SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the period ending 23rd July 2008

GlaxoSmithKline plc

(Name of registrant)
980 Great West Road,
Brentford,
Middlesex, TW8 9GS
(Address of principal executive offices)

Indicate by check mark if the registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-Fx      Form 40-Fo

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yeso      Nox

 

 

 

		Issued: Wednesday, 23rd July 2008, London, U.K. Results announcement and interim management report for the second quarter and half year 2008 GSK delivers Q2 business performance EPS of 27.2p, up 5% CER New strategic priorities announced

Business performance results*

		Q2 2008				Growth								H1 2008				Growth
		£m				CER%				£%				£m				CER%				£%
Turnover			5,874				(2	)			4				11,560				(2	)			3
Earnings per share			27.2p				5				13				52.9p				(3	)			4

Statutory results (including restructuring charges)

		Q2 2008				Growth								H1 2008				Growth
		£m				CER%				£%				£m				CER%				£%
Turnover			5,874				(2	)			4				11,560				(2	)			3
Earnings per share			24.6p				(6	)			3				49.0p				(10	)			(4	)

The full results are presented under ‘Income Statement’ on pages 7 and 16

Q2 business performance summary

•		New strategic priorities designed to strengthen and balance GSK’s business and deliver sustainable long-term financial performance
•		GSK on track to meet financial guidance for 2008
•		Q2 revenue down 2% CER, adversely impacted by generic competition in the USA and lower Avandia sales
•		Significant progress in transition of pharmaceutical portfolio: 12 approvals so far in 2008 including Entereg, Kinrix, Rotarix, Treximet (USA) and Prepandrix, Tyverb (EU); almorexant for sleep disorders added to late-stage pipeline
•		Major new collaboration with Aspen in Emerging Markets; disposal of 4 products for £170 million
•		Timeline for completion of remaining £6.5 billion repurchase under current share buy-back programme extended beyond July 2009 to enable investment in strategic priorities
•		Progressive dividend policy continues with Q2 dividend of 13p, +8%

*		Business performance, which is a supplemental measure, is the primary performance measure used by management and is presented after excluding restructuring charges relating to the new Operational Excellence programme, which commenced in October 2007, and significant acquisitions. Management believes that exclusion of these items provides a better reflection of the way in which the business is managed and gives a more useful indication of the underlying performance of the Group. In order to illustrate underlying performance, it is the Group’s practice to discuss its results in terms of constant exchange rate (CER) growth. All commentaries are presented in terms of CER growth and compare 2008 business performance results with 2007 statutory results, unless otherwise stated. See ‘Accounting Presentation and Policies’ on page 28.

		1

Chief Executive Officer’s Review

GlaxoSmithKline is responding well to the challenges it is facing this year. In Q2, the robust underlying performance of the company is helping to offset the anticipated increase in generic competition to products in the USA and a decline in Avandia sales.

We are also responding to the wider challenges of the pharmaceutical industry through our good progress in the development and delivery of new products from our strong late stage pipeline. However, it is clear that these challenges together with the evolving dynamics of our industry environment require fundamental changes to the way we operate. Today, I have set out three new strategic priorities for GSK, which aim to increase growth, reduce risk and improve GSK’s long-term financial performance:

1. Grow a diversified global business
2. Deliver more products of value
3. Simplify GSK’s operating model

A separate press release, also issued today, explains in more depth the thinking behind these strategic priorities and from today we will begin to report the company’s progress against these priorities.

Grow a diversified global business
We are seeing a significant change in the composition of our pharmaceuticals portfolio, particularly in the USA, as an increasing number of products encounter generic competition. We are very focused on effectively managing this transition, particularly through the delivery of new products from our late-stage pipeline (full details of which are set out on page 11).

So far this year, we have achieved 12 regulatory approvals for a broad range of products that include Entereg, Kinrix, Rotarix, Treximet, and Prepandrix. European approval of Tyverb, for advanced breast cancer, this quarter was also of particular significance for GSK. This level of progress is at the forefront of the industry and builds on the 10 product approvals we received in 2007.

At the same time, we continue to seek opportunities to drive growth in our existing portfolio. In April, we received FDA approval for expanded use of Advair for reduction of exacerbations in COPD, a disease forecast to be the 3rd leading cause of mortality in the world by 2015. We also gained approval for expanded use of Avodart, in combination with tamsulosin, in the USA and several European countries. Reinforcing our leadership in the migraine therapy area, we launched Treximet in the USA this quarter. Patients with migraines typically suffer for between 4 and 72 hours and Treximet has real benefit by offering pain relief after just 2 hours and maintains relief for 24 hours.

