8%. Same factors -- generic competition, lower Avandia sales driving that down to 8%. The underlying number before those two was a growth of 13%. So, good performance from the underlying business; not enough, though, to compensate.

Europe, 4% growth, with a strong performance from vaccines. The rest of the world, down 4%, and there you had pricing reductions, government-mandated pricing reductions adversely impacting performance, particularly in places like Korea, where you have price reductions every two years, and also -- sorry, Japan -- and Korea, were we also had government-mandated price reductions.

Emerging markets grew 15% and benefited from the timing of vaccine shipments. If you look at the six-month growth for emerging markets, you see an overall sales growth of about 10%. I think that is a better underlying picture for the growth of this new segment in our business.

Here are a few of the pharmaceutical growth drivers that lie within that core portfolio. Advair growing by 6%; lower growth in the US with 2% growth. Lower in Europe at 4%, but in the rest of the world we grew by over 30%, so performing well there. Vaccines up 34%, very strong performance from our hepatitis franchise, and again, a good contribution from our prepandemic vaccines. Again, some benefit in terms of growth from a comparison, a favorable comparison, to last year, and also in terms of timing of shipments. Again, if you look at the half-year growth for vaccines of 23%, I think that's probably a better measure of underlying performance.

And again, if you look at the bottom -- Avodart, Lovaza, Boniva, Arixtra -- you see the continuing growing importance of the smaller products in our portfolio. Clearly, if that group grew at 21%, what it tells you is the balance of the core portfolio was either flat or in modest decline. These products are the key contributors.

These are new products. They contributed GBP174 million to sales in the quarter. If we focus on one for the moment, Rotarix, Rotarix contributed GBP35 million in Europe and the rest of the world. We now have approval in the US market. If you look at Cervarix, you will be aware Cervarix won the tender in the important UK market, something we're very pleased about. That is clearly going to be an important brand in the future. And Prepandrix got approval in the EU in April.

Consumer Healthcare, overall, Consumer Healthcare declined by 1%. If you look at the chart and you move around, you can see actually we had strong growth from Panadol, Lucozade and from our Sensodyne franchise, and those grew between 9% and 11%.

Two factors drove us down. One was alli. Alli fell 76%. Two things to remember here. One, we are comparing to the prelaunch period last year. There were very heavy launch stocks put in in that period. So we are comparing to that period. And secondly, we have some element of retail destocking, about GBP5 million affecting Q2 this year. So that is the reason for the 76% decline.

I care to look at alli in a different way. We now have, within a year of launching this product, a product that sells $200 million-plus a year. That is a very good performance for a product that fundamentally didn't exist in the OTC market over a year ago. So that is a product that we are committed to, continues to do well, and we'll drive further growth from in the future.

If you look at NRT, what you see there is private-label competition taking sales from us and also competition from a particular prescription product. So those two factors, again, driving down growth for NRT. Excluding, by the way, those two, the underlying portfolio excluding alli and NRT grew 7%.

Now to the numbers -- cost of goods increased compared to the previous quarter. This is a trend we saw in Q4; we now see in Q2. We saw in Q1. Same reasons -- lower Avandia sales, generic competition driving up the cost of goods and driving the gross margin down.

If you look at SG&A, SG&A is 8% lower, but we had a very favorable legal cost position in the quarter. We actually had a small credit compared to a charge. I don't think the world has changed. I think we benefited this quarter. You can't predict legal charges, but I don't think the environment where we run at between about GBP250 million and GBP300 million a year has changed. But anyway, for the quarter it was beneficial. Strip that out, SG&A costs about 2% lower.

You will see in other operating income a significant benefit in the quarter. Two factors I'll draw to your attention -- the sale of those four products to Aspen, which generated a significant profit in the quarter; and also, an increase in royalty income, which went up to GBP68 million, a GBP19 million increase compared to last year. Overall, operating profit up 2%.

If you look at this chart, EPS growth for the quarter of 5% and an 8% currency benefit, giving you 13% actual rate growth. This is one of those rare quarters where our simple test -- you remember the simple test of dollar and euro giving you the currency answer? It's a sort of back-of-envelope test I live by -- doesn't work. The dollar virtually has no impact on the difference this quarter, and basically pretty much every other currency strengthened against sterling. So it is those other currencies that are driving this very favorable CER sterling picture.

Tax, let me mention tax for a moment. You will be aware we've had a longstanding dispute with HMRC. That tax affair goes back to 1994. I'm pleased to say that we resolved these matters, almost all the matters, with HMRC up to December 31, 2006. So we are basically current as of today. We have a few minor issues remaining, but they are minor. So I'm pleased to say that matter is now resolved.

Moving on, this is the one slide that picks up the restructuring costs, the business performance column on the left. You recognize those numbers. We had GBP187 million of restructuring costs in the quarter. You then see the statutory results compared to the statutory results in 2007.

Free cash flow, free cash flow was slightly worse than last year. We had higher R&D milestone payments this quarter, so that brought free cash flow down. We also received the proceeds from the Aspen disposal in early July, so beyond the end of the quarter. That is the other factor.

You can see that the net debt increased by GBP1.8 billion, and you can also see that pretty much reflects the share repurchases and the purchase of Sirtris, which is shown there under purchase of business. Net debt as of June 30, GBP8.3 billion.

In terms of financial strategy, we remain committed to a progressive dividend policy and a more geared balance sheet. So we remain committed to both of those. You can see we increased the dividend for the quarter to 13p.

And our strategy in terms of the further available free cash flow and debt capacity is, first, to invest in support of the new strategic priorities, and secondly, to give the cash back to shareholders. That has meant a repacing of the GBP12 billion share repurchase program. You will be aware we have purchased GBP5.5 billion since we announced the program, so to date, and there's another GBP6.5 billion to go. And that GBP6.5 billion is extended beyond the earlier date of July 2009. So we will pace the program out according to our investment to support those new strategic growth priorities.

What are we going to do for the rest of 2008? We are going to basically buy back about GBP1 billion of shares in the five months remaining this year.

In conclusion, we are on track to meet our earnings guidance. The restructuring program remains on schedule to deliver GBP350 million of cost savings this year. And cash flow maximization remains a priority. And we are looking at our working capital levels, aiming to bring those down, and also aiming to divest further noncore assets.

I would now like to hand back to Andrew. Thank you very much.

Thank you, Julian. What I'm going to do now is really start to outline for you in a little bit more detail some of the thinking behind and the rationale of the strategic priorities that we announced in the press release. And then obviously, we will give you a chance to ask any questions you have about that.

As I introduce that, let me give you a little bit of a sense of my perspective of the sector, because I think that really gives you an orientation about why I came to the conclusions of what we're going to do.

If you look at this sector, you can't escape, and you are all a lot more expert than I am on commenting on the derating of this sector -- you cannot escape from the derating of this sector over the last seven or eight years. Neither can you escape from the obvious uncertainty, which isn't completely disconnected from the derating, about the next few years, with up to about $200 billion of product going to go off patent in the industry and no real clarity about where the replacement power is from the R&D laboratories to make sure that growth is maintained.

Those two things are clearly intertwined. I think where I sit is, at GSK, what we need to do is we need to really address the realities that we face. This sector has increasingly become characterized as one which is struggling to find reliable growth and carries with it significant volatility of risk. That risk comes in lots of different ways -- patent invalidations. It comes from safety scares. And this Company, along with many others -- in fact, most others in the sector -- have suffered from some or all of those effects.

The consequence is it has really eroded confidence in the sector from an investor perspective, and that is why we've seen the PE deterioration that we have. What we need to do at GSK is we need to face that, and we need to put in place strategies which really address the core issue. The core issue is we need to find ways to deliver more reliable growth with less risk, and that is exactly what underpins the logic behind these strategic priorities.

Now, in all of this, and you've probably already read the press release. Most of you have probably already flicked through the slides. You are not going to see an aha moment of something completely new you've never seen before. What you are going to see is an organization committed to delivering a series of actions which we believe are highly likely to be successfully executed, which together will create a very different profile business to the one we have seen in the past, one which has a greater degree of balance, has a greater degree of diversification, has a mix, a greater mix of risk profiles, and one which we believe will have a greater certainty of delivery. And that is really what underpins what I'm about to talk to you about.

So let me first of all introduce that the three priorities that we're going to focus on as an organization. The first is to deliver a growing, diversified global business. I'm going to go into more detail about this, but clearly our investors are looking for growth. We believe that, going forward, we need to be more present on a global basis even than we are today, particularly in emerging markets. And in a goal of diversifying our risk, we need to ensure that we are invested in a broader portfolio of businesses than perhaps we have done in the past.

We need to ensure that we have ways of driving growth and return above and beyond hoping that the next R&D product is going to save the day. And that is an important change in terms of the way in which we look to secure our growth for the future.

Secondly, we're going to focus on delivering more products of value from R&D. I'm going to talk in a little bit more detail about this. Value, critically, we need to recognize in today's world, having a patent is no longer sufficient to deliver a return. You need a patent. You need an exclusivity. You need a discovery. You also need to deliver value, which is persuasive to the buyers who we face across the world. And whether it is NICE in London or a managed care negotiator on the West Coast of the US, the same questions are being asked, and now is the time for us to absolutely ensure that our pipelines are delivering true products of value.

