Good day, ladies and gentlemen, and welcome to your GSK Analyst and Investor Call. My name Grunt and I’m your event manager. During today's presentation, your lines will remain on listen-only. [Investor Relations] I would like to advice all parties today's conference is being recorded. And now I'd like to hand the call over to Sir Andrew Witty, CEO.

Thank you very much. Good afternoon and welcome to the call. Q3 has been another strong quarter for GSK. We've continued sales growth, cost control and pipeline progression. Core EPS was £0.32, up 12% on CER basis and group sales grew 8% to £7.5 billion at constant exchange rate. Sales growth came from all three businesses across the group, but primarily from the moment of new pharmaceutical and vaccine products, which had sales of £1.2 billion, 79% on the same period last year. Pharmaceutical sales grew 6% to £4.1 billion. HIV sales were up 32% to £940 million with continuing very strong demand for Tivicay and Triumeq. In respiratory, sales grew 8% to £1.6 billion, including 14% growth in the U.S. At the start of the year, we said we'd be looking for return to growth of this business and year-to-date total respiratory sales are indeed up 2%. New respiratory products are driving this performance with third-quarter sales of £269 million pounds. These new products Breo, Anoro, Incruse, and Nucala positioned the group well to manage the impact of potential genericization to Seretide/Advair and to ensure GSK remains the world’s leading respiratory company. I’m also excited by the progress we’ve seen in our respiratory pipeline. In the near-term, we are on track to file our closed triple products COPD in Q4. In earlier stage development, our next-generation products include danirixin, our CXCR2 antagonist and our PI3K inhibitor, which I’m pleased to say, met its primary endpoint in the Phase II proof-of-concept study during the quarter. Vaccines also had a very strong quarter with sales up 20% to £1.6 billion. This is not a function of phasing, but much more related to an improved execution of commercial performance allowing for an earlier delivery of vaccines giving us high market share and…

Thanks, Andrew. The results we’ve reported today mark another quarter of progress and deliver against both the strategy and the goals we set out in the financial architecture to drive growth and earnings per share ahead of sales by improving our operating leverage and being more financially efficient and convert more of those earnings to cash that we can return to shareholders or reinvest back into the business when and where we can see attractive returns. Sales growth is being driven by all three businesses in the quarter, but particularly via continued momentum from the new pharma products and a standout performance from our vaccines business that continue to build the new meningitis portfolio while also delivering very strong growth in flu vaccines especially in the U.S. We're generating greater operating leverage through continued execution of our integration and restructuring programs, which have not only delivered around £2.5 billion of annual cost saves since they started, but also creating significantly greater flexibility in our cost base allowing us to maintain tight control of our ongoing costs while also allowing us to relocate resources and targeted reinvestments, including supply chain improvements and new product support as well as advancing the R&D pipeline. Together with the continued efficiencies we’re delivering through our funding structure, this improved operating leverage allowed us to deliver earnings-per-share growth ahead of sales growth as well as a significant improvement in free cash flow more than double Q3 last year after adjusting for the restructuring and other transaction costs being funded from the balance sheet through divestment proceeds. As you'll recall, we’ve already adjusted our earnings guidance upwards a couple of times during the year and delivery this quarter leaves us with confidence in meeting the guidance we’ve set out for growth in core earnings per share for…

Thanks very much, Simon. And let's open up the call for today. Operator perhaps you could take people through the protocol and we will start the Q&A.

Thank you. Ladies and gentlemen, your question-and-answer session will now begin. [Operator Instructions] Your first question comes from the line of Graham Parry from Bank of America Merrill Lynch. Please go ahead. You are now live on the call.

Great. Thanks for taking my questions. So I’ve got three. Firstly on Advair, can you quantify the rebate benefit that we saw in the quarter in the U.S. and how much of that is the historic adjustment versus the just the change in rebates? And any channel that mix of price came from? And I think you said that this is a trend you expected to continue, if you could just clarify that comments. Secondly, could you run through first the contracting position of Breo, Anoro, an increase to 2017, I seen you’ve pretty much done on those contracts now, just in terms of covered lives in tier 2 across Part D and commercial and any exclusives that you’ve got there and is there any risk that that positioning shift if generic contract is approved, so are there opt outs in those contracts? And thirdly on Bexsero, you’re annualizing over £1 billion in sales now and capacity constraint, so what is your ultimate capacity needed to meet what you perceive to be demand now and can you help us understand just how far penetrated you think into the ultimate potential of that vaccine? Thank you.

