Glaxo/Smith/Kline announces $$$$$$

Tuesday October 23, 7:05 am Eastern Time
Press Release
SOURCE: GlaxoSmithKline plc
GlaxoSmithKline Results Announcement for the Third Quarter 2001
Strong Third Quarter Performance Drives GlaxoSmithKline Earnings Per Share Growth to 20% (18% at Constant Exchange Rates)
LONDON, Oct. 23 /PRNewswire/ -- GlaxoSmithKline plc (NYSE: GSK - news) today announces its results for the third quarter ended 30th September 2001. The business performance results are summarized below.


BUSINESS PERFORMANCE RESULTS

Increase 9 months Increase
Q3 2001 CER% 2001 CER%
$m $m

Sales 7,191 12 21,417 10
Trading profit 2,039 18 6,231 14
Profit before tax 1,942 16 6,392 12
Earnings per ADS $0.46 18 $1.50 14


Q3 2001 HIGHLIGHTS

-- Pharmaceutical sales up 13% (excluding divested products).

-- All regions performing strongly with sales growth in the USA 14%;
Europe 8%; Rest of World 18%.

-- New products up 59% to over $1.4 billion, representing 24% of
sales.

-- Respiratory business up 36% to $1,255 million.

-- Over two million prescriptions written in the USA for
Seretide/Advair since launch in April.

-- $5.76 billion share buy-back program announced.

-- GSK on track to deliver 2001 earnings per share growth target of
around 13% CER.



Commenting on the performance for the third quarter, Jean-Pierre Garnier, Chief Executive Officer, said:

``GlaxoSmithKline had a strong third quarter, delivering sustained growth across all regions. I am especially pleased to see the way our new products (up 59%) continue to help drive this growth -- the performance of Seretide/Advair, in particular, was excellent. Our respiratory and anti-viral franchises also performed strongly this quarter. We are on track to deliver our earnings per share growth target of around 13% CER for the year and remain confident we will achieve our earnings guidance for 2002 of mid-teens earnings per share growth at comparable exchange rates.''

Business performance results exclude merger items, integration and restructuring costs and disposals of subsidiaries. Growth rates are at constant exchange rates (CER) unless otherwise stated.

Pharmaceuticals

Pharmaceuticals sales growth for the quarter, excluding divested products, was 13% with all regions performing strongly. Sales in the USA grew 14% to $3.24 billion. Although US wholesaler stocking patterns affected sales growth rates of some products, the underlying growth for the US business in total is broadly consistent with reported sales growth. In Europe, sales grew 8% to $1.54 billion and in the Rest of World sales increased 18% to $1.25 billion. All regions benefited from continued growth in the key therapy areas of central nervous system (CNS), respiratory and anti-virals as well as strong performances from new products Seretide/Advair and Avandia.

CNS - continued strong underlying growth with sales of $1,416 million

Total Seroxat/Paxil sales were in line with last year. Strong growth in Europe, up 12% and Rest of the World, up 55% offset a 10% decline in the USA. Despite good underlying demand in the USA, sales growth was negatively affected by wholesaler buying patterns. Seroxat/Paxil is currently the only SSRI approved in the USA for Generalized Anxiety Disorder (GAD) and a DTC campaign for this new indication was launched at the beginning of October. Wellbutrin sales grew 40% to $241 million and sales for Imigran/Imitrex increased 9% to $285 million. Imigran/Imitrex tablets were launched successfully in Japan and achieved sales of over $8 million in just one month on the market.

Respiratory products - Seretide/Advair, Serevent and Flixotide/Flovent grew 53% to over $880 million

Total Seretide/Advair sales were $345 million. In the USA, more than two million prescriptions have been written for Seretide/Advair since its launch in April. The speed at which patients have adopted Seretide/Advair in the USA makes it the most successfully launched asthma treatment in the past decade. Seretide/Advair continues to drive growth in Europe. An indication for the use of Seretide/Advair to treat chronic obstructive pulmonary disease (COPD) was filed in Europe in September, following the US filing in May. The three key products -- Seretide/Advair, Serevent, Flixotide/Flovent -- grew 74% in the USA; 35% in Europe and 37% in the Rest of the World.

Anti-bacterial sales over $780m

Total sales of anti-bacterial products were $782 million, with Augmentin contributing $401 million. Despite good underlying demand in the USA, sales of Augmentin at $242 million were in line with last year, negatively affected by wholesaler buying patterns. New Augmentin ES (extra strength), the only product with an indication to treat children at risk of otitis media caused by antibiotic resistant strep. pneumoniae, was launched in the USA in October.

Anti-viral sales up 15% to over $760 million - driven by HIV products and Valtrex

Total HIV sales were $490 million, up 16%. US sales were up 11% to $292 million, driven by strong uptake of Trizivir, the new HIV triple combination product. Sales in Europe, up 17%, and the Rest of World, up 48%, improved as a result of further launches of Trizivir and strong performances by Ziagen. Valtrex sales were $128 million, up 54%. Sales in the USA grew to $80 million, helped by the new 3-day indication for recurrent genital herpes.

Strong performance from Avandia drives metabolic and gastro-intestinal sales

Total sales of metabolic and gastro-intestinal products were up 24% to $576 million. Sales for Avandia were up 94% to $326 million, inflated by advanced US wholesaler stocking. Total US prescription growth for Avandia was 30% for the quarter reflecting increased acceptance of the product in the oral diabetes market. Zantac sales continued to decline in most markets.