We need more of them because we want to even diminish our concentration of business even within our core pharmaceutical business. Today, we have one of the most diversified small molecule portfolios, but even we have 60% of our business in 10 products. We need to get a greater degree of diversification even within our core business and then surround that with other businesses which help to spread the risk.

And finally, to facilitate all of that, now is the time for us to truly attack the opportunity that we have to simplify our operating model. So I'm going to go through a series of slides, which just give you a little bit of a taster for each of the actions or each of the major themes which sit underneath those three key priorities.

And you can see on this slide a little bit of a sense of what we're trying to achieve here. We already have the benefit of several different businesses. What you are seeing from left to right is our goal of making sure that we build out the true business opportunities that sit within the current stable of GSK businesses. And I will talk in a little more detail about each of those.

Let me start with the core. Clearly, our small molecule pharmaceutical business is the core heritage business of GSK. And that is a business which we continue, obviously, to invest in and to develop. And that counts for our new products as well as our current existing significant products. And this remains, obviously, a major focus for the organization.

As you can see from this slide, just a selection of the brands, clearly Advair remains a major source of incremental growth for the Company. The last year or two has been quite a challenging period for Advair, particularly in the US, partially through questions around safety, around long-acting beta agonists, like salmeterol; partly by questions of safety of other molecules, like the leukotriene antagonist, and even more recently, products in the COPD marketplace.

Now, all of that has created a turbulence in the marketplace, which I think you're beginning to see flow through in terms of patient behavior. It has taken some of the edge off the growth in that marketplace. We are determined that Advair is going to make sure that it continues to grow.

We have grown through all of this period. We need to now make sure we are recapturing our volume growth through this period. We need to make sure that we are absolutely delivering the messages we have around, for example, being the only product in the U.S. now indicated for COPD exacerbations, an indication that was given to us just in the middle of the quarter, and in fact we have only had four weeks of promotion.

But clearly, that differentiates us and it also represents a positive move by the agency in the US to give more to Advair at a time when in the past the conversations have been much more about safety than efficacy. Clearly, there is more growth opportunity here in the US, and obviously that exists in spades elsewhere in emerging markets in Europe.

Touch on a couple of the others -- Lovaza, recent acquisition into the business. You've seen already in this quarter GBP67 million worth of sales from Lovaza. It was not in the family a year ago. This is very much a product which is for its time in the US. This is one of the very few products in the States that has no warnings on the label. In the environment that we see in the US of high nervousness, high litigation nervousness, [exactly] a simple, straightforward product for physicians to prescribe. A great asset for us.

And you see one or two of the newer ones coming through. Solzira -- this is the asset we licensed in from XenoPort for neuropathic pain. We are filing that later in the year. A great opportunity to go into another major primary care market in the US.

Promacta, during the quarter, we had a unanimous vote in favor of Promacta from the FDA Advisory Committee, so we should expect to see positive agency action before the PDUFA date in September. Treximet just launched in the US, but already has over 3% market share and has already overtaken the two or three smallest products in the category. And obviously now, we're really in a race to make sure we develop this product as quickly as possible over the next few months before we see generics to Sumatriptan.

I can tell you we're off to a very good start there because we've got extremely good access to managed care. Next key trigger there will be a start to the DTC campaign, which allows us to move forward.

So in terms of our core business, we have a number of assets either in the market or coming to market which are clearly going to be sources of growth and opportunities for us to further diminish the concentration of our business on a handful of assets, thereby reducing some of the volatility that we have seen in the past when a given asset runs into an issue of one type or another. But I think there is much more than that we need to address. We need to really fundamentally tackle what is the business model of the pharmaceutical industry going forward. And at GSK, now is the time for us to really step up and do that.

As I've mentioned already, we want to see a reduction in the concentration of exposure to a handful of assets. We want to start to move the mindset of the organization from one which obsesses about when is the next blockbuster going to come along to one which is capable of exploiting everything that comes from R&D in an efficient and profitable way and is ready to exploit the blockbuster when it comes by.

Just to give you a little bit of a kind of a memo note on this, I regard the blockbuster model of the industry as being a little bit like the following. Our business model is to discover needles in a haystack. And by the way, our business model is to discover a needle in a haystack when we want the next needle in a haystack.

That is a very high-risk strategy. And I think what you are seeing as a sector is that that is a tough strategy to repeatedly succeed on to order. It is not impossible. Of course it happens. It will happen in the future. But it is a tough strategy to absolutely pin your hopes on. That is why the world's biggest pharmaceutical company in 1980 no longer exists, and it's why the world's biggest pharmaceutical companies during the '80s and beyond have all been so volatile, why we have seen so many occasions where a company has really burst through only to recede into the middle ranks or disappear completely. It is very hard to repeat that business model.

What we need to do is really recognize that. That's exactly what we're doing here. So what can we do? What we can do is we can discover a series of products, some of which may be big, some may be middle-sized and some may be small. But we can discover those products. If we can discover a flow of products continuously, not feast-and-famine, boom-and-bust blockbuster cycles, but a flow of products, and then be capable to exploit them appropriately, then you've got a business which is much more reliable and actually operates around what is more likely to happen, not hoping, but knowing that you are going to be able to deliver.

And that is exactly what I mean by moving from blockbuster-dependent to blockbuster-ready. Of course, we would love a blockbuster like anybody else. We're just saying, we're going to be able to make it whether we get it or not in the next two or three years or the next five or six years.

Now, underpinning that, what is clearly required is some pretty major changes in your business model. You can't move to the world I've just described and have salesforces where you can only deploy them in chunks of 4,000. You have to have salesforces where you can deploy them in much more variable scale and where you are able to efficiently pick off specialty markets while still being competitive in primary care markets. You need a clinical development organization which is fundamentally different cost structure to allow you to progress multiple products in parallel rather than just one or two every three or four years.

That is exactly what we're going to do at GSK. We are well on the way to much of this change. All of the work we did in the last three years around salesforce pilots informs this change. And all of these changes have being rolled out across the organization as I talk.

Let me move now to a second part of the business into some parts of the business where historically we haven't talked quite as much. The first is clearly our consumer business. Now, the consumer business at GSK is a big business. Just to give you an orientation to that, our OTC organization is twice the size of Reckitt Benckiser's OTC organization. It is a significant player.

Sensodyne is one of the world's biggest toothpastes. In fact, last year, Sensodyne accounted for 25% of global toothpaste growth. In the last four years, Lucozade has grown by 55% in the UK and is one of the top-selling brands in Tesco. This is a business which is a global organization. Panadol is available in 80 countries, and last year we shipped 10 billion tablets of Panadol.

So across the organization, we've got a very significant presence with a very broad group of businesses. In all of those businesses, we are determined that we are only going to stay there for as long as we are demonstrably a winner in that sector. So there's plenty of debate about why do you keep the consumer business. We keep the consumer business because we're big, we're fast-growing and we're very profitable. And those are good reasons to keep a business.

If that changes in any dimension, then of course you have to ask a different question. But right now, in our oral care business, in our drinks business and in our OTC business, we clearly demonstrate performance at the top of the league.

How have we done that? We've really done that through a series of different strategies. I would say that there was a sea shift in the performance of our consumer business about three years ago, when most of these strategies started to come onstream simultaneously. And I would say that where we have had periods where these things have not all been clicking in gear together, that is where we have run into issues of slower growth.

We really believe now that we know what we need to be doing simultaneously to make things happen, a big piece of it obviously being competitive market excellence, being great competitors, great intimacy with our retailers across the world.

Innovation, I will talk to you a little bit in a second and give you some examples around innovation, come back to that in a second. Acquisition, we've made acquisitions big, like Block, where we have increased the sales of that business by over 50% since we bought it. You look at a product like Breathe Right from CNS, acquired. Similarly, there's a very significant track record of acquisition.

And of course, switch, where we've taken a product like alli from somebody else's laboratories at Roche, we've successfully deregulated. And as Julian has said, despite some inter-quarter stocking issues, we've now got a $200 million top 10 OTC medicine in America from nothing 12 months ago. That is the kind of series or sequence of activities which we believe can drive this business.

Geographic expansion then gives us the opportunity to simply apply all of that process, if you will, to territories where we haven't been before. Let me give you a bit more detail. So if we look at something like Pronamel, this is just an example of a product, Pronamel drives the growth in Sensodyne, essentially.

If you look at Pronamel, it is not very expensive to develop a new toothpaste. I'm going to show you some real numbers in a minute. We have launched in 40 markets since we did this. Growth, 72%. What this represents is an organization capable of globalizing brand innovation in a very rapid way, straight out of the playbook of the FMCG companies, absolutely being deployed by this organization.

And if you step back and think about it, there are not very many global healthcare companies. There are healthcare companies who play in America. There are healthcare companies who play in Europe. There are very few -- I can think of probably two or three -- who play in America, Europe and the emerging markets. We are one of them.

Breathe Right -- when we acquired Breathe Right, they were -- CNS were marketing the Breathe Right product, the little strips that help you sleep at night, they were marketing this in just eight markets in the world. A year after we bought that company, we were in 27 markets, and at the end of this year we will be in 43 markets. Absolutely no rocket science to that. That is just disciplined grinding out sales growth as you apply good quality brands into different markets.