Thanks very much, Graham. So on the Advair piece, I think there are a couple of things, about $50 million in terms of the RAR adjustments. It's a historic, as you all know, we don’t know at the time that we ship the product, which channel product is going to be sold through and there is an estimate we then have to correct one way or the other. So this is a catch up or a correction on historic provisioning. It's really important for you all to understand, we also we did not call out in the press release by detail but we did make the general point. Actually at the respiratory level is a neutral impact because we had RAR provision changes going in the other direction for some of the products, notably Ventolin. So the net-net of all of this is irrelevant in terms of the overall group but product-by-product it has a slight impact which is why we called out for Advair because obviously I know a lot of you are tracking the Advair kind of decline curve. The underlying performance of Advair is basically pretty much on track with what we’ve seen historically but there is no big deal around this particular point within the respiratory business and that’s one of the group level because it essentially washes out between the various puts and takes. And in terms of contract and I think we're in the best position we’ve been for next year. So for Advair, we are running a very high favorable position in the commercial book of business as we are for all the new products, and the same in the Part D book. You never quite know what is going to happen if the generic comes, the key question really, Graham, obviously is…

Thank you. Your next question comes from the line of James Gordon from JPMorgan, please go-ahead, you’re live on the call.

Hello, thanks for taking my questions. One was on the new respiratory launches, which is Relvar/Breo, Anoro, Incruse and Nucala. They are a little bit below where consensus expectation was. So let me just do a sum around this quarter or is this something that we miss, something like step up and rebating or something else? Any reason we need to be a bit more cautious in subsequent quarters for these products? The second question was just about where we are in terms of cost savings and looking forward year, so I think there's about 500 million pounds of further cost savings to come through. Can you just remind us where they might fall in terms of the cost lines or by division, and it is a chunk of that from vaccine. I know the target is to eventually get to 30% plus margin but it looks like you could almost get this year actually, could you actually get the next year? And then just a final question more generally with [indiscernible] coming from the consumer background, could be accelerating a move to lesser bit best pharma focus and more of a consumer focus, but is that a fair move and when you're looking at something like fixing assets, is consumer increase in a focus in less pharma?

So thanks very much James for the question. I'm going to ask Simon in a minute to comment on what kind of likely distribution of the next 500 million of cost savings are. I think on Breo and Anoro, it’s a round in aero in terms of the difference between the expectations and the delivery first off and I don’t know why that is there but within the schema things, I think it's a very close set of numbers. Actually if you look at the performance of the products, there continue to be extraordinary growth actually. So if you look at the U.S. for example, 100,000 patients a week and they have been prescribed ELLIPTA based inhaled products. July 01, ELLIPTA represented the equivalent of 36% of total Advair volumes by prescription. By September 30, it was up to 42%, a very rapid evolution there. If you look in the U.S. share position during the year, over 12 month period, Advair has lost seven share points, Breo has gained seven share points, Anoro and Incruse together in the market have acquired a brand-new 12.7% share. And in all cases, the NBRx, the leading indicator of new completely new to brand tracking significantly ahead of the actual delivery. So if you look at Breo currency RX share, and it’s in 11% of territory but NBRx is now up to 18.5%. That gives you a very strong impression of the where that product is going. And overall when you combine it with the HIV business, you can see that new products at 1.2 billion annualized and 4.8 growing at 79% year-over-year, a very, very strong new product portfolio. And to pull that into contest, for the pharmaceutical business, one in every 4 pounds we generate in sales comes from products lost in…

Sure. And I think James, as we’ve said before, in terms of the sequence, we always expected the SG&A and R&D savings would come before the SG&A and cost of goods savings if you like. So those are sort of the general trends and that is true of the last 500 million that we probably expect to see a heavier weight within cost of goods than the other two lines. I think in terms of the business mix, probably consumer and Pharma where you would see the greatest contribution, some still to come in vaccines although as you pointed out we have been ahead of that in terms of delivery and the margin performance makes that pretty clear. So that’s kind of the overall shape but more cost of goods benefit than the other two.