Regarding Avandia, whilst the outlook for future performance remains uncertain, we continue to see supportive independent long-term data for its use as a treatment for diabetes. At this year’s American Diabetes Association meeting, two cardiovascular outcome studies involving over 20,000 years of patient experience with Avandia in a high-risk population were presented demonstrating no related increase in risk of mortality. Of further note, was the FDA’s decision to include long-term efficacy and safety data from GSK’s ADOPT study into the US label. These data confirmed that patients achieved greater sustained glycemic control with Avandia compared to either metformin or sulphonylurea.

We are also striving to maximise the value of our pharmaceuticals business through divestment of non-core assets and product acquisitions. This quarter, we divested four products, which no longer hold patent protection, for £170 million. We also saw the benefit of last year’s acquisition of Lovaza, a treatment for adult patients with very high levels of triglycerides, which contributed sales of £67 million.

Issued: Wednesday, 23rd July 2008, London, U.K.		2

It is our intention to unlock the geographic potential of our business, particularly in fast-growing emerging markets. Today, we concluded a transformational agreement with Aspen, which gives GSK priority access to commercialise assets from its large portfolio and pipeline of brands. This is a significant step in our new strategy to accelerate growth in emerging markets and accompanies several other initiatives including the recent establishment of a new dedicated business model within GSK for these countries.

GSK’s Vaccines division continues to perform strongly, and with increasing demand for preventative healthcare, GSK is well placed to benefit from this major source of future market growth.

Our second quarter performance exemplified the breadth of GSK’s current vaccine portfolio with sales growth coming from several vaccines including those for Hepatitis and Infanrix/Pediarix. Vaccine sales this quarter also benefited from the timing of certain shipments to European and International markets.

This business has a strong pipeline and we are seeing good uptake of our next generation vaccines. Sales of Rotarix for example grew strongly in the second quarter and, following approval by the FDA in April, this vaccine will shortly be available to provide early protection to the many thousands of infants at risk of rotavirus in the USA.

In June, GSK won a significant tender for use of Cervarix in the UK’s national immunisation programme to protect against cervical cancer and we are making good progress in competitive tenders across Europe. Last month we progressed our application for Cervarix in the USA, submitting our response to questions raised by the FDA in their Complete Response Letter. We have also decided to submit final data from our phase III pivotal efficacy study for inclusion in the review and product label. We expect to submit these data by the first half of 2009.

This quarter, GSK became the first company to obtain a European licence for a pre-pandemic H5N1 influenza vaccine, testament to our efforts in this critical area of public health. Prepandrix has the ability to raise immune protection against potential drift H5N1 strains, thereby providing governments with the ability to protect people in advance or at the onset of an officially declared influenza pandemic.

Our presence in Consumer Healthcare continues to provide us with competitive advantage in today’s healthcare environment. Budgetary pressures are leading governments to consider wider use of over-the-counter products in established markets; whilst economic improvement is driving increased demand in emerging markets for these products. This latter point is clearly demonstrated by our second quarter performance, with strong demand seen for our consumer healthcare products in Central and Eastern Europe, India, the Middle East and Asia.

In reported terms, overall sales for Consumer Healthcare this quarter were down 1%, principally due to lower sales of alli and smoking cessation products; excluding these items Consumer Healthcare sales grew 7% in the quarter.

We continue to see strong underlying consumer demand for alli, our new weight loss treatment. However, reported sales this quarter were impacted by lower demand from retailers for stock following a year-end promotion and an adverse comparison to Q2 2007, which benefited from stocking ahead of the product’s launch in June. Consumer Healthcare sales growth was also affected by continued competition in the USA to our smoking cessation franchise. It is our expectation that with the initiatives we have planned for these brands, reported growth will improve in both these areas during the second half of the year.

Sales in other areas and geographies remain strong, with the investments we have made to globalise our brands and produce innovative brand extensions clearly helping drive sales growth. The successful global rollouts of Sensodyne Pronamel and Breathe Right are evidence of this, as is the launch of new Lucozade Alert. It is our intention to accelerate this type of activity through increased investment in the business.