Let's talk about innovation. Pharmaceutical industry is always characterized as a kind of do you get payback on R&D. I thought I would show you not necessarily the payback on the pharmaceutical R&D, but the payback on consumer R&D. This just gives you a little selection, and I think some of you will be quite surprised by the numbers on this slide.

So here you have a few innovations. AquaFresh White Trays, the things you take to whiten your teeth, we spent GBP6 million developing that product. We launched it in 2007. By the end of the year, it was launched. We'd sold GBP21 million. And you can see on the right the return per R&D dollar.

Now, it is a very simple chart. I'm not claiming statistical significance here. What I'm trying to demonstrate to you is innovation in R&D in consumer, where last year we spent less than GPB100 million, is a significant area of opportunity. These are innovations which have very high probability of success. Typically 70% of things we start get launched. So you have very low attrition, low cost per project, rapid payback, and you see the numbers.

This is an area where we're going to spend more going forward. This is an investment opportunity to drive organic growth in the Company.

Let me move on now to our vaccine organization. Now, vaccines is, again, a business we've had for a long time, but is a business that is really changing and growing and creating a very different type of future for us.

Why is vaccines interesting to us? Well, number one, it's interesting because it is a marketplace which demonstrates some significant differences in profile to the small molecules. Higher annuity values, brands go on for longer, lower SG&A costs associated because of the buying concentration. Tremendous growth opportunities, as you see [both] cohorts develop in various markets, and very few competitors.

High barriers to entry -- if you want to come into this market, you need to be able to discover a vaccine. You need to be able to develop a vaccine. And you need to put $1 billion in the ground in a factory to produce a vaccine. These are real issues in terms of people trying to penetrate this marketplace. It's why there's been such a scramble for people to buy the few independent vaccine assets which sit out there to allow big companies to move into this space.

GSK has been in this space from day one. You see on the right some metrics of the way in which we have expanded our presence. It just demonstrates to you the scale of the vaccine organization in terms of the performance in sales, the size in terms of scientific focus, how we're allocating resources to this piece of the organization. This is a place where our return is high, annuity is high, cost of delivery relatively lower, but high CapEx requirement.

If you look at our portfolio, you are all familiar with our classic pediatric portfolio. It has very much been the base business of the organization. We have over the last few years really developed our adolescence program, Cervarix most recent launch. As you heard from Julian, we won the UK tender. Great news in the UK tender is even since we have won it, the government decided to increase the number of cohorts who are going to be vaccinated. I think that is a real vindication for our strategy of how we tendered for that business because we have acquired a substantially greater volume opportunity through the mechanism of our tender, which is great.

If I look across the rest of our performance of Cervarix, we're obviously only competing with Merck in a select number of markets, in Europe and in the rest of the world, not in the US. But in those markets where we compete, there have been 35 tenders so far which have involved both Cervarix and Gardasil. So since the launch of Cervarix, there have been 35 occasions when a government or a province of a country have tendered head to head.

Of those 35 tenders, GSK's Cervarix has won 22, which demonstrates to you, again, although we came later than the competition, our ability to win our way into this marketplace. Now, there's a long way to go in this market. The UK is a big win for us. We just got reimbursement in France. There's going to be some major marketing battles, I'm sure. And of course, we need to get the product approve in the US, as you know.

We've now got ourselves into a position, I think a good position in the US, where we're going to be filing our final data in the beginning of '09, first half of '09. We believe that is going to do two things. One, it's going to be what we need to provide for approval, but secondly, it's going to give us what we need to strengthen the label.

Let's face it, if you are not going to be first, you need to be better, and that is what we are determined to do in terms of our filing for FDA in 2009.

So, you've got the adolescent portfolio, and then something we haven't talked much about but is clearly now becoming something much more likely to happen, is our therapeutic vaccine business. We now have drugs in Phase III development. MAGE-A3 is in Phase III for melanoma. We have a series of other tumor targets, and we have a series of other antigen-specific vaccines, including PRAME, in addition to MAGE-3.

So what you see here is a business with a portfolio of established brands, continue to perform well. You see a portfolio of adolescent brands growing. And then you see a whole new business emerging through therapeutic vaccines.

If I look at where are the growth opportunities, clearly, even in the pediatric vaccines, the old stuff which we have been making for years, there is tremendous opportunity to take that product into emerging markets. If you just look at this slide, simply shows you the birth cohorts in the emerging markets, the number of babies who are potentially available to be vaccinated every year. This is exactly where we need to take our traditional base business.

This is, again, there's very little to be invented to go after this business opportunity. This is, take our current brands, our established scientific record, our manufacturing activity and apply it to a marketplace which for the first time starts to want to buy the more sophisticated vaccines that we sell.

Is that theory? No. If you look at the way Eastern European markets have evolved in the last decade, you see the move from no vaccination to traditional, we would argue, less effective vaccines, through to GSK vaccines. Country after country goes through that escalator. The difference is, China has a heck of a bigger cohort than Romania or Poland.

So what you're going to see are opportunities on a scale which are going to be really material for the group. And clearly, this is again one of the areas we intend to invest for and go for this growth. We think this is an opportunity which is available to us now, and it is something that we are committed to.

Just to give you a sense of how quickly all this can happen, this is Brazil. Brazil is a marketplace which has absolutely, if you will, crossed that threshold of looking for how to improve the health of their population. Brazil is a market who are committed to investing in a preventative program.

Here is an example of Rotarix. Rotarix is a vaccine for essentially pediatric gastroenteritis. You probably all know by now, but every single person on the planet gets this illness before the age of 5. So anybody who thinks they never had rotavirus, you did, sorry. Everybody has had rotavirus. The vast majority of people in the West who get rotavirus have diarrhea for a couple of days and they are fine. When you get rotavirus in an emerging or a poor country, there's a very high probability you're going to end up in a hospital or even die.

There is a very high burden of disease associated, which is why governments are now committing significant resources to these basic vaccination programs. Here is an example where we constructed a transaction with the Brazilian government, and you can see just in two years the scale-up in the opportunity.

Now, you all know that there is another product out there for vaccination against rotavirus. The big difference between our product and the other product is this one you only need to take two doses. They need to take three. That means you get protection much more quickly on this, and you only have to go to the doctor's twice.

Bear in mind, Rotarix is oral, very simple to deliver -- perfect for an emerging marketplace with relatively less sophisticated healthcare delivery mechanisms. So again, not that high a risk proposition to expect to see this kind of vaccine do much better in emerging markets as countries start to commit resources.

So that hopefully gives you a little taster of why I remain, just as JP was, but I remain even more bullish on our vaccine business and why we're looking for how we can really expand our business.

Now, part of that is clearly the geographic growth I've just described. The second is you're beginning to see and you will see later in the year funders like The Global Fund, Bill Gates and others put more and more money into vaccination programs to kick-start vaccination even in the poorest countries. You're going to see a significant increase in the market size of markets where GSK is typically one of only two companies capable of supplying. That is a very good place for us to be going forward.

And then finally, obviously, the therapeutic vaccines represent a whole new business opportunity, which is going to sit somewhere between vaccines and pharmaceuticals in terms of the way in which they are going to be commercialized going forward.

Let me move on to biopharms. Biopharms, in this regard, I am talking about large molecule pharmaceuticals, not vaccines. I'm talking about large molecule pharmaceuticals. This is the Genentech/Amgen business that I am focusing on here. And it is pretty obvious that GSK has been late to the party on this issue.

What is very clear, though, is it is going to be a business of the future for this Company. And we're going to get there through both our organic development and some of the acquisitions we have made recently.

If you look at our history in this space, yes, we weren't the fastest to get going. Now, we're very much running at full speed in terms of biopharmaceuticals. We initiated internal organic research. 2006, we bought the Domantis company. I'm going to talk a little bit about how that influences us today. We have 12 biopharms in the clinic. Five of those are in late-stage development. That really means that we're on the edge of being in a position to introduce products into the marketplace here.

I would remind you that 70% of Amgen's sales are driven off eight brands. You don't need many biologicals to be a big player in this marketplace. And with five in the clinic -- sorry, 12 in the clinic, five in late development, what you see there is an organization which has got the capacity to come to market in the relatively near term in a big way in biologicals.

Just to touch on Domantis for a second, this is just a little picture, cartoon, of the difference between a monoclonal antibody traditionally, on the, I guess, the left-hand side, and the small one is a picture of a domain antibody, or a dAb. The domain antibody is essentially the business end of a monoclonal antibody. It's the smallest piece of a monoclonal antibody that you need to actually trigger the response at the cell.

And what this allows us to do is deliver drugs which are far more stable than monoclonal antibodies, easier to manufacture than monoclonal antibodies, and because of their size and oftentimes their proximity to cell membranes, that they will actually work preferentially.

Now, this is a significant platform opportunity for the organization. What you should also recognize, and many of you know this already, is that domain antibodies, while obviously will look at novel targets, can also go after validated targets for which monoclonals already hit. And what you then have is an opportunity to develop a second generation of drugs against targets which have already been validated and proven. So that diminishes substantially the discovery risk associated with this field.