Cardiovascular and Oncology sales growth driven by Coreg and Zofran

Total sales for Coreg grew 24% to $86 million. In the USA, Coreg received an approvable letter from the FDA for the treatment of severe heart failure. Coreg is the only beta-blocking agent that has clinical data showing survival in severe heart failure patients. In oncology, Zofran sales increased 20% to $221 million owing to new growth in the post operative market.

Vaccines - worldwide sales grew 9%

Total vaccines sales were up 9% to $347 million. Infanrix (our new DTPa range of combination vaccines) was up 28% to $77 million. Other vaccines, including Priorix, Tritanrix and Typherix, all achieved strong growth of over 30%. Growth from these vaccines more than offset an 8% decline in the hepatitis portfolio.

Pipeline

GSK has completed a review and prioritization of its product development portfolio and today issued an update of its product pipeline. The company currently has 113 projects in clinical development, which include 50 new chemical entities (NCE's), 22 new vaccines and 41 line extensions.

The review of the portfolio has concluded that GI262570, a peroxisome proliferator activated receptor (PPAR) agonist, in Phase III clinical trials for the treatment of type 2 diabetes, did not meet its target profile. Development of the compound for this indication has now ceased and alternative indications are being explored.

GSK continues to actively pursue external collaborations to further enhance its product development pipeline and has initiated six new collaborations, so far, in 2001. In the third quarter, GSK completed an agreement to form a joint venture with Shionogi & Co., Ltd. and a collaboration to research, develop and commercialize several compounds with Tanabe Seiyaku Co. Ltd.

During the quarter, regulatory filings were made in Europe for Seretide/Advair to treat COPD and dutasteride for the treatment of benign prostatic hyperplasia (BPH).

Consumer Healthcare

Consumer Healthcare sales grew 27% to $1,166 million; sales excluding Block Drug grew 4% to $955 million.

Worldwide sales of oral care products, excluding Block Drug, were $238 million, up 1%; US sales were down 15%, but in Europe sales were up 9%, benefiting from new product launches. Block Drug added oral care product sales of $160 million.

Nutritional Healthcare products increased 13% to $220 million, led by strong growth from Lucozade, Ribena and Horlicks.

Worldwide sales of over-the-counter medicines were $548 million. The performance of smoking control products improved, up 2%, as a result of stabilization of market share in the USA and a strong performance in Europe. Sales of Analgesic products, up 39%, were also drivers of growth in this category.

Consumer Healthcare trading profit increased 27%, reflecting sales growth and the contribution from Block Drug.

Share Buy-Back Program

GSK plans to spend up to $5.76 billion buying its shares in the market. The program covers purchases by the company's employee trusts relating to share option grants and other share based incentives, of which $1.0 billion has already been spent in 2001. It also covers purchases by the company of shares for cancellation. The exact amount and timing of future purchases will be determined by the company and is dependent on market conditions and other factors.

Merger & Restructuring

GSK continues to implement the manufacturing restructuring plans initiated by both SmithKline Beecham and Glaxo Wellcome, and is proceeding with the integration of the SB and GW businesses in accordance with the merger plans developed during 2000. Merger savings in excess of $576 million are expected in 2001.

Costs of $948 million were incurred in the quarter in respect of the merger, integration and restructuring and disposal of subsidiaries. After tax relief of $105 million, the net charge was $843 million. Together with business performance earnings of $1,382 million, this produces total earnings of $539 million for the quarter.

Trading Profit and Earnings Per share

Trading profit growth was 18%, reflecting improved trading margins. The trading margin improved 1.7% to 28.4% as a result of cost savings from merger integration, partly offset by the divestment of certain high margin products required by regulatory authorities as a condition of the merger.

Third quarter EPS was up 18% in CER terms and 20% in sterling terms, benefiting from favorable exchange rates in the USA and Europe.

Dividend

The Board has declared a third quarter interim dividend of 9 pence per share. The equivalent dividend receivable by ADR holders is 25.584 cents per ADS based on an exchange rate of 1 pound sterling/$1.42133. The dividend will be paid on 3rd January 2002 to shareholders and ADR holders of record on 2nd November 2001.

GlaxoSmithKline -- one of the world's leading research-based pharmaceutical and healthcare companies -- is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For company information and a copy of the company's updated product development pipeline, visit GSK on the World Wide Web at www.gsk.com.

GSK prepares its financial results in pounds sterling. Accordingly this Announcement is issued in pounds sterling. This document is a convenience translation in US$. Both pounds sterling and US$ versions of the Announcement are available on ``Corporate Home'' at www.gsk.com.

Cautionary statement regarding forward-looking statements

Under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, the Company cautions investors that any forward-looking statements or projections made by the Company, including those made in this Announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Group's operations are described under Risk Factors in the Operating and Financial Review and Prospects in the Company's Annual Report on Form 20-F for 2000, filed with the US Securities and Exchange Commission.