And in terms of your question about MRIN [ph], clearly next year we’ll layout for you how she sees strategies to take forward the company and she is doing all the work now to really take the time to do deep dives on various aspects of the business and particularly the parts of the business. She hasn’t personally run up until this point. And so you're going to have to wait to see what hurt U.S. I just want to come by analogy, just maybe make a point around why you should not necessarily make any assumption until Emma actually stands up and tells you what she wants to do. The last project I did for the company before I was appointed CEO was to do an analysis of whether or not we should keep the consumer business and my in going prejudice if I could put it that way was – maybe we shouldn’t keep the consumer business. By the time I had finished that project, I convinced myself and the company that we ought to, and we massively kept it and invested into that business into a phenomenal organization for the company, 16% margin, sales up this quarter 5%. Very substantial, global scale and a terrific innovator when you look at the power brands like Sensodyne or the new switches like Flonase and obviously the approval we had this quarter for Veramyst, all great stories around momentum. So just by analogy, you might have looked at me six months before I took over as CEO and predicted one thing and I did completely the opposite. And you know I would simply use that as a reminder that when somebody is appointed to be the CEO, they have a chance to really think about what they do with that organization and the take in ownership for they have the chance to set their strategy. You shouldn’t necessarily expect that what people have done in the past will be a precursor of what they do in the future in any particular way. Next question?

Thank you. Your next question comes from the line of Andrew Baum from Citi, please go ahead, you’re now live on the call.

Thank you. Three questions please. First, could you just outline GSK's commitment to oncology? Given the history of the asset as well, given the share competitive intensity of the segment, should we believe the epigenetic's IO are here to stay for good inside GSK? Second, could you just give us some additional color, Simon, on the tendering components around vaccines and how you anticipate it to play out over the next couple of quarters? And then finally, for China, and are you confident that we are now tossed here on the new base in terms of underlying outlook?

Thanks, Andrew. So I think on China the answer to that is yes. We had a little bit of benefit in this quarter of a system’s cut over. But fundamentally, we are back into the growth. We are seeing improvements across the refocus business and importantly, with the launch here of new products in hepatitis B the launch but also critically the Cervarix approval in the quarter. We can see a significant opportunity to put more energy behind that business in the next year or two. So I think the answer to that question is yes. We are committed to oncology, Andrew, and what does that mean? It means that we are absolutely focused on bringing through breakthrough medicines as you’ve written several times whether it be an epigenetic store in IL, we have some significant opportunities for first in class Meds. It’s a little early to say exactly what these medicines could be or can’t be but in the next 12 to 18 months we are going to know, that date is going to come in thick and fast during 17 and through to the middle of 18. And at that point, MO will be in the position of making the choices about how we then go forward. You're quite right of course. This is a very competitive space. There's the potential for combination strategies. You know we are already partnered with Merck and one or two of the combination exploratory trials. With Keytruda, we are very pleased to be working with them to explore potential of our meds alongside or possible meds alongside of Keytruda. But exactly how we then go forward is really depend on what happens to which products over the next 18 months. The number one driver is going to be how we maximize shareholder return from those assets. We took a decision about how we can maximize shareholder return on the older generation of assets. That deal I think did maximize shareholder return very substantially. And that we’ll make, ML will be in a position to make choices going forward but I would say all options are on the table but the default option must be to develop this business ourselves. And if I went back to 2006, 2007, we had no oncology business. Within four or five years, we built a built-in time business launch 7 products which we then sold to Novartis, but the fact is we built that presence very practically and I think there is no reason why we couldn’t do that again if that were the right thing to do with the portfolio of medicines that come along. But we will know what that portfolio really is for probably another year or so. Simon, do you want to comment on the tendering question?

Yes, Andrew, as we talked about for tenders, to create a lumpy profile inside the vaccine business many affecting the international piece of it which is why I called it out. But it is not material to the overall position we reported for the whole vaccines business. There's probably a $30 million to $40 million within the international region which is why we market so it's on that scale.