It is bad enough finding a monoclonal or a dAb; it is even more difficult if you have to find the target in the first place. So there's a great opportunity here to have a relatively lower-risk entree into this marketplace. Now, again, the lead programs from Domantis are already in the clinic, and I think you will expect to see this become a major part of the future of GSK.

I would also just mention at this point that the person who founded and ran Domantis is now in charge of GSK Biopharmaceuticals. So I think it is also worth just noting that we have taken external entrepreneurial scientific leadership and put that in charge of our entire biopharm operations.

Let me move on now to another area of geographic growth, which is Japan, just characterizes where we sit in Japan. And really, all this slide tells you is there is plenty of room to grow. This is an established marketplace. Here are the three big markets that we are interested in -- pharmaceuticals, vaccines and consumer. And you can see here, these are big markets. But typically, with the exception of pharmaceuticals, we have relatively low position today. What this tells you is we have to devote our attention to develop this market properly once and for all.

This is a place where we need to invest, and it is a time perfect for GSK. Why? Because we have so much ready to go in Japan. We have 25 programs expected to [find] and launch in the next four years. We have products which have already been in the market for a decade in the West just launching.

Adoair is the Japanese version of Advair, only launched nine, 10 months ago. Only three weeks ago did we get approval for people to be given four-week prescription of Advair rather than a two-week prescription of Advair. I can tell you, in the three weeks since the end of the quarter, Advair sales in Japan have really taken off as a result of that.

So you have got tremendous scope in products which have really driven the group around the rest of the world for a long time just launching. We also have the opportunity to introduce from generations ago products like Lamictal, just now going off patent in America, not yet launched in Japan, expected to be launched in the next year or so.

We also have today's generation of products like Tykerb. And of course, we're going to have tomorrow's generations coming together. So we are essentially going to have past, present, future all hit the Japanese market in the space of about five years. That is a tremendous chance for us to leverage up our position in Japan and to really see Japan fulfill its promise within the GSK portfolio of businesses.

What we need to make sure is that we have enough investment on the ground and that we have enough capacity to do a proper job with all of these assets that are coming market. Clearly as well, in vaccines, we have no presence, essentially, in vaccines. Japan again has historically been a pretty closed market to foreign vaccine manufacturers. We think that is going to change.

Consumer, we have a very small presence. Clearly, it is a place where we can invest for growth. And so Japan represents for us a major opportunity going forward.

And then finally, talking more about emerging markets. Why are we interested in emerging markets? Because that is where all the growth is going to be. Let's go fish where the fish are. And that is absolutely what we're going to do. 40% of the pharmaceutical market growth in the next five or seven years will come from non-American, non-European markets. So if we want to grow in the next few years, we'd better be where that growth this.

Now, we are today a very established business in most emerging markets, but we can be a lot bigger. And importantly, we can have a different type of portfolio. Just to give you a sense that we know how to do this, and again, reassure you that this isn't a dream, look at India. India is a business where we ship 25% of our global manufactured pack volume. So two and a half out of every 10 packs we manufacture anywhere in the world is sold in India. Just a huge volume. It tells you something about the historic price evolution of India. But it is a huge volume.

So our presence physically in India is enormous. We have nearly 2,000 reps. They can hit all of the physicians very quickly, as you would expect on that scale. We have in India a great product portfolio. It is a very Indian product portfolio. We sell things in India we don't sell anywhere else. It's why we've done so well. It's why we're one of the biggest pharmaceutical companies right there with Ranbaxy, Daiichi and with Cipla in terms of size.

And we have a huge consumer company. We have a consumer company that sells 2 billion cups of Horlicks a year to Indian consumers. Horlicks is one of the biggest consumer brands in India, and we have one of the biggest distribution mechanisms in retail in India. It is exactly what you want to see in a market which is now beginning to rapidly rise up the economic pyramid. Great position just as the waters start to rise.

And that is what we're seeing. We're seeing this in India; you're seeing it across the BRICs. There will be ups and downs as we see the inevitable kind of glitches through economic and political development. But the reality, as we all know, the wealth is rising in emerging markets. More and more consumers are moving from the "I would like to but I can't afford" to the "I want it and I can afford" mode. You're seeing that happen in India. We are a beneficiary of that in India. We want to position ourselves to be a beneficiary of it elsewhere.

How do we do that? Like in India, we need to make sure that we have the right portfolio. Now, we are present in many of the key portfolios. These are the key disease areas or the key therapeutic segments in emerging markets. We are present in all of them, but we are not dominating in enough of them.

That is exactly why we have started to address that through our acquisition of access to new products and new portfolios. The deal we announced with Aspen this morning is an important deal. It is an important deal because it gives the Company in the emerging markets access to about 1,200 products, different packs on a pay-as-you-go basis. This is not an example where we have run around and splashed around a few hundred million or billions of dollars to buy access to a business. We've got total access to what we need on a pay-as-you-go basis.

This is a very novel, innovative deal. It gives us what we want. We don't have to put huge amounts up front. We retain our firepower to do something else. We've got exactly what we need to get going in a number of our emerging markets.

In addition to the products, we obviously now have direct access to the network of low-cost manufacturers which Aspen use to ensure they're competitive in the generic marketplace. So this is a transformational deal. And I think it is also a transformational deal delivered at very low cost to GSK shareholders.

So that is so much for diversified growth. I think you've got the message around globalization. Hopefully you've also heard some of the things I've had to say about diversifying our portfolios to give us a broader spread. Let me move on to how we want to deliver more products of value from R&D.

First of all, I think R&D has really performed incredibly well over the last two or three years. I think the CEDD model has worked. I think the CEDD model has triggered accountability and the CEDD model has triggered a degree of creativity in the organization which we didn't have before.

If I look at the last 18 months, so January '07 to June '08, the FDA in America has approved 26 new vaccines and new drugs, of which five are from GSK. Roughly, roughly a 20% market share of approvals for a company which holds roughly, roughly 6% market share in the market. That demonstrates the performance of the organization.

We have a great pipeline, 130 drugs and vaccines in the clinic, but this is what counts. You have to get drugs approved. In fact, you also have to get them reimbursed. So these are the metrics we need to be focused on.

Performance of R&D has clearly improved, and that is a goal we want to continue to drive toward. So, what we have announced today -- and by the way, there was nothing in the announcements today which hasn't already been executed, so none of this is to happen sometime in the future. All of this has already been executed. What we have already done is we have restructured R&D into key eight therapeutic areas. Why did we choose those key areas? We chose them because we believe they represent the most likely area of unmet medical need and the most likely area for us to deliver a potential breakthrough.

There is no point looking for breakthroughs in areas where nobody is looking for any need, and there's equally no point striving away in an area of unmet medical need if you have no reason to believe you can discover anything. So we are absolutely focusing our energies around the eight areas where we believe we have an intersect between need and ability to deliver. That is the eight areas. That is where the eight CEDDs essentially sit.

What we then said, and I personally believe this enormously, is that really what you need to do is you have to drive accountability, financial ownership, project excitement down to the level of the laboratory. And so what we have announced today is the formation of our discovery performance units, the DPUs. These are groups which at their smallest only have seven people in them. I think the biggest we have only has 78 people in them.

They are focused on a particular target or pathway. They are literally lab-scale units. They don't get bogged down with all the bureaucracy. And they are allowed, if you will, to bid for money, just like a venture capital company would bid for money. I'm going to talk about that in a second.

So the structure of R&D, eight therapeutic areas or CEDDs; within each of the CEDDs a series of discovery performance units, which really is the heart of where we want to now drive accountability. This is all about trying to repersonalize R&D. I do not believe that discovery is a process. I believe discovery is an intensely personal small-team event. I could draw on a piece of paper how one of our scientists discovered Tykerb. I could give it to any one of you, and with respect to all of you, there's no chance you could replicate that success.

The reality is we need to know that. We need to recognize that it is down to the individuals and create circumstances for the individual to succeed. That is exactly what the DPUs are about.

So at the front end, we're really pushing the logic of the CEDDs, maximally diversified, entrepreneurial, high accountabilities, really personal. And then on the development side, where if you want to take a file to FDA, you need to be able to execute an industrial-scale clinical development program, then clearly, that is where you need to drive efficiencies and standard process and procedure. It is really an extension of the direction we've been going in in the past.

In the middle, the thing we have to tackle is attrition in Phase III. The costs of developing drugs are high. The cost of developing drugs that fail late is unacceptable. We have to attack attrition in Phase III. The best way to attack attrition in Phase III is don't put drugs into Phase III which have liabilities. So we are strengthening our gateways into Phase III to make sure that we only put into Phase III product we believe truly unencumbered with liabilities going forward. That is going to be how we change the economics of full-scale development.

Now, I talked a little bit about how the little DPU teams are going to operate. I'm going to touch on that a little bit more. Now, this slide shows you three ways in which we now bring in significant external expertise. And this really speak directly to the question I get asked most by investors -- how do I know you are spending $6 billion properly? How do you make decisions in R&D? Do you just make this stuff up?