PROFIT AND LOSS ACCOUNT
Three months ended 30th September 2001

Merger, integration
and restructuring
Business and disposal
performance of subsidiaries Total
_________________ _____________ ____________

Q3 Q3 Q3 Q3 Q3 Q3
2001 2000 2001 2000 2001 2000
$m $m CER% $m $m $m $m
_____ _____ _____ _____ _____ _____ _____
Sales:

Pharmaceuticals
-- Existing
portfolio 6,025 5,428 13 - - 6,025 5,428
-- Divested
products - 183 - - - 183
_____ _____ _____ _____ _____ _____

-- Total 6,025 5,611 10 - - 6,025 5,611
_____ _____ _____ _____ _____ _____

Consumer Healthcare
-- Existing
portfolio 955 945 4 - - 955 945
-- Acquisition
- Block Drug 211 - - - 211 -
_____ _____ _____ _____ _____ _____

1,166 945 27 - - 1,166 945
-- Divested
products - 6 - - - 6
_____ _____ _____ _____ _____ _____
-- Total 1,166 951 27 - - 1,166 951
_____ _____ _____ _____ _____ _____

SALES 7,191 6,562 12 - - 7,191 6,562


Cost of sales (1,542) (1,360) (16) (114) (36) (1,656) (1,396)
_____ _____ _____ _____ _____ _____

Gross profit 5,649 5,202 10 (114) (36) 5,535 5,166

Selling, general
and
administration (2,688) (2,507) (9) (377) (54) (3,065) (2,561)
Research and
development (922) (945) 1 (25) (4) (947) (949)
_____ _____ _____ _____ _____ _____

Trading profit:
Pharmaceuticals 1,831 1,580 17 (484) (86) 1,347 1,494
Consumer
Healthcare 208 170 27 (32) (8) 176 162
_____ _____ _____ _____ _____ _____

TRADING PROFIT 2,039 1,750 18 (516) (94) 1,523 1,656

Other operating
income/(expense) (85) 6 - - (85) 6
_____ _____ _____ _____ _____ _____

Operating profit 1,954 1,756 13 (516) (94) 1,438 1,662
Profits/(losses)
of associates 27 35 - (3) 27 32
Disposal of
interest in
associate - (4) - - - (4)
Business
disposals - - (432) - (432) -
Merger transaction
costs - - - (37) - (37)
_____ _____ _____ _____ _____ _____

Profit before
interest 1,981 1,787 (948) (134) 1,033 1,653
Net interest
payable (39) (89) - - (39) (89)
_____ _____ _____ _____ _____ _____

PROFIT BEFORE
TAXATION 1,942 1,698 16 (948) (134) 994 1,564

Taxation (518) (465) 105 32 (413) (433)
_____ _____ _____ _____ _____ _____

Profit after
taxation 1,424 1,233 17 (843) (102) 581 1,131
Minority
interests (33) (32) - - (33) (32)
Preference share
dividends (9) (21) - - (9) (21)
_____ _____ _____ _____ _____ _____

EARNINGS 1,382 1,180 19 (843) (102) 539 1,078
===== ===== ===== ===== ===== =====

EARNINGS PER ADS $0.46 $0.39 18 $0.18 $0.35
===== ===== ===== =====


To illustrate ``Business performance'', merger items, integration and restructuring costs and disposal of subsidiaries have been excluded and an adjusted EPS presented. Appropriations of profit attributable to shareholders are set out under ``Appropriations'' on page 12.

PROFIT AND LOSS ACCOUNT
Nine months ended 30th September 2001

Merger, integration
and restructuring
Business and disposal
performance of subsidiaries Total
_________________ _____________ ____________

9 9 9 9 9 9
mos. mos. mos. mos. mos. mos.
2001 2000 2001 2000 2001 2000
$m $m CER% $m $m $m $m
_____ _____ _____ _____ _____ _____ _____

Sales:
Pharmaceuticals
-- Existing
portfolio 17,980 16,603 12 - - 17,980 16,603
-- Divested
products - 530 - - - 530
_____ _____ _____ _____ _____ _____

-- Total 17,980 17,133 9 - - 17,980 17,133
_____ _____ _____ _____ _____ _____

Consumer Healthcare
-- Existing
portfolio 2,808 2,944 - - - 2,808 2,944
-- Acquisition
- Block Drug 629 - - - 629 -
_____ _____ _____ _____ _____ _____

3,437 2,944 23 - - 3,437 2,944

-- Divested
products - 20 - - - 20
_____ _____ _____ _____ _____ _____

-- Total 3,437 2,964 22 - - 3,437 2,964
_____ _____ _____ _____ _____ _____

SALES 21,417 20,097 10 - - 21,417 20,097

Cost of sales (4,559) (4,255) (13) (203) (96) (4,762) (4,351)
_____ _____ _____ _____ _____ _____

Gross profit 16,858 15,842 10 (203) (96) 16,655 15,746
Selling, general
and
administration (7,967) (7,506) (9) (1,086) (343) (9,053) (7,849)
Research and
development (2,660) (2,763) - (88) (4) (2,748) (2,767)
_____ _____ _____ _____ _____ _____

Trading profit:
Pharmaceuticals 5,708 5,105 14 (1,253) (378) 4,455 4,727
Consumer
Healthcare 523 468 17 (124) (65) 399 403
_____ _____ _____ _____ _____ _____

TRADING PROFIT 6,231 5,573 14 (1,377) (443) 4,854 5,130

Other operating
income/(expense) 46 194 - - 46 194
_____ _____ _____ _____ _____ _____

Operating profit 6,277 5,767 11 (1,377) (443) 4,900 5,324
Profits/(losses)
of associates 78 79 - (11) 78 68
Disposal of
interests in
associates 138 222 - - 138 222
Business disposals - - (434) - (434) -
Merger transaction
costs - - - (71) - (71)
_____ _____ _____ _____ _____ _____