I think just on the back of that because if you what you digging at, Andrew, how real is the Q3 vaccine number versus it being somehow phased in or tendering. I think the reality is it's a very real number. It doesn’t mean that we are going to see the same sales number in every quarter because there is some fundamental seasonality in the vaccine business whether that be around the flu business particularly in the United States. There are some vaccines which are associated with back-to-school period that sort of thing. So, there is definitely lumpiness from a seasonality point of view and there's definitely a tendering which can affect us, and there also things like CDC stockpiles which can be positive or negative. Actually in this quarter that was a negative. So actually the number would have been even higher if we hadn’t had that situation. So you’ve got a lot of - there are things which drive lumpiness of the quarter. Now in this particular year, in quarter three, the reason why we got such a strong performance is really twofold. Absolutely fantastic Bexsero meningitis sales in particular and absolute execution of the goal we had which was to ship more flu vaccine earlier so that we could a) get higher share and achieve that at a better average price point than you get when you come late in the market. So that is a very deliberate effort to shift the flu business into Q3 and obviously going forward the challenge will be to do that every Q3. But that's why we’ve generated that, it's not just that the sales have come into a different quarter compared to historic patterns. They’ve come in higher volume and they’ve come in at higher average prices and that is very substantially permanent if I can put it that way rather than simply a timing phenomenon. It’s quite important to understand I think. It doesn’t mean you won’t see lumpiness but it's not that, it's not really the feature of why you've seen this very strong vaccine performance in the quarter. Next question?

Thank you. Your next question comes from the line of Kerry Holford from Exane BNP Paribas, please go ahead, you’re live on the call.

Thank you. Kerry Holford from Exane. Just two questions please. Firstly on the pipeline, I noticed that you’ve terminated the maturation inhibitor from Bristol-Myers and there is a negative back up with the better profile. Can you just give us some more detail on this? What stage is that backup and can you provide us with more detail as to why 795 was terminated, and why you think the backup will be superior? Do you still think you can be first to market with an oral maturation inhibitor? And just a concern, does that backup also originate for Bristol-Myers? And then just going to from your comment, Andrew, on your color, you referenced the time taken to get basis onto drug following efficient writing a script. Have you seen a decrease now? Is that moving in the right direction? How long does it typically take to get patients onto drug now? And any comments you like to make about competitive production at pace currently and into next year? Thank you.

Thanks very much, Kerry. So as far as the maturation inhibitor, you're quite right. We terminated 795, it’s really a tolerability issue, we didn’t feel it was good enough from that point of view. In fact, we have at least two more backups and they come from both Bristol-Myers and GSK labs actually. And I don’t think we are going to lose a lot of time. We obviously lose a bit of time here but not a lot of time. So I think we feel like the overall program is really still very much substantive as a number of opportunities in it and even at the time where we did the transaction with Bristol-Myers, while we didn’t know the tolerability profile of this lead asset, we were particularly intrigued by a couple of the backups. So even at the time of the transaction, we’ve been increasing our focus on the backups. As it turns out the leader from BMS wasn’t what we hoped it would be but the reality is I think the program remains very much intact. I don’t think the time liability is going to be very material and the backups come from both BMS and GSK which is good because that gives you a bit of diversity of chemistry and it gives us a bigger solution set to be able to come up with the right kind of product. As far as new color is concerned, we are seeing that timeline shortened but the reality is for anybody who is on these kind of biologics, it’s the timing to get through the reimbursement cycle and authorizations are challenging, and much longer than you would want them to be and personally I think it’s one of the areas really deserving of a focus for all the stakeholders to…

Thank you. Your next question comes from the line of Jo Walton from Credit Suisse, please go ahead, you’re live on the call.

Thank you. Jo Walton from Credit Suisse. It is with trepidation if I ask this question, but it's about U.S. pricing going forward and specifically you made a comment that plans were looking to keep the brand as much as possible post generic. I'm not sure that those of that follow French companies are seeing that is a widespread factor. So we just wonder if you could tell us a little bit more about how you think that could play out in the respiratory market and just generally do you think investors are too worried about all the rhetoric that we are hearing on the U.S. political scene? Do you think that could turn into action and if so what would be your best bet as to what may happen on U.S. pricing next year?