And that is what we're really focused on here. We are focused on making sure that we have really objective input to the key points of our decision-making process. So the scientific panels are external scientific experts in the field, many of whom we have worked with in the past, so not our friends, necessarily, people who are going to come in and tell us whether they believe what we are doing scientifically makes it or doesn't. Many companies do that.

The second area is our Drug Discovery Investment Board. This is new. No other company does this. Our DPUs, these discovery groups, the small lab-scale team, have an idea. They want to invest in a new program. In the old days, they would have asked for a budget. Last year, I had a budget of 50; this year, can I have a budget of 52, please? Next year, can I have a budget of 55, please? Typical budgeting behavior.

What we now do is these people come in essentially to a Board. They have to bid for three years' investment money, just as you would as if you were spinning out a company from a university and you went to a VC. You're going to go and you say I have a great idea, I have a great strategy, I've got a great team, and I need some money. And that Investment Board is going to make the decision on whether or not that is an appropriate place for GSK to invest.

Now, what is special about this Investment Board is the Board is constituted not just by GSK people, but by people who run venture capital funds on the outside of the Company, from biotech CEOs from outside of the Company and from people who were formerly in the customer environment of our world.

So this is an extremely objective mechanism. And I can tell you, this Board has already started to meet and review, and they don't pull any punches when people come in and look at what they're seeing, good or bad. And that is important, because we need to know early whether or not we're doing the right thing. So that is new and it is different, and it is very disciplined and it is very focused.

We then have the reimbursement panels, because you can do those first things. So, okay, you believe you're going in the right direction in science. You believe your Discovery Board buys the theory, they buy the team. Real question then is, okay, you go through it all, it gets approved. Is NICE going to pay for it? Are the Germans going to pay for it? Are the managed care companies going to pay for it?

So what we have now done is we brought heads of reimbursement authorities into ad hoc reimbursement panels into the Company, where, before we put drugs into Phase III, we now disclose to them what we believe those drugs will do if they succeed, and we get their feedback. And no other company does that.

What this reflects to you is an absolute commitment that before we pile into the ultra-expensive Phase III development programs, we need to do everything we can scientifically to eliminate attrition. We need to do everything we can from a team perspective to make sure we invest in our best teams first, and we do everything we can to make sure that the end product gets paid for. This is exactly what these three are about. This is a huge cultural shift in the way the R&D business and it is unique in the industry.

Surrounding that R&D organization is something which we have been building up over several years and which was, I think, alongside the CEDDs, a great innovation in R&D over the last seven or eight years, and that was our rapid growth of externalization collaboration. This just gives you a little taster of all the different places we announced yesterday. Another one with the University of Cambridge, where we now have a very novel innovative mechanism, where we collaborate with Cambridge. Even Cambridge University is financially -- has a financial exposure as well as a scientific engagement.

So, across the board, what you see here are mechanisms for us to reach out and try and catch value all across our space. You know that within our organization, this is bringing in potential opportunities. This is how we came across companies like Sirtris. We have, for example, recently optioned the lead product from Exelixis, our first example of this.

It is pretty clear that this represents a very significant source of incremental drug discovery, and we are able to run essentially a drug pipeline of a multinational scale with 20 scientists. So this entire network consumes 20 headcount inside GSK. But if you go and look at all of the lists of programs that we're optioned on, you will see something of a scale almost the size of any of the big multinational companies can do internally.

So this is a way of really doubling up our opportunities. Now, much of this is going to fail, but you don't need many to succeed. And this is an area you continue to see us push very hard on.

Now, finally, clearly what I've described to you is a lot of work for people inside GSK. And one of the things we need to make sure is that we start to take away some of the low-value-added activities in the Company. We need to simplify the way we do things.

Now, to some degree, this is just about cost. And one of the questions I get asked most often from people like yourselves and from shareholders is, is there more you can do on cost? Because GSK is well known for being pretty good at cost management. The answer is, yes, there is more we can do. There's more we can do by thinking much more laterally across our organization.

Historically, we focused our cost reduction mechanisms looking at each business. Going forward, we see the opportunity to really drive simplification across our businesses. So for example, today we run five different backoffice finance systems. Vaccines has one, consumer has one, America has one and the rest of the world has one. It is not completely crazy to imagine that we could all work with one, and the savings which would come from that are pretty significant.

We are able, I believe, to drive down our overheads. I think GSK can run with a lighter overhead cost than it currently has. I think there are ways in which we can reduce what we call kind of above-country burden on our businesses. We can free up our businesses from overheads.

We can clearly reduce our working capital. And there is an absolute intent in the organization to start a completely different approach to the way in which we think about working capital to drive off greater free cash flow in the organization, which Julian is leading on my behalf.

We can simplify our manufacturing organization. We can simplify what we manufacture. Historically, every product we launched in Europe, as one small example, every product we launched in Europe, one product required 45 packs because every country wanted a different pack. The last product we launched in Europe six months ago we launched with 15 packs because we were able to figure out a way where we didn't need to have every country have a different pack.

Globally, we manufacture 40,000 packs. You can work out for yourself the implications of taking that 45 to 15 into the 40,000. That sounds very basic. It is probably the single biggest point of leverage on cost in the pharmaceutical company, is how many packs you manufacture.

So across the board, we see opportunities to simplify process. What that will do is release to the organization resources. It will release costs, which can either be redeploy in investment, or it can release costs which can be paid back to shareholders, and it will also release human resources. It will free up our people from things which don't add value to allow us to focus on that pretty long list of activities which we believe will add value in the future.

So that is all I'm going to say. I haven't covered everything that was in the press release, and there may be things you want to talk about which I haven't covered. What I would like to do now is ask Julian to join me up here and really open up the floor to questions on either, obviously, the Q2, or if there is anything anybody wants to ask with regard to the strategic update. If I can ask you to raise your hand, and then one of the ladies with a paddle will come to you, and I will call out the number. And if you wouldn't mind, since I'm new, if you could give me your name that would be helpful.

It's Andy Kocen at Redburn. Welcome, I guess. I hope you enjoy it.

That is up to you.

The first question was just about the acquisition strategy. It seems like you're going to stick with sort of therapeutics and OTC, just to have that confirmed that you're not going to be foraying into medtech or generics or anything like that.

And then the next one is, for the next two or three years, the focus of your business is still going to be on small molecule drugs in Europe and the US. You still have major patent expirations to come, Valtrex, Lamictal, potentially even Advair. How do you think about those sorts of events, and how do you think -- when do you think we will recognize Glaxo as a different-looking business to where we are now, not through the attrition of existing products, but through active change?

A couple of great questions. As far as where we would be looking to acquire bolt-on type of acquisitions, and I think you are right to think that they're going to be much more around the perimeter of our current footprint. Right now, I see us trying to build out and potentially spread that footprint rather than go find some new island to live on. That is clearly not high on the priority list.

As far as the change in the business, first of all, I would like to see some of the changes I've just described to you start flowing through sooner rather than later. I deliberately tried to indicate to you things like, for example, the base vaccine business. There is some much shorter-term opportunity there than, for example, some of the other things, which require, clearly, other programs to go through the process.

So I'd like to see some of these things happen. I think the consumer business continues to have short-term growth opportunity. Overall, what I've laid out for you is a view which says, look, we need to do absolutely the best we can in the next few years, the short run. Clearly, that is what everybody is interested in, is what is the earnings progression going to be of this Company? We need to make sure that is as strong as possible.

I actually think that we are coming through very much that, sort of, the kind of dark clouds of the mass genericizations. And while you're right, we still have, of course, things in front of us, if you actually look at what we've burned off in the last few years and if you think about this year, where we're burning off essentially the tail of Wellbutrin; we have got Lamictal going; we've got the tail of Zofran going; we've got the Avandia hit, all hitting, and we are still managing to be there or thereabouts in terms of sales, I think that tells you this Company has a pretty high ability, at its underlying levels, to absorb a lot of hits.

This year, the Avandia on top of everything else was just a bit too much for us to really hold it together. But it's clearly indicative of a very strong underlying business. So I think we're going to focus on making sure that continues. I think we have got still plenty of space to grow in Advair, for example. I think that is going to be an important part of growth going forward.

In the meantime, or in parallel, we absolutely need to be doing everything we can to redesign our business model to be, I think, as competitive as we should be in five, six years' time. So the way I look at this sector is, this sector has a fleet of ships. They are sailing into a storm. And all sorts is going to happen in the next five years. You guys write great stories about this. And it is going to be fascinating to see what happens.

What we need to make sure is we go into that storm as healthy as we can possibly be. And the good news is an awful lot of our genericizations are behind us, and every day that goes by that is truer, and that as we get through that storm, we come out the other side with a business model which actually is more attractive to shareholders than the one we took in in the first place.

I, for one, am not completely convinced that the most compelling new business model is to say, yes, we're going to go off a generic cliff, and if we survive that we're going to take you right back up another one. That is not, I think, very attractive. I think we have to address how to navigate this genericization era, and then, what is your business model going to be after that? And I think that is where I am focused, in making sure that that proposition is more compelling than we have seen in the past.