Profit before
interest 6,493 6,068 (1,811) (525) 4,682 5,543

Net interest
payable (101) (213) - - (101) (213)
_____ _____ _____ _____ _____ _____

PROFIT BEFORE
TAXATION 6,392 5,855 12 (1,811) (525) 4,581 5,330

Taxation (1,706) (1,598) 262 117 (1,444) (1,481)
_____ _____ _____ _____ _____ _____

Profit after
taxation 4,686 4,257 13 (1,549) (408) 3,137 3,849
Minority
interests (98) (133) - - (98) (133)
Preference
share
dividends (39) (63) - - (39) (63)
_____ _____ _____ _____ _____ _____

EARNINGS 4,549 4,061 15 (1,549) (408) 3,000 3,653
===== ===== ===== ===== ===== =====

EARNINGS PER ADS $1.50 $1.34 14 $0.99 $1.20
===== ===== ===== =====

Weighted average
number of shares
(millions) 6,074 6,064 6,074 6,064
===== ===== ===== =====



To illustrate ``Business performance'', merger items, integration and restructuring costs and disposal of subsidiaries have been excluded and an adjusted EPS presented. Appropriations of profit attributable to shareholders are set out under ``Appropriations'' on page 12.

PHARMACEUTICAL SALES - EXISTING PORTFOLIO
Three months ended 30th September 2001


Total USA Europe RoW
$m CER% $m CER% $m CER% $m CER%
____________________________________________________________________
CENTRAL NERVOUS
SYSTEM 1,416 8 1,011 5 263 5 142 43
Depression 874 8 658 3 128 12 88 53
Seroxat/Paxil 633 - 422 (10) 128 12 83 55
Wellbutrin 241 40 236 40 - - 5 34

Migraine 318 10 239 6 56 8 23 68
Imigran/
Imitrex 285 9 217 6 46 8 22 74
Naramig/Amerge 33 12 22 13 10 6 1 33

Lamictal 128 23 64 27 49 20 15 20
Requip 33 48 17 75 14 23 2 24
Zyban 31 (34) 16 (4) 11 (61) 4 (8)

Respiratory 1,255 36 618 55 438 20 199 2
Flixotide/
Flovent,
Serevent,
Seretide/
Advair 882 53 455 74 325 35 102 37
Flixotide/
Flovent 315 7 175 22 82 (19) 58 15
Serevent 222 7 139 20 70 (12) 13 2
Seretide/
Advair 345 >100 141 - 173 >100 31 >100

Flixonase/
Flonase 167 20 134 21 15 29 18 11
Ventolin 99 (1) 9 (5) 44 (9) 46 9
Becotide 53 (17) - - 40 (21) 13 (3)

ANTI-
Bacterials 782 - 372 2 211 1 199 (5)
Augmentin 401 (1) 242 - 97 (1) 62 (5)
Zinnat/Ceftin 107 - 36 (11) 32 (5) 39 16
Fortum 73 9 19 20 30 10 24 2
Amoxil 47 (17) 11 9 16 (5) 20 (32)

ANTI-VIRALS 768 15 399 16 203 12 166 18
HIV 490 16 292 11 140 17 58 48
Trizivir 66 >100 45 - 20 >100 1 -
Combivir 216 3 130 (4) 59 (1) 27 72
Epivir 106 (3) 57 (5) 32 (6) 17 9
Retrovir 21 - 10 12 8 (5) 3 (14)
Ziagen 61 1 35 (12) 18 6 8 >100
Agenerase 20 (1) 15 (23) 3 97 2 >100

Herpes 222 8 93 32 53 - 76 (5)
Valtrex 128 54 80 39 21 20 27 >100
Zovirax 94 (22) 13 4 32 (11) 49 (31)

Zeffix 38 49 3 42 4 55 31 49

METABOLIC &
Gastro-
Intestinal 576 24 328 48 98 (4) 150 9
Avandia 326 94 295 90 12 >100 19 >100
Zantac 161 (14) 32 (29) 51 (16) 78 (4)

VACCINES 347 9 98 6 149 1 100 28
Hepatitis 158 (8) 64 (9) 66 (4) 28 (14)
Infanrix 77 28 30 82 33 (8) 14 57

ONCOLOGY &
EMESIS 312 20 233 24 49 7 30 15
Zofran 221 20 160 22 40 13 21 19
Hycamtin 38 16 30 26 7 (5) 1 (1)

CARDIOVASCULAR 203 9 135 11 44 8 24 1
Coreg 86 24 84 22 - - 2 88

ARTHRITIS
(Relafen) 46 (46) 39 (48) 3 (33) 4 (31)

OTHER 321 (3) 2 (93) 85 8 234 30
____________________________________________________________________
6,026 13 3,235 14 1,543 8 1,248 18
====================================================================


PHARMACEUTICAL SALES - EXISTING PORTFOLIO
Nine months ended 30th September 2001


Total USA Europe RoW
$m CER% $m CER% $m CER% $m CER%
____________________________________________________________________
CENTRAL NERVOUS
SYSTEM 4,133 14 2,906 11 819 14 408 38
Depression 2,546 16 1,901 13 399 14 246 42
Seroxat/
Paxil 1,887 11 1,260 5 399 14 228 44
Wellbutrin 659 32 641 32 - - 18 31

Migraine 888 5 662 4 173 5 53 27
Imigran/
Imitrex 792 4 603 3 143 3 46 26
Naramig/
Amerge 96 14 59 13 30 12 7 32

