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Strategic reportGovernance and remunerationFinancial statementsInvestor informationChairman’s statement2020 was an extraordinary and challenging year. We continued toprogress our strategy towards the creation of two new companies.The COVID-19 pandemic dominated all aspects of life andbusiness and GSK was no exception with impacts felt bothoperationally and among our people. In the face of hugechallenges we delivered our financial guidance for the yearand continued to make progress on our strategy.This is a testament to the leadership of Emma and hermanagement team who have navigated the company throughthe year and ensured people across GSK remained focusedon our purpose and delivery of performance.StrategyThe Board was pleased to see the continued progressmade against the company’s strategic goals in 2020. Whileit is disappointing this has not yet translated into improved TotalShareholder Returns (TSR), the progress made reinforces theBoard’s confidence in the direction of the company and itseventual split next year into two new companies in Biopharmaand Consumer Healthcare. This, combined with meaningfulimprovements to operating performance from 2022 onwards,provides significant opportunity to create value for shareholders.Strengthening the Biopharma pipeline remains the Company'snumber one priority, and this continued through 2020 (despitethe pandemic), with nine significant approvals, nine pivotal trialstarts and a pipeline now consisting of 58 potential medicinesand vaccines focused on infectious diseases, oncology andimmune-mediated diseases. A number of these assets couldbe significant launches over the next five years, with thepotential to change medical practice and provide materialvalue for the company. The Board’s Scientific Committeeis closely involved with Hal and his team on the pipeline.Operational and financial performance was resilient throughthe year. Importantly we are seeing evidence of significantlyimproved commercial capability and execution and thisis driving good expansion in our key growth products.Management also maintained its strong focus on costcontrols and cash generation. 2021 will see further pipelineinvestment and continued short-term disruption to our adultvaccines business, both of which are reflected in our earningsguidance for the year.GSK’s capital allocation framework focuses on investing inthe R&D pipeline, new product launches, vaccine supplycapacity and disciplined business development.In 2020, we paid 80p per share to shareholders and expectto do the same in 2021. We intend to implement a newdistribution policy for dividends from 2022, the year wewill separate into two new companies. This will ensure bothbusinesses are competitive and have the right capital structurewith the capacity to invest to deliver growth and shareholderreturns. Overall, we expect that aggregate distributions forGSK and across the two new companies will be lower thanthe 80p per share currently paid.The importance of businesses acting responsibly is centralto how an increasingly broad range of stakeholders viewcompanies. As part of this, global health has always been animportant element of GSK’s Trust priority and the Board waspleased to see that GSK once again topped the Access toMedicine Index. Environmental, social and governance (ESG)are increasingly a focus for investors and other stakeholdersand the Board fully supports the ambitious, new environmentalgoals on climate and nature, and new inclusion and diversity(I&D) targets, including on race and ethnicity, that managementhave announced.The Board also supports management’s efforts to contributeon COVID-19, including progression of potential vaccinesand therapeutic treatments. As a company with a world leadinginfectious diseases portfolio and scientific expertise, GSKhas an opportunity both to contribute meaningfully to the currentresponse to the pandemic and to work with global institutionsto support better long-term preparedness planning.Board changesThe Board continues to adapt to support the company’spriorities and ensure effective delivery. Specifically, a newcommittee was established to oversee the separation andtransformation into two companies, and the CorporateResponsibility Committee has taken on an expanded remit inline with the greater focus on ESG. The Science Committeecontinues to provide excellent oversight and direction for theR&D strategy.In May, Charles Bancroft joined the Board as a Non-ExecutiveDirector. Charlie will succeed Judy Lewent as Chair of the Audit& Risk Committee on completion of the 2020 annual reportingcycle. Judy steps down from the Board at the AGM and I wouldlike to thank her for her enormous contribution to GSK over10 years. I am also grateful to Lynn Elsenhans, who has agreedto stay on the Board for a further year, to ensure that there iscontinuity in the important work of the Corporate ResponsibilityCommittee.Finally, I would like to thank all GSK’s employees, partners,shareholders and customers for their support during thisunprecedented year.Sir Jonathan SymondsChairmanGSK Annual Report 2020 03