It's Brian Bourdot at Deutsche Bank. A couple of questions, one relating to R&D and one relating to vaccines. I will start with the vaccines question, perhaps. Could you mention what the pricing difference is, please, between Rotarix in Brazil and in the US, for example, and Cervarix in the US and Europe and markets outside that? And what sort of opportunity you see for the contribution for Cervarix sales from outside the US and Europe -- is it less or is it more?

The question I have on R&D, I guess, is a bit more general. I'd like to come back to the comments that you made about R&D being a little bit like finding a needle in a haystack and ask you what you think the incremental return on a dollar spent on R&D is, and if you know or if you don't know, what therefore is the optimal level of R&D? How do you know it is not zero outside the high-barrier areas like vaccines? Are you going to drive R&D spending from a bottom-u[ perspective or from a top-down perspective? And does that mean if you find a whole bunch of projects that have very interesting science, promising science, external endorsement, and payors are likely to pay for them, potentially could you be spending more on R&D rather than less? I'd just like to ask if you think there's anything wrong with falling off a generic cliff if in doing so you've climbed a mountain?

It depends whether you get rewarded for climbing up the mountain. I just am fascinated to watch the overhang on the stock prices and the ratings for the five or six or seven years before you even get to the top of the cliff. So I think this whole sector has been derated in the period where the sector has been at its most profitable and returned the most to shareholders, because of the fear of what is coming.

So it is not simply a case of what happens when you're at the peak; it's the anxieties that run up all the way up to it. And there are some brilliant examples of that right now in the marketplace where you're seeing that in absolute spades. So I would say that firstly.

To your specific questions, I'm not going to give you specific price differentials, but ballpark, if you look at something like -- I can't give you Cervarix America and Europe, but if you look at Gardasil America and Europe and Cervarix Europe, list prices are roughly similar. They're not the same, but they are within a few, $10, $15 of each other. So they're not massively different.

In terms of Rotarix in somewhere like Brazil versus US, yes. Clearly, the price in Brazil is lower than the price in the US. But the Brazilian government gave us a multiyear total contract for everybody. So there is a huge difference in the negotiation there in terms of volume.

In terms of R&D, what I said was, look, finding blockbusters is like finding a needle in a haystack. Finding drugs is a lower hurdle. Finding drugs is a lower hurdle. My view is it will be somewhat bottom-up-driven, to be honest with you. I am not hooked to a view which says R&D must be 15% of sales. I am not -- and today, I don't have a belief it should be more than that for any special reason.

I think that we need to demonstrate that we invest the next incremental pound in the place which gives the most certain highest return to the shareholder. And if over time we start to get more and more confident that what we are doing in R&D is more and more likely, i.e. we not only discover great things, but we drop attrition, then that would be, I think, a defendable argument, a defendable case to invest more in.

If that wasn't true, I would absolutely expect to see that reduce. And I think, I believe we should be running the Company being very pragmatic around how do you deliver the best return for the shareholder. And R&D is in that mix, just as anything else. And the next pound in R&D has to compete with the next pound in consumer innovation or the next pound in vaccine manufacture.

So that is the way I'm going to look at this going forward, to say, again, simply speaks to why it is so important to get as much objective input as possible from that perspective.

In terms of paybacks, I don't think anybody knows, nobody really knows how to measure the overall payback of R&D, because much of it is the cost of failure of the programs that don't make it. But, because I thought somebody might ask this question when I showed the consumer slide about pharmaceuticals, if you look and just pick one of the drugs we have launched in the last two years, if you pick, if you just look at the costs of the full development of the drug, so just on that drug, we basically paid that off in the first two years.

So the payback on successful pharmaceutical R&D is pretty good. In fact, it is great. The issued in R&D is all the failures, which dilute -- so that is why I made such a thing about really hitting attrition, because it is the failures that drive all of the return mechanisms. Okay?

It's Andrew Baum, Morgan Stanley. A couple of questions. Firstly, just to play devil's advocate for a second, there are examples of the industry exhibiting lemming-like behavior in strategic moves. And one thinks of PBMs and [DPS] with SmithKline [and MedTech], and there are other examples you could give.

So when you think of the potential mistakes once could make through diversifying further away from core pharma, and not for one second am I saying it's the wrong thing to do, but what do you see are the big concerns? How do we know that the overpaying for external assets is not going to diminish shareholder returns, because the industry no doubt will follow a very similar pattern to you?

And then the second thing is, how concerned are you about the behind-the-counter shift in the US market and what that could do to consumer healthcare? There's one follow-up from that, if I could.

Okay. As far as behind-the-counter is concerned, let's see how that evolves. Obviously, we're very used to working in that environment in many other areas. And in fact, even if you look at alli, for various reasons alli is very often behind the counter. It is not a behind-the-counter medicine, but not least because it is probably one of the more expensive boxes on the shelf. You actually have to go to the counter to get it. And we've been fine with that. So I'm not too anxious about that.

In terms of your point around diversification, first thing, I'm going to reiterate what I've said already. There is no single here today that we're rushing off into some business we have never been in before, that firstly.

What I think we are saying is, first of all, we're probably a bit more diversified already than a lot of people recognized or acknowledged. Secondly, we think there's tremendous growth potential in a number of our classically noncore businesses going forward, and we're going to go after that.

So a lot of our investment going forward, I think, won't necessarily require us running off and doing lots of acquisition. Where there are acquisitions, I think they will be bolt-on, fill-in type of acquisitions, quite targeted. And there is no -- we are going to, and I think Julian and I are in exactly the same place -- you should get -- I think you hear it in the answer I just gave on R&D. We will be very disciplined about how we allocate capital. If we can get an asset for the right price, we're going to do it. We're not going to go do it for any price. And we're going to be using our own internal payback metrics to make sure that we are absolutely delivering something for the shareholder.

There is nothing -- I can tell you there is -- I'm not going to give you the name of the company, for obvious reasons, but it was not in the pharmaceuticals space. There is a company that we were looking at, we stopped bidding on because it couldn't get to our return metrics in three years, because I am not going to go and buy a company, have the organization work like a dog to make the most of it, and not actually get any benefit to our shareholders. There's absolutely no point in buying companies where all the benefit forever goes to the target shareholders. We want something which leaves something on the table for us to give back to our shareholders.

So I think we will be pretty disciplined. That may mean, from time to time, like in this case, we let something go past the door, and we say, you know what? We loved it, but not at that price.

I would also say, if you look at the Aspen deal, that is a really good example of how I want to think about these things. Now, we're not always going to be able to do deals like Aspen. But you know and I know there are other people running around trying to get access to branded generics and generics, spending a heck of a lot more money to get there than the deal we've just announced with Aspen.

I think Aspen is a very good example of we know what we want, it is coherent with our strategy, and we have said, okay, we want to get there. Is there a way of getting there without having to spend a fortune up front? And that is exactly what we have done. Now, there may be other occasions where we can't get it quite that way, but I think it is quite a good indication of the mindset we're trying to apply.

The second question, I will keep brief, was just on R&D, where you are clearly trying to implement a different behavior. It is one thing to have the idea, which makes complete sense, given the environment and productivity. It is another thing to execute it. And the timeline to change the behavior of current employees, upgrade employees where need be, what kind of timeline should we anticipate before you actually see that come through?

Well, so we've already started executing the change. So the Discovery Investment Board has already started meeting. The reimbursement panels have already started meeting. And the DPUs have already started to be created, or have been created. So that is all happening. I can give you a couple of really good examples.

Two weeks ago, I was in one of our discovery labs. It's a really good example -- somebody came up to me and said, Andrew, I know there's lots of change going on. It is so much better. Everybody I need to work with is in this lab. I don't have to book a VTC meeting with somebody in Philadelphia. I don't have to go to America. It was quite nice to go to America now and again, but if I want to get something done, they are right here.

So already we're getting that kind of feedback of releasing people to focus on what is important. In another lab, similar timeframe, actually, in fact the day before, a different laboratory, different site, I walked into a lab. There were two scientists, two benches. Both had experiments set up. Interestingly enough, both PhDs. One was a Chinese who had come through Stanford back to Cambridge and now works for GSK. The other was a European who had come to Cambridge, and now worked for GSK.

Stood next to each other, and I asked the girl, what are you doing today? What is your experiment today? And she said, well, I was going to do ABC, but his experiment just came in positive 20 minutes ago. So I'm stopping everything and we're going to just work on that.

So that is exactly what I want. There was no memo sent, no anything. It was like, boom, experiment -- suddenly the critical path moves. You just move your resources to chase after that next opportunity. It's exactly what it is like in a hothouse biotech. That is exactly what we we're going to have in the Company.

So I would say at the day-to-day level, already started. How is it going to start -- when are you going to start to see it reflect through? I'm as impatient as the next person. I hope we're going to start to see some real change, I would have thought, in the next couple of years. I think this is something you will start to see quite quickly in terms of the basic stuff.

Now, it is not, of course, going to deliver a drug in the next couple of years. But we're going to start to see it in how it reloads our early pipeline and the quality of the assets that come forward. And I also think you're going to start seeing things like number of patents we file and all of that kind of thing. So all of that will start to reflect, I hope, this kind of change. But it is already happening.