Thanks very much Jo. I didn’t actually say the plans we’re trying to do is keep the brand as much as possible. I said plans were more open-minded to looking at strategies to keep the brand. We are seeing that. I think a lot of this depends on, it's no secret to anybody, certainly not you Jo or anybody else on this call. But the net average Advair prices dropped significantly in the last three years and essentially we’ve absorbed 50% of the economic effect of generalization already notwithstanding the reduction in any volume market share. Now what that means is that our net prices are in the range of being able to have a sensible conversation around potential generic entrance. Now obviously all depends on what kind of generic marketplace evolves and when it evolves and how substitutable or how big the supply is, all those good questions which have been the subject of my earnings calls for nearly 10 years. Those things still exist. And the reality is I think against that backdrop, there are some significant merits for customers to think about some certainty and there are some significant merits to think about the overall portfolio that GSK has to offer versus the single debate about Advair versus a generic. And to contrast that to some other companies who’ve been very challenged in this space, you got to step back and say okay we're doing just over 200,000 prescriptions a week in America of Advair. We are already doing 100,000 plus a week of ELLIPTA based products. The dynamic of that whole conversation has really moved on to how do we work together on the new products. That is why we're seeing such terrific access being established across the border of the respiratory portfolio. And remember the…

Thank you. Your next question comes from the line of Tim Anderson from Bernstein, please go ahead, you’re live on the call.

Thank you. A couple of pipeline questions. Going back to respiratory and the closed triple just thinking about market access in the U.S. when you launch Breo, you felt you had more pricing power than you ended up having that obviously hurt the product launch and I’m wondering what lessons from that experience might port over to the closed triple specifically. Are there some similarities there or do you think this is a totally different product, different set of circumstances? I know it's always a way but just wondering if investors should be bracing for another slow launch kind of matter what you do. And then second question is on Shingrix. Great efficacy but on safety and tolerability, there is something that standout so in the New England Journal article for example about 10% of patients had a great reinjection side reactions which is pretty high and higher react to the city. So for preventive product were patients aren’t really coming to the office or for active symptomatic disease, I'm wondering if that creates a commercial impediment or if there could be compliance issues with the second dose.

Great. Thanks very much Tim. As far as the triple's concerned, I don’t think Breo is a good analogy. I would actually look at what we’ve done since Breo. So Breo was you have to remember, Breo and Advair was a simultaneous event and as a very unusual dynamic. If you then look at our ability to get Anoro, Incruse, Nucala, all of these products covered very, very quickly. And in fact our ability to reverse the setbacks we had an Advair and Breo, I think you can see a very different success rate in terms of our managed market position. And I am pretty confident that, I do not want to hand them a gift too much of this point but in terms of one of those gifts where you have to constantly explain it. My guess is that tripled ought to be reasonably straightforward provided we go in with a pragmatic price proposition and that is what we have been doing since Breo. And the consequence of that is we’ve seen excellent coverage, rapidly achieved and then very rapid market share acquisition. So I think it should be fine. But it all revolves around – I mean literally walking the talk. I just talked for five minutes about how I see U.S. pricing and we have to be consistent with that and have pragmatic pricing positions for new products like triple. But I think that will work. As far as Shingrix is concerned, fabulous of efficacy as you rightly say. The injection site in the trial remembers the placebo was literally placebo so you're comparing something which is not active against an active, so the comparison in the trial isn’t really relevant. If you look at other products like Pneumovax, you see very similar sort of injection great…

Thank you. Your next question comes from the line of Keyur Parekh from Goldman Sachs, please go ahead, you’re live on the call.

Good afternoon. I’ve got three please. First one, Andrew, there has been recent press about some UK government reaction to a white paper that happened to Glaxo and AstraZeneca in the ABPI had worked on towards kind of Brexit. Would be great to hear your thoughts on how you think that plays out for the industry. Secondly, last quarter, there was some question around intellectual property around [indiscernible] and whether the Gilead compound could potentially infringe that. Would love to hear your updated thoughts on that if you have any? And lastly and I realize, we will have another quarter to do this but just what do you think your biggest legacy to Glaxo will be, how we think about your time at Glaxo in five years time? Thank you.