Lamictal 364 19 181 24 144 16 39 10
Requip 85 38 43 55 39 23 3 30
Zyban 148 30 59 (13) 46 55 43 >100

Respiratory 3,694 26 1,725 44 1,347 14 622 14
Flixotide/
Flovent,
Serevent,
Seretide/
Advair 2,514 43 1,234 61 976 27 304 40
Flixotide/
Flovent 1,019 12 550 30 286 (14) 183 18
Serevent 729 11 441 29 246 (9) 42 1
Seretide/
Advair 766 >100 243 - 444 >100 79 >100

Flixonase/
Flonase 537 18 396 19 60 22 81 10
Ventolin 321 (8) 33 13 141 (11) 147 (9)
Becotide 170 (24) - (98) 131 (20) 39 (24)

ANTI-
Bacterials 2,647 2 1,328 11 720 (3) 599 (9)
Augmentin 1,400 10 880 19 331 (2) 189 (1)
Zinnat/Ceftin 431 (2) 199 (4) 121 5 111 (6)
Fortum 218 (5) 45 (4) 95 (3) 78 (7)
Amoxil 156 (27) 40 (34) 53 (20) 63 (28)

ANTI-VIRALS 2,199 9 1,089 8 623 8 487 12
HIV 1,405 14 818 8 431 17 156 40
Trizivir 147 >100 100 - 45 >100 2 -
Combivir 645 7 379 (1) 196 8 70 67
Epivir 321 (4) 167 (7) 104 (6) 50 10
Retrovir 58 (13) 26 (9) 22 (16) 10 (13)
Ziagen 179 5 104 (9) 55 20 20 84
Agenerase 55 (7) 42 (23) 9 88 4 >100

Herpes 667 3 256 25 168 (7) 243 (6)
Valtrex 356 46 217 36 69 12 70 >100
Zovirax 311 (23) 39 (14) 99 (17) 173 (27)

Zeffix 109 62 7 50 13 71 89 62

METABOLIC &
Gastro-
Intestinal 1,665 17 883 33 314 (3) 468 8
Avandia 860 75 779 66 32 >100 49 >100
Zantac 525 (13) 104 (25) 173 (16) 248 (5)

VACCINES 998 8 275 14 425 - 298 16
Hepatitis 472 (9) 194 4 194 (17) 84 (14)
Infanrix 253 37 76 98 128 18 49 30

ONCOLOGY &
EMESIS 901 18 662 22 151 7 88 8
Zofran 641 20 459 23 116 14 66 12
Hycamtin 107 8 76 16 24 (4) 7 (8)

CARDIOVASCULAR 595 16 379 19 143 18 73 -
Coreg 240 40 232 39 - - 8 55

ARTHRITIS
(Relafen) 191 (22) 167 (20) 10 (44) 14 (24)

OTHER 958 (4) 49 (69) 248 2 661 10
____________________________________________________________________
17,981 12 9,463 16 4,800 7 3,718 9
====================================================================


CONSUMER HEALTHCARE SALES


Three months ended
30th September 2001

Including Block Drug $m CER%

Over-the-counter medicines 548 12
Analgesics 116 39
Dermatological 61 53
Gastro intestinal 117 7
Respiratory tract 58 11
Smoking control 116 2
Vitamins & naturals 54 7

Oral care 398 70

Nutritional care 220 13

Total 1,166 27

Excluding Block Drug

Over-the-counter medicines 497 2
Oral care 238 1
Nutritional healthcare 220 13


955 4

Block Drug 211 -

Total 1,166 27


Nine months ended
30th September 2001

Including Block Drug $m CER%


Over-the-counter medicines 1,637 6
Analgesics 346 22
Dermatological 199 55
Gastro intestinal 357 4
Respiratory tract 156 (3)
Smoking control 328 (15)
Vitamins & naturals 168 9

Oral care 1,174 70

Nutritional healthcare 626 9

Total 3,437 22

Excluding Block Drug

Over-the-counter medicines 1,473 (4)
Oral care 709 2
Nutritional healthcare 626 9


2,808 -

Block Drug 629 -

Total 3,437 22


FINANCIAL REVIEW - PROFIT AND LOSS
Total sales


An analysis of total sales between existing portfolio, divested and acquired products is set out below:

Q3 2001$m Q3 2000$m GrowthCER% 2000$m
________ ________ ________ ________
Existing portfolio:
Pharmaceuticals 6,025 5,428 13 22,772
Consumer Healthcare 955 945 4 3,999
________ ________ ________ ________
6,980 6,373 12 26,771
Products divested on
merger - 189 - 709
________ ________ ________ ________
6,980 6,562 8 27,480
Acquired products
- Block Drug 211 - - -
________ ________ ________ ________
7,191 6,562 12 27,480
======== ======== ======== ========


Sales of existing portfolio products in Q3 2001 increased in aggregate by 12% over Q3 2000. The revenue lost from products divested at the end of 2000 to fulfill regulatory conditions for the Glaxo Wellcome/SmithKline Beecham merger, principally Kytril and Famvir, is more than offset by the additional revenue from the acquired Block Drug portfolio.

