6. Segment information
Operating segments are reported based on the financial information provided to the Chief Executive Officer and the responsibilities of the Corporate Executive Team (CET). GSK reports results under four segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines and Consumer Healthcare, and individual members of the CET are responsible for each segment.
The Group’s management reporting process allocates intra-Group profit on a product sale to the market in which that sale is recorded, and the profit analyses below have been presented on that basis.
As explained on page 58, from 1 January 2017 only significant legal charges have been excluded from segment profit and reported within other reconciling items between segment profit and operating profit. Segment profits for 2016 and 2015 have been revised onto a comparable basis.
Corporate and other unallocated turnover and costs included the results of several Vaccines and Consumer Healthcare products which were held for sale in a number of markets in order to meet anti-trust approval requirements in 2015, together with the costs of corporate functions.
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2017 |
2016 | 2015 | ||||||||||
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Turnover by segment |
£m | £m | £m | |||||||||
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Pharmaceuticals |
17,276 | 16,104 | 14,157 | |||||||||
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Vaccines |
5,160 | 4,592 | 3,656 | |||||||||
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Consumer Healthcare |
7,750 | 7,193 | 6,038 | |||||||||
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Segment turnover |
30,186 | 27,889 | 23,851 | |||||||||
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Corporate and other unallocated turnover |
– | – | 72 | |||||||||
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| 30,186 | 27,889 | 23,923 | ||||||||||
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| 2017 | 2016 | 2015 | ||||||||||
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Pharmaceuticals turnover by therapeutic area |
£m | £m | £m | |||||||||
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Respiratory |
6,991 | 6,510 | 5,741 | |||||||||
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HIV |
4,350 | 3,556 | 2,322 | |||||||||
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Immuno-inflammation |
377 | 340 | 263 | |||||||||
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Established Pharmaceuticals |
5,558 | 5,698 | 5,831 | |||||||||
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| 17,276 | 16,104 | 14,157 | ||||||||||
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During 2017, the US operations of the Pharmaceuticals and Vaccines businesses made sales to three wholesalers of approximately £2,449 million (2016 – £2,139 million; 2015 – £1,574 million), £3,043 million (2016 – £2,691 million; 2015 – £2,471 million) and £2,356 million (2016 – £2,129 million; 2015 – £1,602 million) respectively, after allocating final-customer discounts to the wholesalers.
| 2017 | 2016 | 2015 | ||||||||||
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Vaccines turnover by category |
£m | £m | £m | |||||||||
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Meningitis |
890 | 662 | 326 | |||||||||
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Influenza |
488 | 414 | 268 | |||||||||
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Shingles |
22 | – | – | |||||||||
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Established Vaccines |
3,760 | 3,516 | 3,062 | |||||||||
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| 5,160 | 4,592 | 3,656 | ||||||||||
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| 2017 | 2016 | 2015 | ||||||||||
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Consumer Healthcare turnover by category |
£m | £m | £m | |||||||||
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Wellness |
4,001 | 3,726 | 2,970 | |||||||||
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Oral care |
2,466 | 2,223 | 1,875 | |||||||||
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Nutrition |
680 | 674 | 684 | |||||||||
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Skin health |
603 | 570 | 509 | |||||||||
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| 7,750 | 7,193 | 6,038 | ||||||||||
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| 2017 | 2016 (revised) |
2015 (revised) |
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Segment profit |
£m | £m | £m | |||||||||
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Pharmaceuticals |
8,667 | 7,976 | 6,449 | |||||||||
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Pharmaceuticals R&D |
(2,740 | ) | (2,488 | ) | (2,168 | ) | ||||||
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Pharmaceuticals, including R&D |
5,927 | 5,488 | 4,281 | |||||||||
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Vaccines |
1,644 | 1,429 | 958 | |||||||||
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Consumer Healthcare |
1,373 | 1,116 | 684 | |||||||||
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Segment profit |
8,944 | 8,033 | 5,923 | |||||||||
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Corporate and other unallocated costs |
(376 | ) | (362 | ) | (264 | ) | ||||||
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Other reconciling items between segment profit and operating profit |
(4,481 | ) | (5,073 | ) | 4,663 | |||||||
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Operating profit |
4,087 | 2,598 | 10,322 | |||||||||
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Finance income |
65 | 72 | 104 | |||||||||
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Finance costs |
(734 | ) | (736 | ) | (757 | ) | ||||||
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Profit on disposal of interest in associates |
94 | – | 843 | |||||||||
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Share of after tax profits of associates and joint ventures |
13 | 5 | 14 | |||||||||
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Profit before taxation |
3,525 | 1,939 | 10,526 | |||||||||
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Taxation |
(1,356 | ) | (877 | ) | (2,154 | ) | ||||||
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Profit after taxation for the year |
2,169 | 1,062 | 8,372 | |||||||||
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Other reconciling items between segment profit and operating profit comprise items not specifically allocated to segment profit. These include impairment and amortisation of intangible assets, major restructuring charges, significant legal charges and expenses on the settlement of litigation and government investigations, disposals of businesses, products and associates, certain other items related to major acquisition and disposal activity and the pre-tax impact of the enactment of the US Tax Cuts and Jobs Act.