Thanks, Key. I think I’m going to short-circuit the three. Nothing to add on IP or potential competition issues there. Way too early to think about legacy, I'm still thinking about making sure we deliver a great year end for the company. And in terms of the UK government position, I think first of all there is a very good dialogue going on between the industry and government. Of course, the overall strategic framework of the UK's exit from Europe is not clear or defined, so inevitably there is an absence of black and white decisions and clarity if I can put it that way. But I would say that the number one most important thing that has definitively been confirmed since June 23 is life sciences is one of the top three industrial sectors that Britain wants to swing behind. That is incredibly important. It's definitely creating the backdrop for a constructive engagement between industry and government not just on the short run but on long-term competitiveness that’s clearly very important for GSK. We are very actively involved in those conversations. But I think it is also fair to say and also reasonable for us to kind of sit back and say this is a big complex, big story around Brexit and therefore inevitable that things necessarily get nailed sector by sector as quickly as a people might like. Nothing to worry about I think from my perspective. I think we are in an early stage of a complex process. We are in a good position because we have been called out priority industry. I think the benefits that could bring in terms of continued commitment in science in Britain, continuation of things like the patent box, ensuring that this is an agenda where the UK government looks for ways in which you can legitimately help encourage innovation to take place and these are all very positive. So it's early days but nothing to worry about and I certainly would not be concerned about any observations in the media on this sort of thing. Next question?

Thank you. Your next question comes from the line of Steve Scala from Cowen, please go ahead, you’re live on the call.

Thank you. I have several questions. Andrew, apologies for asking a question you said you wouldn’t answer but regarding the expectation that new pharmaceuticals and vaccines are expected to reach 6 billion pounds in 2018. GSK is on track to exceed that in 2017. So given the fact that it's nearly upon us, what are your reservations in revising that number now? The second question is on vaccine. Merck strategy is to vaccinate as many people as possible before Shingrix is approved. GSK has said that only 7% to 8% percent of patients have been penetrated but if Prevnar is a good parallel, only about one third of patients will seek vaccination. So if GSK's ongoing study of Shingrix in people already vaccinated with zoster vaccine of new patient pool is indeed fairly limited. And then lastly what impact on a new color would GSK expect if Astra [indiscernible] is approved on a QA basis. Thank you.

Thanks very much, Steve. So in terms of the new products, we're clearly tracking very well. In terms of the performance and if you can draw your own lines, you take the 79% growth rate over 4.8 billion basin then you figure out what the decay rate of that growth projectile is and you can come to your own conclusion. It's more a general point that we, right now, I do not think it's necessary for us to update for you. I think kind of what is in the 10 is more important, what is on the label of the tin and the situation is absolutely clear fantastic momentum here. I think it's also important that frankly as we look at forward facing statements in 2017, 2018, 2019, that is largely for Emma to be very much the owner of as she takes of the business going forward. And so I think that as we go through this transition, there will be some things which we may all agree on Steve, but it is) into the person to say yes, I am ready to make that commitment on behalf of the company going forward. No question, though, that I am super pleased with this performance and I am going to reiterate having a quarter of your pharma business coming from new products most of which have been flicked property running too late 2020, that feels pretty good. In terms of zoster, you are quite so, a couple things really. Remember that Merck are only in a handful of countries because they have a live virus manufacturing process that always been significantly constrained to manufacturing volume. They’ve clearly prioritized some of the biggest markets like the U.S. but they are only in a handful of countries. We see Shingrix as being…

Thank you. Your next question comes from the line of Richard Parkes from Deutsche Bank. Please go ahead. You are live on the call.

Yeah, thanks for taking my questions. I've just got three questions if that’s okay. Firstly, just a simple one, I wonder if you could quantify the impacts from the stocking in China and phasing of tenders in the established products line? And then secondly, given the beat to consensus for customers in the third quarter and the fact that you haven’t raised guidance, looking at R&D you’ve increased spend in the third quarter, it looks like from your comments that you are really taking the opportunity to reinvest some of that better underlying performance. I’m wondering, is that the right interpretation? Are you ahead of where you expect it to be and how should we think about R&D spend versus margin development longer-term? And then third question, we are seeing Sandoz recently file a petition on questioning use of the low dose of Advair in bioequivalent trials. I'm just wondering how likely you think those delay generics I think both the current filers have used the lower dose in their phase three trials? Thanks.