CEO’s statementInnovation for healthcare impact is the heart of our purpose. In 2020we made further significant progress, continuing to build a high-valuebiopharma pipeline focused on vaccines and specialty medicines.2020 was a remarkable year for us all. Despite the challengesit was also a year of progress for GSK and I’m proud of the waythe company has responded to support patients, healthcaresystems and our people while also delivering good financialperformance and advancing our strategic transformation.This progress means we have high confidence in our abilityto launch new competitive, standalone Biopharma andConsumer Healthcare companies in 2022 that can achievemeaningful global impact to health and have the opportunityto create significant value for shareholders.Growth in 2020 salesGroup sales grew 1% at actual exchange rates (AER)and 3% at constant exchange rates (CER) to 34 billion.This is a testament to the increased focus we have continuedto place on improving commercial execution.New and Speciality products drove growth with sales of 9.7 billion, up 11% AER and 12% CER. This group ofinnovative products now account for more than half ofpharmaceutical sales.In respiratory we saw strong growth for Nucala, our biologicfor asthma and Trelegy our 3-in-1 inhaler for asthma and COPD.In HIV, new two-drug regimens Dovato and Juluca more thandoubled sales to 869 million while our oncology portfoliocontinued to grow with Zejula, for ovarian cancer, significantlygrowing market share, and the launch of Blenrep, for heavilypre-treated multiple myeloma patients. Shingrix, our successfulvaccine for shingles, continued to grow and had sales of 2 billion, despite the significant disruption to adultvaccinations from the COVID-19 pandemic. We also sawa strong Consumer Health performance with sales up 4%CER on a pro-forma basis, excluding brands divested andunder review, reflecting the underlying strength of brandsacross our portfolio.This strong performance in our growth drivers and disciplinedcost control allowed us to deliver our guidance for the year,which was set before the pandemic. Total earnings per sharewere 115.5p, up 23% AER, up 26% CER while Adjustedearnings per share were 115.9p, down 6% AER and down4% CER.We had strong cash generation, with free cash flow of 5.4 billion. We declared a dividend of 80p per shareand expect to pay the same again in 2021.04 GSK Annual Report 2020Continued R&D deliveryInnovation for healthcare impact is the heart of our purposeand strengthening our R&D pipeline remains our first priority.In 2020 we made further significant progress, continuingto build a high-value biopharma pipeline focused on vaccinesand speciality medicines, harnessing the science relatedto the immune system, the use of human genetics andadvanced technologies.We had nine major approvals in 2020 for medicines inrespiratory, oncology, HIV and immuno-inflammation –a remarkable achievement. This included Zejula’s expandedlabel in ovarian cancer, making it potentially available tomore women, and Cabenuva, the world’s first long-actinginjectable for the treatment of HIV which allows patientsto have 12 injections a year instead of taking daily pills.Nine pivotal trials were started in the year, including for avaccine candidate for RSV – a virus with a high unmet needand which causes thousands of deaths and hospitalisationsa year. If successful, this vaccine could play a significant rolein easing this burden. We will start other late stage trials thisyear including for a new long-acting asthma medicine which,if successful, would be given every six months – a furthertestament to how we put patients at the heart of our R&D.Overall, we now have more than 20 assets in late stagedevelopment, many of which could be transformational forpatients. These products could all launch by 2026 and webelieve more than 10, if data is positive, have the potentialto be very significant commercially.Last year we also executed more than 20 business developmentdeals, strengthening our capabilities with the acquisition of newantibody, mRNA and genetic platforms and technologies.We continue to use our science to contribute to the COVID-19response on multiple fronts. We were of course disappointedwith the delay to our vaccine being developed with Sanofi,but we continue to progress this along with others as well asin-house and externally-partnered therapeutics. Importantly,we are looking ahead to the potential need for next generationCOVID-19 vaccines to use with emerging variants or as abooster and we are delighted with our recent collaborationwith CureVac to research and develop several mRNA vaccines,including for COVID-19.