Marietta Miemietz from Societe Generale. I have a few questions, please. The first is on the share buyback. I was just wondering if you can give us a very rough feel for the timelines when you expect to complete it, because basically, from the way you describe your new strategic priorities, it didn't sound to me like there is an investment of billions that is required here. So are you saying we might be completing the buyback in November '09 as opposed to July '09, because we might need a few extra hundred millions? Or is the share buyback effectively suspended until you have more clarity on exactly what the business needs are?

The second question, relating to your intellectual property in Japan, I was just wondering if you can give us a rough feel for when your key patents or exclusivity expire for the products you've got there, i.e. the extent to which you are actually relying on a Japanese generics market not fully developing, or do you have other protection?

And then my third question relates to gross margin, whether you could help us with some guidance how to model this for the second half, i.e. what sort of a hit roughly should we expect verses Q2 '08 from the increasing genericization? To what extent is it overcompensated by efficiencies? The reason for the question is that I think what we have seen in the first half is much, much better gross margins than what seemed to be implied in your guidance, even though you had a significant hit from genericization of Avandia.

Thanks for the questions. As far as the buyback is concerned, basically what we're announcing today is we're committed to the GBP12 billion buyback. We have already spent GBP5.5 billion as of last night. We intend to spend about another GBP1 billion between now and the end of 2008. And then after that, the pace of the buyback will vary according to opportunities.

So we are not signaling any new close date. The buyback is absolutely not suspended. But its pace after the end of this year will really be a function of other investment opportunities that we see. If we see or we want to execute on many, then it is going to go more slowly than if we don't, and it will go more quickly if there are relatively fewer or lower-cost opportunities.

What I have been very keen to do here, and the reason why I have done this, is, as I have describe and implied, this environment I'm operating in is going into a pretty interesting period. And I want to make sure I have got flexibility and options to do the right thing to build up our business going forward. I don't want to be in a position where I don't have that flexibility. So that is why we're varying the pace, but the pace will simply be then a function of those opportunities that we see.

Secondly, as far as Japanese intellectual property is concerned, we do have a raft of patents, obviously, in Japan. But critically, and very positively, you probably know that data exclusivity was adopted in Japan a couple of years ago. So essentially, pretty much everything that we're launching into Japan at least has the 10 years' data exclusivity and then plus any other patents we might have.

So I think even for the products which are, in Western terms, very old, like Lamictal, we would fully expect a full 10 years' exclusivity in the marketplace. So if there is no -- which is why this is such an interesting opportunity, to have three generation of products hitting at the same time really gives us a great scope.

As far as gross margin is concerned, we've guided earlier in the year and we are sticking that view, that you would expect our cost of goods to be running around about the 24% level. We were a little bit better in the first half. We think that that is a good guide for the full year. That's pretty much the answer.

Kevin Scotcher, HSBC. It is a question about attrition rates. I think that, if I remember, back in 1993, when Glaxo Wellcome was facing Zantac, Richard Sykes in Report and Accounts pointed out that 10 $500 million drugs could make the average return of a $5 billion drug for Glaxo Wellcome. The problem in his thinking was attrition. 10 drugs have 10 times the risk of one drug.

Your attrition rate will have to reduce very significantly for you to maintain the current returns that you are making, as you mentioned, on very large drugs. How are you going to reduce the attrition rate? You pointed out it's what's important, but your strategy doesn't really tell me how you're going to reduce attrition.

So clearly, there is no doubt, and I agree with you -- you have to get this right. A large part of it is what I have touched on, which is to create great objectivity in the Company. It is very interesting. If you look, and the reason why I know we can do this is we have just compared what happens to our in-house programs and what happens to all those programs we do due diligence on externally for acquisition. And we compared on the external population what happened to the project we brought in and what happened to the projects we rejected and somebody else bought.

And was that shows is we have a very high -- our ability to buy in assets which stay in development and make it is much higher than even our internal judgments, which is an interesting observation and tells you immediately where to start focusing. So our due diligence capability externally is sharper than it has been historically internally.

And secondly, the progression of the assets we bought is substantially more positive than what happened to the assets that we rejected and somebody else bought. So, within that portfolio of how do you make decisions, applying that kind of disciplined objectivity is really at the core of all of this.

And I've got no -- I don't disagree with you at all. It is critical. I am not at all intimidated by the notion of can you improve it. I think the answer is you can absolutely improve it. And I think we've got some pretty clear metrics inside the Company which show what behaviors drive down attrition and what behaviors don't drive down attrition.

We need to obviously select for a certain type of behavior. And that is something we have been putting in place over the last year or so, and I think you will start to see that shine through, I think you see even now in our full development program, where our volatility of our full develop program is much less than it has been for a very long time.

You are also seeing it in our flow of new products. So this Company had no new products, essentially, between, what, '99, 20000 and 2007. We had 10 approvals last year, 12 approvals this year. We have a Phase III pipeline you have got in front of you. It is a pretty significant difference in terms of the size and the number of assets in there. So I absolutely hear you, but I think this is something we can address.

Now, the second thing I would focus on, which is very different from where things were 20 years ago, is what I'm also saying, is we are not going to deploy a blockbuster SG&A model behind things that aren't blockbusters. That is very different. So what is downstream -- because then, because this whole notion of how big does it have to be to be efficient is a function of what you spend on it after you launch it, not just how much it costs to get there.

So that is the other key part, and it's why I talked about a different clinical development approach and a different sales and marketing approach and a lighter overhead structure for the Company. You've got to start tackling all of that. What I've described to you is pretty fundamentally different business model to the blockbuster business model that the industry has kind of been able to run for a long time.

Boylan with UBS. In addressing this branded pharma blockbuster-ready model, to some extent we would expect that average revenues would go down on products, which implies that costs have to also come down in R&D. To what extent is this in internal reduction either through geographical diversification of trials failing fast, et cetera, and to what extent is this the regulator changing with you, biomarker qualification, electronic data capture, postmarketing, et cetera?

You're right. You need to have a different cost structure. I'm going to repeat what I just said, which is that it is not just R&D. You have to have a different cost structure in your go-to-market model, as well as R&D. But within R&D, the best ways to reduce overall costs are clearly not to have the failures in the first place. That is where the bulk of the costs are.

I mentioned earlier a payback of two years. It was not in one of our biggest drugs that that two years was achieved. That was in a drug in the mid-pack, very much the kind of drug we're talking about here, actually.

So the pressure is really to tackle the attrition first. Where else are we going to get cost savings? I will tell you. For sure, some offshoring and low-cost clinical trial centers, of course. Secondly, very basic, don't ask as many questions in clinical research. If you know what the question is you want to answer, you can run a very simple clinical trial. If you haven't really been disciplined enough to decide what the question is you're going to answer, you're going to run a clinical trial which asks 100 questions, just in case.

If you run a trial that's going to ask 100 questions, it's going to cost you 10 times more than the one that asks five questions. And it is that kind of really making high-quality judgments up front, and this, again, speaks to cultural change. It is exactly where Moncef Slaoui, my head of R&D, has been pushing for the last two years. It is really fundamentally changing the way we operate inside R&D. And what we're seeing is a constant flow of efficiencies from inside our R&D business.

Now, you think about R&D today. We're spending $6 billion, or whenever this. +*+ now you think about R&D today. Where spending $6 billion, whatever it is we're spending this year, in R&D. Within that total of $6 billion, we now have a very substantially bigger vaccine R&D business than we had five years ago, number one. So that has been accommodated within essentially no overall growth. And you have now got a pipeline of Phase III assets you've got in front of you, again, for no overall net growth.

How has that been funded? It has been funded through all the efficiencies improvements that we were already driving through. It is absolute evidence of the ability of the R&D organization to release tremendous costs to deploy into higher-value opportunity. It is exactly what you see, and we want to do more of that. I'm not saying the R&D budget is never going to change, to the question earlier. It will bump up and down according to opportunities. But clearly, there is the potential for us to drive efficiency through the kind of very basic things that I've just described.

Kevin Wilson from Citi. Three questions. On R&D, how confident are you that your Phase II portfolio would withstand a ruthless examination before it goes to Phase III? Might we see some changes in that over the course of the short-term period? And might that also mean that R&D growth is perhaps less than your predecessor had wished it would have been, I think?

R&D cost growth, you mean?

Yes, indeed. Secondly, on the opportunities for simplifying the business and restructuring, how large is this opportunity relative to the benefits you are going to get from the program in place now? You have GBP700 million penciled in with the benefits you're going to get. What sort of scale do you think the organization can actually generate? Obviously, you're not going to give us the number; we understand that. But is it a tenth? Is it the same number? Is it three times as much? That would be useful. And thirdly, how far down --

That would be a number, obviously.

We can debate the question. And finally, on inventories, how far down can inventories go in the industry? They've typically run 180 days for as long as I can remember. Will it go down to 60 days? Might it go to 30? Is that the biggest source of working capital benefit?

Kevin, thanks very much. As far as Phase II attrition is concerned, I am not necessarily expecting a huge step-change in what is in that portfolio. But we are putting those drugs through it. And there will be -- I will give you -- let's give you a real example. We have a couple of urology assets in Phase II, which I think is pretty much an open secret that we're looking at potentially spinning out from the Company, for exactly that reason. I don't think those are going to, for us, I don't think they're going to make it in a way which is going to be helpful for our strategy going forward.