Yeah, thanks very much Richard. So the stocking in China was 20 million in fact. And Simon, the tenders?

It’s about 30 million or 40 million overall.

Yeah, so not – I mean immaterial at the scheme of things. And to be honest with you, as you know, in our quarters, you are just as likely to have a one or two more of those – you can get them in a quarter, you don’t get them in the quarter. But I would say those are small. We really only call that the China one in particular because – I mean that’s Andrew Baum's first question, very, very positive about the beginnings of recovery growth in China. But we did not want to necessarily give the impression it was going even more quickly than it is because of that distortion. I think frankly if it wasn’t for that, we wouldn’t call it out because it's such an immaterial number. In terms of the – so in terms of where we are, we are ahead of where we expected. That’s why we’ve risen guidance – lifted guidance a couple of times during the year. We continue to trade very well. We are very confident we can come in within the range that we set for the rest of the year. Let's see what Q4 brings us. There are always degrees of volatility in the quarter. I am feeling very, very confident about where we stand today. But it's also true that we are incorporating into our short run and medium run expectations a gradual beginnings of investment in the – rising investment in the R&D business driven by the opportunity of the R&D portfolio. And as we look going forward, we start to see some of the big inhaled respiratory programs, which have consumed a lot of resources, some of the big Tanzeum programs, which have consumed a lot of resources historical coming to an end. We start…

Thank you. Your next question comes from the line of Nicholas Guyon from Morgan Stanley. Please go ahead. You are live on the call.

All right. Thank you very much for taking my questions. I have two, actually. The first one is on 2017 margins. So this year currencies will have the lot combined with the integration and material synergies in OTC and vaccines. While I suspect it ViiV also plays a major role in pharma margin improvement. How shall we think about margins for next year so 2017 directionally with further FX and synergy tailwinds but potentially Advair generics in H1 and thus comps for vaccines? I mean is there a scenario where you can improve margins as anticipated by the consensus despite Advair being genericized? And second, respiratory question, what do you expect from the soon-to-be published head-to-head trials that Novartis is running with Ultibro versus Anoro? Do see any particular upside or downside there? Thank you.

Thanks very much. So, Nicholas, a super elegant question, but I am going to not give you guidance for 2017 while we are still in 2016. So the only thing I would say is if and when there is a generic to Advair, obviously, Advair is a very profitable product, we don’t have very much commercial resource attached to Advair, we're focused on the future not on Advair, so if and when there is a generic to Advair, then the loss of Advair volume will be -- it's a high profitably product, so you have to be aware for that. I think it terms of – the only other piece I would say and I think you alluded to this in your question, is important to remember that all else equal, it’s highly likely we will retain a significant currency tailwind into and through much of next year if everything stays as it is today. There was no guarantee of that of course but it's hard to remember almost that the pound is at 1.50 as recently as June 22. And so for the first of next year, you're likely to see a very significant currency tailwind. But beyond that I'm not going to make any comment on margin again. I think all of those kind of comments are very much appropriate in 2017, not in 2016. They are driven enormously by the timings. So if a generic came earlier, it's one thing. If it came late, it's another. If it came never at all, then it's another. And those are all things which Emma and Simon will be in no doubt chatting to you about at different times during next year. No particular comment on the Novartis trial. I think it's for us to talk about our trials particularly before they are published – sorry, talk about our trials when they are published, not other peoples when they haven’t been published. Let’s wait and see. The only good news I will share with you on that front which is fantastic news is that GSK is now number one in the [indiscernible] global marketplace and given that we started second and we are now number one, it feels like that race is playing out well and we are continuing to see some very good progress and I think we will see in some global guidelines some evolution over the next few months, which will also potentially open up opportunity for us. Next question?

Thank you. Your next question comes from the line of Jeff Holford from Jefferies. Please go ahead. You are live on the call.