Pharmaceutical sales

Sales of existing portfolio products increased 13%, which represents additional sales of $691 million (in CER). An analysis of sales between new products (those launched in a major market within the last five years), franchise products (established products), and older products now less actively promoted is set out below:

Q3 2001
_______________________________________________

$m % total CER % CER $m
________ ________ ________ ________

New 1,444 24 59 525

Franchise 3,240 54 8 248

Other 1,341 22 (6) (82)
________ ________ ________ ________

6,025 100 13 691
======== ======== ======== ========


The growth of the new products, notably Seretide/Advair and Avandia, more than offsets the decline of older products, such as Zantac and they build an increasing share of the total portfolio.

Regional analysis

In the third quarter 54% of the Group's total pharmaceutical revenue was earned in the USA where overall sales growth was 14%. Advair (Seretide) for asthma recorded sales approaching $150m in the quarter and Wellbutrin also continued its strong growth record. A number of products were impacted by changes in wholesaler stocking patterns, some, such as Avandia, beneficially, others, such as Paxil and Augmentin, adversely. The net effect of these buying patterns in the quarter is not considered to be material. Zantac sales continued to decline in the face of increased generic competition.

Europe region sales accounted for 25% of the Group's total pharmaceutical sales. Seretide was the major driver of the 8% overall sales growth in the region. The continued strength of Seroxat/Paxil together with growth of the HIV portfolio, particularly Trizivir, offset declines in a number of other products. France, Italy and Spain all returned good performances in the quarter.

Sales growth of 18% in the Rest of the World, an improvement on the second quarter results, reflected better conditions in most markets, notably India and Latin America, and a number of tender orders in the Middle East and Africa. Japan continued to perform well with sales growth in the quarter of 20%, driven by the recent launches of Paxil, Valtrex and Imigran tablets.

Trading profit - business performance

Q3 2001 Q3 2000 Growth 2000
$m % $m % CER % $m
_______ _______ _______ ________ ______ _______
Sales 7,191 100.0 6,562 100.0 12 27,480


Cost of sales (1,542) (21.4) (1,360) (20.7) (16) (5,793)
Selling, general
and
administration (2,688) (37.4) (2,507) (38.2) (9) (10,232)
Research and
development (922) (12.8) (945) (14.4) 1 (3,815)
______ ______ ______ ______ ______ ______
Trading profit 2,039 28.4 1,750 26.7 18 7,640


====== ====== ====== ====== ====== ======

Cost of sales increased as a percentage of sales as the loss of the high- margin products divested in December 2000 and the inclusion of lower margin. Block Drug products were only partly offset by the benefits of merger and manufacturing restructuring savings.

Selling, general and administration (SG&A) costs also benefited from merger savings, principally in general and administration expenditure, but the inclusion of Block Drug costs distorts the quarterly comparison. Excluding Block Drug expenses, growth in SG&A costs would have been 5% and SG&A expressed as a percentage of sales would have been 1.3% lower. Research and development expenditure increased at below the rate of sales growth. It is expected that growth in research and development costs will increase as merger savings begin to be reinvested in this area.

Overall the trading margin improved 1.7%, which is consistent with expectations of an improvement for the full year of up to 2%.

Profit before tax - business performance

Q3 2001 Q3 2000 2000
$m $m $m
________ ________ ________
Trading profit 2,039 1,750 7,640
Other operating income/(expense) (85) 6 416
Profits of associates 27 35 99
Disposal of interests in
associates - (4) 219
Net interest payable (39) (89) (277)
________ ________ ________
Profit before tax 1,942 1,698 8,097
======== ======== ========


Other operating income in Q3 2001 includes costs associated with product withdrawals, and equity investment write downs due to adverse stock market conditions.

Net interest payable was lower due to a lower average level of net debt in Q3 2001 than in Q3 2000 and to lower interest rates. Overall profit before tax increased by 16%.

Merger items, integration and restructuring costs and disposal of subsidiaries

Q3 2001 Q3 2000 2000
$m $m $m
________ ________ ________
Manufacturing and other
restructuring (53) (41) (260)
Merger integration costs (431) (53) (608)
Block Drug integration costs (32) - -
________ ________ ________
Effect on operating profit (516) (94) (868)

Share of associate - (3) (12)
Product divestments - - 2,152
Merger transaction costs - (37) (184)
Loss on disposal of businesses (432) - (21)
________ ________ ________
Effect on profit before tax (948) (134) 1,067
======== ======== ========


Taxation

Q3 2001 Q3 2000 2000
$m $m $m
_______ _______ _______
Business performance (518) (465) (2,210)
Merger items, integration and
restructuring costs and disposal
of subsidiaries 105 32 (372)
_______ _______ _______
(413) (433) (2,582)
======= ======= =======


The charge for taxation on business performance profit in Q3 2001 represents an effective rate of tax of 26.7%, which is the rate expected to apply for the year. This represents a reduction compared to the effective rate of 27.3% in the full year 2000.

The credit for taxation on merger items, integration and restructuring costs and disposal of subsidiaries in Q3 2001 reflects the estimated actual tax rate applicable to the transactions in the territories in which they arise.