Strategic reportGovernance and remunerationFinancial statementsInvestor informationCEO's statement continuedSeparation preparationWe remain firmly on track with our intention to separateinto two new, exciting companies next year – a New GSK inBiopharma and a new world leader in Consumer Healthcare.We have met all our first year targets for the separationprogramme and the integration of the Consumer JV issubstantially complete. As the second year of our two-yeartransformation, 2021 will see further investment in our pipelineand behind successfully launching new products to sustain ourlong-term competitive growth. Short-term disruption from thepandemic to our vaccines business is reflected in the financialguidance we have set out for 2021. We continue to expect ameaningful improvement in performance from 2022 onwards.We have continued to work with partners on other long-termurgent global health needs. Following positive data for oursingle dose treatment for the P. vivax strain of malaria, wehave filed alongside our partners Medicines for Malaria Venture(MMV) for its use in children – a population disproportionatelyaffected by the disease and we have licensed our TB candidatevaccine to the Bill & Melinda Gates Research Institute for itscontinued development and potential use in low-incomecountries with high TB burdens. I am pleased that ourcommitment to this important work has been recognisedagain by the Access to Medicines Index, which we havetopped for the seventh time in a row.Building TrustBuilding trust with all our stakeholders – in addition to deliveringsustainable financial returns – is critical. The pandemic hashighlighted the need for businesses to operate in a responsibleway and, for life sciences companies, to ensure there iswidespread access to medicines.Our people and cultureOur people have shown remarkable dedication, agility andresilience through the year in unprecedented circumstances.This has included the thousands of employees who havecontinued to work in our manufacturing facilities throughoutthe pandemic to ensure our vital medicines, vaccines andconsumer products continued to reach patients and consumers.Investor interest in environmental, social and governance (ESG)issues has increased significantly over the last year. We believein the need to transition to a net zero economy and we wantto play our part in protecting and restoring people’s and theplanet’s health. In November we set ambitious, industry leadingenvironmental targets to have a net-zero impact on climatechange and net-positive impact on nature by 2030.I want to thank our fantastic people and our partners, forwithout them we would not succeed and we count on themnow as we prepare for our exciting future.GSK firmly believes in the value of inclusion and diversity andwe have set aspirational targets for the proportion of ethnicallydiverse leaders at VP level and above in the US and UK by2025 and reset our gender target, aiming to further increasefemale representation at VP level and above globally by 2025.We are also focusing on improving diversity in clinical trialsto ensure that they represent – and our medicines are safeand effective in – real-world patient communities.Their efforts have meant that despite the challenges we enter2021 with our pipeline stronger, our commercial executionsharper and our confidence higher in our ability to deliversustainable long-term growth post separation.Emma WalmsleyChief Executive OfficerGSK Annual Report 2020 05

Financial performanceOperating performance – 2020TurnoverPharmaceuticalsVaccinesConsumer HealthcareCorporate and otherunallocated turnoverGroup turnoverGrowthCER%2020*Pro-formagrowthCER% mGrowth )(2)2834,09913(2)Financial results mTurnoverTotal operating profitTotal earnings per shareAdjusted operating profitAdjusted earnings pershareNet cash from operatingactivitiesFree cash flow )* Pro-forma CER growth rates are calculated as if the equivalent sevenmonths of Pfizer consumer healthcare business results, as reportedby Pfizer, were included in the comparative period of 2019. Please seepage 53 for more information.TurnoverStrong sales performance from key growth drivers in HIV,Respiratory, Oncology and Consumer Healthcare offsetdisruption from COVID-19 to adult vaccinations.Group turnover was 34,099 million in the year, up 1% AER,3% CER. On a pro-forma basis, Group turnover was down2% CER, but up 1% at CER excluding the impact of divestmentsin Vaccines and brands divested or under review in ConsumerHealthcare.Pharmaceuticals turnover in the year was 17,056 million, down3% AER, 1% CER. Respiratory sales were up 22% AER, 23%CER, to 3,749 million, on growth of Trelegy, Nucala and Relvar/Breo. HIV sales were flat at AER, up 1% CER, to 4,876 million,with growth in Juluca and Dovato partly offset by declines inTivicay and Triumeq. Sales of Established Pharmaceuticalsdeclined 16% AER, 15% CER to 7,332 million.Vaccines turnover declined 2% AER, 1% CER to 6,982million, primarily driven by the adverse impact of the COVID-19pandemic on Hepatitis vaccines, DTPa-containing vaccines,Synflorix and Bexsero, together with the divestment of Rabipurand Encepur. This decline was partly offset by higher sales ofInfluenza vaccines across all regions and by Shingrix growthin Europe, China and the US together with a strongperformance from Cervarix in China.06 GSK Annual Report 2020Reported Consumer Healthcare sales grew 12% AER and14% CER to 10,033 million for the full year, largely drivenby the inclusion of the