Hi. Thanks very much for taking my questions. I kind of look at a bit differently on Advair for 2017, maybe for Simon, if you could give any general thoughts about when you're going to give guidance on 2017? Can we just assume that you will be ignoring the potential of Advair generics in 2017 and we will just see when we come, we will try and bake that somehow into guidance of 2017, just interested in general thoughts on how you're going to deal with that? Secondly, maybe just a bit more comment on generally the company's appetite for M&A right now and the focus and the size if there is any interest? And then just last, Andrew, I kind of thinking from some of the comments you’ve made today, you’re playing down the potential risk of things like changes to LIS and dual eligible patient rebating over the next year or two, I wonder just might tell me if I'm correct about that and why you have that view? Thank you very much.

Thanks very much, Jeff. I think on things like dual eligible, the degree – so the point I'm trying to get across is I think the chance of that in the next year or two are low, I think as you get into the end of 2018 and 2019 it raises. So I think there is a – there is a timing dynamic around that. I think there are some other things, which could happen more quickly. And so I don’t think it's a zero risk at all. Jeff, I don’t think it's a 2017 risk and it's more a case of the pace and speed at which some of these various things might evolve. As you know, GSK has a low fraction of its business exposed in the Medicaid Medicare space compared to many and what we do have there is dominated by Advair, so slightly ironically, if there were to be a generic Advair, our risk to dual eligibles drops dramatically and – which is a kind of interesting upside to something you didn't want necessarily to happen. In terms of guidance for next year, Emma and I, we will sit down over the next few weeks also to start to think about how we [indiscernible] this, but rest assured, between the three of us, between Emma, Simon, myself, we will do everything we can to make sure that we give you as much help as appropriate so that you can understand what the true underlying growth of the company is and what the potential impact of generics might be. So we will definitely be discussing that with you. But obviously it's supercritical that that is owned and something that Emma feels good about and therefore we're not going – one of the reasons we are not going to rush anything out, because it would only be sensible to have that conversation once Emma has had her chance to really get the grips with the process she is going through now in terms of familiarity with parts of the business that she hasn’t necessarily run directly. So you're just going to have to bear with us a bit. We wouldn’t normally give you guidance until we were into the year; I think that’s a very safe assumption in this situation. The three of us will work together on it and at the right time, we will be describing to you, I am sure, both what the effect would be if there were no generic, but also give you some indication of what the impact of the generic would be. Next question?

Thank you. Your next question comes from the line of Seamus Fernandez from Leerink. Please go ahead.

Great. Thanks for the question. Andrew, I guess, given your views on the industry and near-term prospects particularly on pricing and access, just kind of wondering also as we enter a more biosimilar heavy environment as that accelerates, what are your thoughts on the prospects for mega cap M&A as we saw heading into the big sort of 2007 to 2012 cliff that the industry had the way into? Obviously you took a very different strategy than mega cap M&A, but others may have a different view and I’m just wondering how you feel GSK ultimately is positioned in the context of that environment? And then a separate but similar question, just interest in further consolidating OTC consumer, and just maybe giving us a better understanding of Novartis' ability to block a deal that GSK may want to do that could be a little bit costly in the near-term but could be significantly value-added long-term. Obviously we're seeing some challenges at some of your partners in that regard. Thank you.

Yeah, thanks very much, Seamus. I think – so I think from the kind of mega cap M&A dimension, I think the possibility of – the economic rationale for that type of thing must be rising if you believe the environment becomes more pressurized from a price perspective. But we are now – certainly when I started in this industry, I think there was 65 companies global drug companies, we're down to a reasonably small number. These are very big companies typically, but they are complex and we’ve obviously seen a variety of potential or putative transactions launched and then canceled in the last two or three years always for slightly different reasons, but nonetheless they’ve been tricky to get done. And I think that is an issue. I think complexity of the transaction when these businesses are so big and they have lots of overlapping pieces potentially and then the issue of do you really want to run a drug company with 250,000 employees in it. I think it's really an interesting question actually. These companies are very, very big. There are relatively few companies in the world with 250,000 employees. That’s not a completely trivial challenge to think about if what you want to drive is top line growth. So where do I come out and obviously when Emma takes over, she will develop her own view of this. But my own personal view is that from a GSK perspective, I think we are set pretty well to deal with the challenges which are coming. We’ve really and you know over the years, we haven’t always been a flavor of the month for this, but I think we are set well to anticipate a challenging price environment. We’ve invested in businesses, which have differential risk exposures, consumer vaccines,…