Earnings

Q3 2001 Q3 2000 2000
$m $m $m
_______ _______ _______
Net profit attributable to
shareholders
Earnings 539 1,078 6,314
Adjustment for merger items,
integration and restructuring costs
and disposal of subsidiaries 843 102 (695)
_______ _______ _______
Adjusted earnings 1,382 1,180 5,619
======= ======= =======


Earnings per ADS dollars dollars dollars
_______ _______ _______
Basic earnings per ADS 0.18 0.35 2.08
Adjustment for merger items,
integration and restructuring costs
and disposal of subsidiaries 0.28 0.04 (0.23)
_______ _______ _______
Adjusted earnings per ADS 0.46 0.39 1.85
======= ======= =======


Appropriations

$m $m $m
_______ _______ _______
Earnings (profit attributable
to shareholders) 539 1,078 6,314
Dividends (787) (226) (3,187)
_______ _______ _______
Retained (loss)/profit (248) 852 3,127
======= ======= =======



The dividend in Q3 2001 is the declared GSK dividend. In Q3 2000 the dividend charge reflects the third quarter dividend payable by SmithKline Beecham plc. Glaxo Wellcome plc did not declare quarterly dividends.

STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES

9 Months 9 Months
2001 2000 2000
$m $m $m
_______ _______ _______
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 3,000 3,653 6,314
Exchange movements on overseas
net assets (310) (911) (682)
UK tax on exchange movements (9) (17) (52)
_______ _______ _______
TOTAL RECOGNIZED GAINS AND LOSSES 2,681 2,725 5,580
======= ======= =======


SUMMARY STATEMENT OF CASH FLOW AND MOVEMENT IN NET DEBT

Q3 2001$m Q3 2000$m 2000$m
_______ _______ _______

BUSINESS PERFORMANCE Operating profit 1,954 1,756 8,056
Depreciation and other non-cash items 321 293 952
Increase in working capital (179) (34) (452)
Increase/(decrease) in net liabilities 776 (120) 412
_______ _______ _______
2,872 1,895 8,968
Restructuring/integration costs paid (427) (110) (550)
Merger transaction costs - (57) (147)
_______ _______ _______
Net cash inflow from operating
activities 2,445 1,728 8,271

Earnings from joint ventures
and associates - - 2
Returns on investment and servicing
of finance (33) (87) (490)
Taxation paid (581) (326) (1,885)
_______ _______ _______
FREE CASH FLOW 1,831 1,315 5,898
_______ _______ _______

Purchase of tangible fixed assets (371) (363) (1,531)
Sale of tangible fixed assets 32 2 70
Purchase of intangible fixed assets (42) (38) (146)
_______ _______ _______
(381) (399) (1,607)
Product divestments (5) - 2,324
Purchase of own shares (470) (78) (1,872)
Proceeds from own shares for
staff options 62 164 313
Purchase of equity investments (6) (16) (94)
Sale of equity investments 21 69 439
_______ _______ _______
Capital expenditure and
financial investment (779) (260) (497)
_______ _______ _______
Purchase of businesses - - (38)
Business disposal (6) - (94)
Investment in joint ventures
and associates (12) - (3)
Disposal of interests in associates - (4) 235
_______ _______ _______
Acquisitions and disposals (18) (4) 100
_______ _______ _______

Equity dividends paid (788) (216) (3,083)
_______ _______ _______

NET CASH INFLOW 246 835 2,418

Issue of ordinary share capital 38 77 281
Other financing cash flows 108 (78) (71)
Other non-cash movements - (12) (11)
Exchange movements (17) 97 268
_______ _______ _______
DECREASE IN NET DEBT IN PERIOD 375 919 2,885

NET DEBT AT BEGINNING OF PERIOD (1,610) (4,264) (3,795)
_______ _______ _______
NET DEBT AT END OF PERIOD (1,235) (3,345) (910)
======= ======= =======


BALANCE SHEET

Q3 2001$m Q3 2000$m 2000$m
_______ _______ _______

Goodwill 259 246 253
Intangible fixed assets 2,314 1,461 1,439
Tangible fixed assets 9,913 9,743 9,897
Investments 4,470 3,563 3,791
_______ _______ _______
FIXED ASSETS 16,956 15,013 15,380
_______ _______ _______

Equity investments 219 100 255
Stocks 3,324 3,430 3,393
Debtors 7,941 7,812 8,044
Liquid investments 2,043 3,338 3,186
Cash at bank 1,740 708 1,912
_______ _______ _______
CURRENT ASSETS 15,267 15,388 16,790
_______ _______ _______
Loans and overdrafts (2,781) (4,483) (3,399)
Other creditors (10,554) (8,360) (10,137)
_______ _______ _______
CREDITORS: amounts due within one year (13,335) (12,843) (13,536)
_______ _______ _______
NET CURRENT ASSETS 1,932 2,545 3,254

_______ _______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 18,888 17,558 18,634
_______ _______ _______
Loans (2,237) (2,908) (2,609)
Other creditors (206) (217) (213)
_______ _______ _______
CREDITORS: amounts due after one year (2,443) (3,125) (2,822)
_______ _______ _______

PROVISIONS FOR LIABILITIES AND CHARGES (2,705) (2,492) (2,469)
_______ _______ _______
NET ASSETS 13,740 11,941 13,343
======= ======= =======
Called up share capital 2,293 2,285 2,318
Share premium account 210 - 45
Other reserves 10,042 7,840 9,126
_______ _______ _______
EQUITY SHAREHOLDERS' FUNDS 12,545 10,125 11,489
Non-equity minority interest 900 1,548 1,548
Equity minority interests 295 268 306
_______ _______ _______
CAPITAL EMPLOYED 13,740 11,941 13,343
======= ======= =======



RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS

9 Months 9 Months
2001$m 2000$m 2000$m
_______ _______ _______
Equity shareholders' funds
at beginning of period 11,489 8,797 8,797
Total recognized gains and
losses for the period 2,681 2,725 5,580
Dividends (2,359) (1,579) (3,187)
Ordinary Shares issued 169 193 281
Exchange movements on goodwill
written off to reserves 9 (11) 15
Goodwill written off to profit
and loss account 556 - 3
_______ _______ _______
Equity shareholders' funds
at end of period 12,545 10,125 11,489
======= ======= =======



FINANCIAL REVIEW - CASH FLOW AND BALANCE SHEET


Cash flow

Operating cash flow, after restructuring and integration payments of $427 million, was $2.4 billion in Q3 2001. This represents a significant increase over the comparable period and is after adjusting for an increase in net liabilities arising from the timing of payments for rebates, returns and incentives and provisions for product withdrawal costs. The operating cash flow was more than sufficient to fund the routine cash flow of tax, capital expenditure and the first quarter 2001 interim dividend. Funding was provided to the Employee Share Ownership Trusts (ESOTs) for the purchase of GSK shares in the market in the amount of $470 million to satisfy future share options; this was partly offset by receipts of $100 million from the exercise of share options, $62 million satisfied from shares held by the ESOTs and $38 million from new shares.

Net assets

The book value of net assets increased from $13,343 million at 31st December 2000 to $13,740 million at 30th September 2001, an increase of $397 million. This reflects retained profits of $641 million, after providing for the 2001 interim dividends, offset by the use in the first quarter of liquid resources to finance the redemption of some of the non-equity minority interest and the effect on net assets of exchange rate movements.

Fixed asset investments comprise investments in associates, equity investments and an investment in own shares held by the Employee Share Ownership Trusts (ESOTs). At 30th September 2001 the ESOTs held 180.8 million GlaxoSmithKline ordinary shares at a carrying value of $4,097 million against the future exercise of share options and share awards.

Equity shareholders' funds

Equity shareholders' funds increased from $11,489 million at 31st December 2000 to $12,545 million at 30th September 2001. The increase arises from retained profits, shares issued under share option schemes and the write-back from reserves to the profit and loss account of the goodwill on a business disposal.

Legal proceedings

Legal proceedings in which GlaxoSmithKline is involved are described in the Annual Report 2000. Developments since the dates of the Annual Report and the Results Announcements for the first and second quarters 2001 are set out below.

GlaxoSmithKline has received purported class action lawsuits filed in state and federal courts in the USA alleging that paroxetine (the active ingredient in Paxil) is addictive and causes dependency and withdrawal reactions. The state court cases have been removed to federal court. Plaintiffs seek remedies including compensatory and punitive damages and the cost of a fund for medical monitoring. The lawsuits are in their very early stages and there has been no determination as to whether any of the lawsuits will be permitted to proceed as class actions.

GlaxoSmithKline, along with a number of other pharmaceutical companies, has been named as a defendant in a number of purported class action and individual personal injury lawsuits in state courts in the USA alleging that thimerosal, a preservative used in vaccines, causes neurodevelopmental disorders and other injuries. Plaintiffs seek remedies including compensatory and punitive damages and the cost of a fund for medical monitoring and research. The lawsuits are in their very early stages and there has been no determination as to whether any of the purported class actions will be permitted to proceed as class actions.

In August 2001 Bayer AG withdrew Baycol (cerivastatin sodium) worldwide in light of reports of adverse events, including deaths, involving rhabdomyolysis. GlaxoSmithKline had participated in the marketing of Baycol in the USA pursuant to a co-promotion agreement with Bayer which was the license holder and manufacturer of the product. Following the withdrawal, Bayer has received a number of lawsuits filed on behalf of both individual and putative classes of former Baycol users in state and federal courts in the USA. Several of the suits allege that the plaintiffs suffered personal injuries, including rhabdomyolysis, from the use of Baycol. Others claim that persons who took Baycol, although not injured, may be at risk of future injury or may have suffered economic damages from purchasing and using Baycol. A number of the suits include GlaxoSmithKline as a defendant. Plaintiffs seek remedies including compensatory, punitive and statutory damages and creation of funds for medical monitoring. The lawsuits are in their very early stages and there has been no determination as to whether any of the lawsuits will be permitted to proceed as class actions.

On 20th August 2001 the US Court of Appeals vacated the preliminary injunction originally granted in favor of GlaxoSmithKline in its action for infringement of its patents for cefuroxime axetil (the active ingredient in the Group's Ceftin anti-infective product) against Ranbaxy Pharmaceuticals and remanded the case to the US District Court for New Jersey for a full trial on the merits.

On 24th August 2001 GlaxoSmithKline commenced an action in the US District Court for New Jersey against Reddy-Cheminor and Dr. Reddy's Laboratories alleging infringement of three patents for ondansetron, the active ingredient in Zofran tablets. The defendants have filed an ANDA with the US Food and Drug Administration. FDA approval of that ANDA is stayed until the earlier of January 2004 or resolution of the patent infringement litigation. The case is in its early stages.

Although the outcome of claims, legal proceedings and other matters in which GlaxoSmithKline is involved cannot be predicted with any certainty, the Directors, having taken appropriate legal advice, do not expect GlaxoSmithKline's ultimate liability for such matters, after taking into account provisions, tax benefits and insurance, to have a material adverse effect on its financial condition, the results of its operations or its cash flows.

EXCHANGE RATES

The results and net assets of the Group, as reported in sterling, are affected by movements in exchange rates between sterling and overseas currencies. GSK uses the average of exchange rates prevailing during the period to translate t