Pfizer portfolio, partly offset by brandsdivested/under review. On a pro-forma basis, sales declined2% CER, but grew 4% CER excluding brands divested/underreview, reflecting the underlying strength of brands across theportfolio and categories, strong growth in e-commerce, andsuccessful execution meeting evolving consumer demand asa result of the pandemic.Operating profitTotal operating profit was 7,783 million in 2020 compared with 6,961 million in 2019. The total operating margin was 22.8%.This reflected the profit on disposal of the Horlicks and otherConsumer Healthcare brands and resultant sale of shares inHindustan Unilever as well as increased income from assetdisposals. This was partly offset by higher re-measurementcharges on the contingent consideration liabilities.Adjusted operating profit was 8,906 million, 1% lower than2019 at AER and 2% higher at CER on a turnover increaseof 3% CER. Pro-forma adjusted operating profit declined 3%.This primarily reflected the adverse impact from the reductionin sales in Vaccines as a result of the COVID-19 pandemic,investment in R&D, and investments in promotional productsupport, particularly for new launches in Vaccines, HIV andRespiratory. This was partly offset by effective cost control,including reduced promotional and variable spending acrossall three businesses as a result of the COVID-19 lockdownsand the continuing benefit of restructuring in Pharmaceuticalsand Consumer Healthcare.Earnings per shareTotal EPS was 115.5p, compared with 93.9p in 2019. Theincrease in EPS primarily reflected the net profit on disposalof Horlicks and other Consumer Healthcare brands as well asincreased income from asset disposals, partly offset by higherre-measurement charges on the contingent considerationliabilities, higher major restructuring charges and a one-offbenefit in 2019 from increased share of after tax profits ofthe associate Innoviva.Adjusted EPS was 115.9p compared with 123.9p in 2019,down 6% AER, 4% CER, on a 2% CER increase in Adjustedoperating profit. The reduction primarily resulted from a highernon-controlling interest allocation of Consumer Healthcareprofits, higher investment in R&D and reduced share of aftertax profits of associates resulting from a non-recurring incometax benefit in Innoviva.Cash flowThe net cash inflow from operating activities for the yearwas 8,441 million (2019 – 8,020 million). Free cash flowwas 5,406 million for the year (2019 – 5,073 million).The increase in free cash flow primarily reflected increasedproceeds from disposal of intangible assets, beneficial timingof payments for returns and rebates, reduced legal paymentsand improved operating profits, partly offset by higher dividendsto non-controlling interests, increase in trade receivables,increased tax payments including tax on disposals and adverseexchange impacts.

Strategic reportGovernance and remunerationFinancial statementsInvestor informationFinancial performance continuedTotal and Adjusted resultsTotal reported results represent the Group’s overallperformance.GSK uses a number of Adjusted, non-IFRS, measures to reportthe performance of its business. Adjusted results and othernon-IFRS measures may be considered in addition to, butnot as a substitute for or superior to, information presentedin accordance with IFRS. See page 51 for a fuller definition.GSK believes that Adjusted results, when consideredtogether with Total results, provide investors, analysts andother stakeholders with helpful complementary informationto understand better the financial performance and positionof the Group from period to period, and allow the Group’sperformance to be more easily compared against the majorityof its peer companies. These measures are also used bymanagement for planning and reporting purposes. They maynot be directly comparable with similarly described measuresused by other companies.Adjusting itemsTotalresults mTurnoverCost of salesGross profit34,099(11,704)22,395Selling, general and administrationResearch and developmentRoyalty income(11,456)(5,098)318Other operating income/(expense)Operating profit1,6247,783Net finance costsGSK encourages investors and analysts not to rely on anysingle financial measure but to review GSK’s Annual Reports,including the financial statements and notes, in their entirety.GSK is undertaking a number of Board-approved Majorrestructuring programmes in response to significant changesin the Group’s trading environment or overall strategy, orfollowing material acquisitions. Costs, both cash and non-cash,of these programmes are provided for as individual elementsare approved and meet the accounting recognition criteria.As a result, charges may be incurred over a number of yearsfollowing the initiation of a Major restructuring programme.GSK’s reported results for the year ended 31 December 2019included five months of results of the former Pfizer consumerhealthcare business compared with twelve months in 2020.Pro-forma growth rates at CER have been calculated for 2020including the equivalent seven months of results for the periodto 31 July 2019 of the former Pfizer consumer healthcarebusiness, as more fully described on page

and Consumer Healthcare companies in 2022. The programme is using the unique catalyst of separation . to reset the capabilities and cost base for both companies, and help support delivery of the significant value creation opportunities we see in both New GSK and new Consumer Healthcare. For New GSK, we see a clear opportunity to drive a common