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Depreciation and amortisation by segment |
2017 £m |
2016 £m |
2015 £m |
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Pharmaceuticals |
551 | 440 | 303 | |||||||||
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Pharmaceuticals R&D |
96 | 211 | 238 | |||||||||
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Pharmaceuticals, including R&D |
647 | 651 | 541 | |||||||||
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Vaccines |
405 | 315 | 253 | |||||||||
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Consumer Healthcare |
135 | 126 | 140 | |||||||||
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Segment depreciation and amortisation |
1,187 | 1,092 | 934 | |||||||||
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Corporate and other unallocated depreciation and amortisation |
144 | 94 | 145 | |||||||||
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Other reconciling items between segment depreciation and amortisation and total depreciation and amortisation |
591 | 588 | 551 | |||||||||
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Total depreciation and amortisation |
1,922 | 1,774 | 1,630 | |||||||||
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PP&E, intangible asset and goodwill impairment by segment |
2017 £m |
2016 £m |
2015 £m |
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Pharmaceuticals |
38 | 29 | 57 | |||||||||
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Pharmaceuticals R&D |
10 | 88 | 105 | |||||||||
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Pharmaceuticals, including R&D |
48 | 117 | 162 | |||||||||
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Vaccines |
13 | 34 | 17 | |||||||||
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Consumer Healthcare |
10 | 46 | 5 | |||||||||
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Segment impairment |
71 | 197 | 184 | |||||||||
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Corporate and other unallocated impairment |
3 | 24 | 18 | |||||||||
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Other reconciling items between segment impairment and total impairment |
995 | 68 | 385 | |||||||||
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Total impairment |
1,069 | 289 | 587 | |||||||||
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The other reconciling items between segment impairment and total impairment included £229 million related to the progressive withdrawal of Tanzeum.
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PP&E and intangible asset impairment reversals by segment |
2017 £m |
2016 £m |
2015 £m |
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Pharmaceuticals |
(13 | ) | (15 | ) | (8 | ) | ||||||
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Pharmaceuticals R&D |
(2 | ) | (10 | ) | (10 | ) | ||||||
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Pharmaceuticals, including R&D |
(15 | ) | (25 | ) | (18 | ) | ||||||
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Vaccines |
– | (19 | ) | – | ||||||||
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Consumer Healthcare |
(1 | ) | (8 | ) | (4 | ) | ||||||
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Segment impairment reversals |
(16 | ) | (52 | ) | (22 | ) | ||||||
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Corporate and other unallocated impairment reversals |
– | (26 | ) | (2 | ) | |||||||
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Other reconciling items between segment impairment reversals and total impairment reversals |
(36 | ) | (9 | ) | – | |||||||
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Total impairment reversals |
(52 | ) | (87 | ) | (24 | ) | ||||||
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| 2017 | 2016 | |||||||
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Net assets by segment |
£m | £m | ||||||
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Pharmaceuticals |
2,017 | 3,225 | ||||||
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Pharmaceuticals R&D |
522 | 572 | ||||||
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Pharmaceuticals, including R&D |
2,539 | 3,797 | ||||||
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Vaccines |
9,707 | 9,676 | ||||||
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Consumer Healthcare |
2,003 | 3,721 | ||||||
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Segment net operating assets |
14,249 | 17,194 | ||||||
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Corporate and other unallocated net operating assets |
868 | (228 | ) | |||||
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Net operating assets |
15,117 | 16,966 | ||||||
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Net debt |
(13,178 | ) | (13,804 | ) | ||||
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Investments in associates and joint ventures |
183 | 263 | ||||||
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Derivative financial instruments |
2 | (38 | ) | |||||
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Current and deferred taxation |
1,252 | 1,361 | ||||||
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Assets held for sale |
113 | 215 | ||||||
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Net assets |
3,489 | 4,963 | ||||||
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The Pharmaceuticals segment includes the Shionogi-ViiV Healthcare contingent consideration liability of £5,542 million (2016 – £5,304 million) and the Pfizer put option of £1,304 million (2016 – £1,319 million). The Consumer Healthcare segment includes the put option liability of £8,606 million (2016 – £7,420 million).
Geographical information
The UK is regarded as being the Group’s country of domicile.
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Turnover by location of customer |
2017 £m |
2016 £m |
2015 £m |
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UK |
940 | 1,056 | 1,102 | |||||||||
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US |
11,263 | 10,197 | 8,222 | |||||||||
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International |
17,983 | 16,636 | 14,599 | |||||||||
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External turnover |
30,186 | 27,889 | 23,923 | |||||||||
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| 2017 | 2016 | |||||||||||
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Non-current assets by location of subsidiary |
£m | £m | ||||||||||
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UK |
6,824 | 7,060 | ||||||||||
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US |
6,841 | 7,802 | ||||||||||
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International |
20,901 | 21,234 | ||||||||||
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Non-current assets |
34,566 | 36,096 | ||||||||||
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Non-current assets by location excludes amounts relating to other investments, deferred tax assets, derivative financial instruments, pension assets, amounts receivable under insurance contracts and certain other non-current receivables.