So I think there will be a few. I think actually what will also happen, what you might see -- don't overreact to this, but what you might see on a couple of assets is a time liability, because what you might have is a discussion with the payor. And they say, well, actually, if all you're going to prove is X, I'm not interested. But if you could prove X plus Y, now I am interested.

So you might have -- those are the sorts of pieces of feedback which might then lead to a slight change in program or something like that. So we will see. We haven't gone through all of that yet. It has begun. I'm not really anticipating a big fallout from it. But there will be some tweaks around it.

I would say when Moncef took over a couple of years ago, you will have noticed there was a pretty thorough cleanout then. He was applying some of this logic at that point in time. So there has already been a bit of a clearout.

In terms of what kind of costs we might release, I think it is material. I don't know how much it is yet. We are working on it. We need to figure out what kind of scale it really is. But we're not talking about picking up pennies here. This is going to be something which is I think interesting to all of us.

As far as inventories are concerned, yes, I would love to see inventories come down. It is clearly an area which we're focused on in terms of working capital. Just to give you -- I'm not saying this is where they're going to end up, but I was at our Lucozade factory 10 days ago. Our Lucozade factory sends a lorry every 10 minutes out of the factory, and the entire supply chain has no raw material on site. The entire supply chain, start to finish, is two weeks.

So I'm not saying the drugs are going to get there. But it certainly gave me a point of inspiration around, if this Company can run a supply chain like that for drinks, then we have got inside the Company some real expertise which could be brought to bear on what is currently a much bigger supply line on pharmaceuticals. If you think about pharmaceuticals from raw material to drug in the pharmacy shelf, you're talking months, years, in some cases.

It's Graham Parry from Merrill Lynch. Just on the new R&D structure, I was wondering what pilot programs you actually ran ahead of putting in place the DPUs. So is there an individual CEDD where you actually tried this out? Because I think some people may say the CEDD structure hasn't worked; otherwise you perhaps would not be facing some of the challenges you are today. So on that basis, how concerned are you about loss of crosstalk and idea-sharing between groups, if you are actually effective in pitting them against each other for capital?

And then secondly, on the Aspen acquisition, it looks as if the deal is really incentivized by the need to have a supply of low-cost generic products, both from an R&D and manufacturing perspective. So could you contrast the rationale of that with just buying a generic manufacturer? And if you intend to replicate this on a scale globally, will you really have the infrastructure to do that, or is the next logical step just going to be that you have to go and buy a generic manufacturer anyway?

So just on the second question first, Graham, actually if you look at footprints in emerging markets, we're among the biggest. Generic manufacturers have practically nothing. Even if you look at the Indians, they have practically nothing outside of India. So the footprint is the last of our challenges. Now, maybe one more, yes. Are we going to put more people on the ground in China? Absolutely, for example. Are we going to build up more in Russia? Absolutely.

So you're going to see more. But the reality is there are no easy targets, if I can put it that way, to buy infrastructure in emerging markets. We've got the infrastructure. We have good presence. What we need is brand portfolio. What this deal is all about is giving us a very low-cost access point to a very substantial scale.

Is this going to be the end of it? No. We're going to continue to look for ways in which we can further augment it, and maybe other deals will be different to this deal. But we absolutely expect that.

In terms of the DPUs, really the best examples of where the DPUs work are in the various biotech companies we have acquired. And if you look at Domantis, you look at Sirtris, you look at Praecis, these are very much the way they operate. Look at our best units in the Company. They are coherent.

Labs, you look at every drug ever invented in the industry. It comes out of a lab led by an individual with some inspiration. Drugs aren't discovered by following process charts. They might be developed by following process charts, but they're not discovered that way. And really, we're trying get back to that.

In terms of -- these are not pitted against each other. The pot can flex, as I've said already. They can be opportunity-driven. They are pitted against a quality hurdle. And the big -- basically, what we're saying is, if your idea is no good or if it doesn't stack up strategically or your team doesn't look compellingly persuasive, then why would we invest in you? Why would we do that?

So that is what they are really pitted against. The ability to drive crosstalk in the organization is given by the CEDDs. You've got to remember, all these DPUs sit in families inside a CEDD. So the CEDD is what drives that kind of therapeutic coherence.

To your assertion of, well, if the CEDDs had worked, you wouldn't have to do anything more, I think you just have to get back a little bit and be realistic. In 2000, 2001, JP set the Company up. He had nothing in the pipeline. He created the CEDDs. We now have a big pipeline. You all know it takes a long time to get from discovery to Phase III. It's sort of obvious that it was going to take several years.

Now, what is key for me now is to make sure that we build on that momentum that the CEDDs have and go the next step. We think we have learned a lot from the CEDDs, and the CEDDs continue to be a pivotal part of our organizational structure of R&D. But we think the way to step it up another gear is to really empower the teams, put more accountability into them, make them jump a hurdle of qualification at the beginning, and let them go at it for three years. Don't show up for another budget presentations for three years. I'll tell you, they're cheering in the streets when you tell them that.

So is that kind of -- it is that next step that we're moving toward.

All right, I think we have one last question, I think, here. Yes. I think that's the last one.

Savvas Neophytou, Panmure Gordon. I have a couple of questions. We're looking, obviously, at the industry changing -- it's a conceptual question -- and one of the things that is coming is personalized medicine. And that is why the blockbuster era is coming to an end, that there will be a lot of products, but they will be smaller. You haven't talked about things like markers or how you're going to harness the -- whatever, diagnostic, whatever you want to call that. Could you perhaps talk to us about that?

And then, the second question, which I guess is a little bit more difficult to ask, is you spoke at length about the impact that the acquisition of Domantis -- and so did JP previously -- and you paid, what, a couple hundred million for Domantis?

250.

And there were [VCs] invested in that. And I look at, say, what AstraZeneca paid for MedImmune, GBP8 billion. You couldn't have made the jump from GBP250 million to GBP8 billion or GBP9 billion in the space of two and a half, three years, to give you this scale. Do you need to go and buy that scale so that you can actually be playing in that game, if that is the future of the pharma industry?

And the third, the final question, is selling and distribution costs, where is that going to go under your leadership of Glaxo? Are we looking at redistributing the cost of having 10,000-people sales team in the US, or are we really looking to make a big impact there?

Okay, great. Thanks for the questions. As far as personalized medicine is concerned, we are obviously involved in that in various areas. If you look at our HIV business, for example, there is a test being developed for one of our drugs. Obviously in breast cancer with HER-2 overexpression, there is a clear linkage between biomarkers and the use of Tykerb.

So we're there. And within our research programs, we are very actively thinking about and working on how a marker might help the application of our drug be more successful. In the future, the best way to defend a decent price will be able to say to a payor, only people who benefit use the drug. That is going to be where you eventually secure some kind of high ground in the floods, right? That is going to be where you really want to go.

Behind your question is are we going to buy a biomarker company or get somehow into this. I think it is very hard to say -- there is a huge amount of hype around this area, number one. There's loads of technology out there. And every time I look at this, the company you might want to work with in one disease area for one drug is completely different from the technology or the company you might want to work with in another area.

So I think this is an area where it is worthwhile to just see how it all plays out. We're very focused on developing drugs and working with the right biomarker to help us. It is not an area where I think in certainly the short to medium run is one that we're going to be rushing around to jump into in any kind of very material way.

As far as scale in biologicals, I think there are two issues in biopharmaceuticals. One is where can you trap intellectual property and innovation, and then the second is scale. So, what Domantis gave us was a huge platform. And Domantis and Sirtris, one small molecule, one big molecule, are very similar. They both gave us huge potential platforms of discovery, very big IP positions. So it wasn't about once drug. If it works, it is a lot of drug, right? It is really a potentially high-return area.

It does not do anything for scale. We have five drugs, as I have said, large molecules in full development. We're basically doing all of that either using our own facilities that we already have or through contract to people like [Lonza]. So, right now, no issue for us.

Down the road, are we likely to have to make an investment in biological manufacturing capacity? Probably. How are we going to do that? Haven't decided yet. But clearly, that is an area where if the biopharm thing continues to flow, then eventually we're going to have to make some kind of decision. Right now, we feel like we have got enough capacity on tap to us through various mechanisms.

And the beauty for me of Domantis, unlike some other acquisitions which have happened, is we got what could be a strategic lever on the business for tactical money. What I don't want to do is spend strategic money for something that ends up being a tactic. And that -- we've got to be very, for me, if you're going to spend strategic money, you'd better make a strategic difference. And that, for me, Domantis, it was just right.

Your last question, sorry, was?

Selling and distribution.

So selling and distribution, let's wait and see how that goes. I think you have got the message from me that we're very much -- it is very much in scope how we structure going forward. I'm not going to give you any particular guidance on this today, because what we need to now work through is how are things going to really start settling out in emerging markets and growth markets? How are we going to change what we do in the traditional markets? I think that is a conversation for another day. But certainly, for this year, in the very short run, I wouldn't say anything which changes the guidance we have already given.

Okay, with that, I'm going to thank you very much for your attention. I appreciate your questions today. And obviously, the team are around today and after today to answer any more you might have. Thank you very much.