Issued: Wednesday, 23rd July 2008, London, U.K.		3

Deliver more products of value
Improving GSK’s R&D productivity remains our priority and a potential source of competitive advantage. During the quarter, we saw positive progress for two late stage assets. An FDA Oncology Drugs Advisory Committee voted unanimously in favour of the risk-benefit profile for use of Promacta as a short-term treatment for chronic ITP. We also submitted filings for Rezonic/Zunrisa, a new treatment to prevent chemotherapy induced nausea and vomiting, with regulators in the USA and Europe.

Today we have also announced significant changes in our R&D organisation. Following a review, GSK is now focussed around 8 therapy areas: Immuno-Inflammation, Neuroscience, Metabolic Pathways, Oncology, Respiratory, Infectious Disease, Ophthalmology and Biopharmaceuticals.

We have also established new Drug Performance Units (DPU) within our Centres of Excellence for Drug Discovery (CEDD). These units focus on a given biological pathway and comprise between 5 — 80 scientists. They build on the success of GSK’s CEDD model and we believe will further optimise drug discovery research.

A new global Drug Discovery Investment Board, which is tasked to ensure that investment capital is allocated in a disciplined way to competing research teams, has been established. The Board comprises senior GSK R&D leaders and individuals from outside the company operating in the venture capital and Biotech/Pharma investment world.

We continue to seek access to the best science, strengthen our pipeline and balance risk through increased collaboration with external R&D partners. In June, we completed the acquisition of Sirtris, a world leading company in the field of sirtuins, and started a five-year collaboration with the Immune Disease Institute in Boston in immuno-inflammation research. As part of continuing efforts to tap into the highest quality thinking in academia and explore alternative drug development models, this week we signed an innovative agreement with the University of Cambridge to develop a new potential therapy for obesity and addictive disorders.

Finally, this month, we also made a significant addition to our late-stage pipeline, through an agreement with Actelion to co-develop and co-commercialise almorexant, a potential first-in-class treatment for insomnia.

Simplify GSK’s operating model
To support our first two strategic priorities and meet the demands of our future environment it is clear that we must create a new operating model for GSK that can support a more diverse and globalised business. We have therefore established a new priority that focuses on simplifying our organisation.

Spanning the entire business, we have commenced a series of activities to improve the efficiency of our operations. These activities are in addition to the ongoing restructuring programme and are seeking to further improve manufacturing efficiency, free up internal resource, establish new commercial and support functions, and adopt a new pan-business approach to cost savings. We have also commenced a project to generate substantial working capital savings.

Financial strategy
We are committed to a more efficient balance sheet and to increasing returns to shareholders through our progressive dividend policy. This quarter’s dividend was increased 8% to 13 pence. Further available free cash flow and debt capacity will be used to invest firstly in our new strategic priorities and secondly in other cash returns to shareholders.

To ensure we have sufficient flexibility to deliver our priorities, we plan to vary the pace of our remaining £6.5 billion share repurchases according to the investment opportunities available. We therefore now anticipate the full £12 billion programme will be completed after the previously anticipated end date of July 2009. We currently expect to repurchase around £1 billion of shares in the last five months of this year.

Issued: Wednesday, 23rd July 2008, London, U.K.		4

Incremental investment opportunities to support our strategic priorities are expected to include ‘bolt-on’ acquisitions, other investments and collaborations. All investment opportunities will be assessed against strict financial criteria and against our long-term objective of ‘increasing growth’ and ‘reducing risk’ for the company.

Outlook
In summary, we are responding to the challenges faced by GSK this year and are seeing good progress, particularly in terms of pipeline output and product approvals. In broader terms, it is clear that GSK can, and must, do more to improve shareholder value. I believe our new strategic priorities will drive the changes GSK needs to make and enable us to realise the opportunities we see in the future healthcare environment.

Andrew Witty
Chief Executive Officer

Issued: Wednesday, 23rd July 2008, London, U.K.		5

Contents		Page
Q2 2008 results summary			1
Chief Executive Officer’s Review			2
Income statement — three months ended 30th June 2008			7
Operating profit review			8
Pharmaceuticals turnover — three months ended 30th June 2008			9
Late-stage pipeline			11
Consumer Healthcare turnover — three months ended 30th June 2008			13
Cash flow statement — three months ended 30th June 2008			14
Legal matters			15
Income statement — six months ended 30th June 2008			16
Operating profit review			17
Pharmaceuticals turnover — six months ended 30th June 2008			18
Consumer Healthcare turnover — six months ended 30th June 2008			20
Balance sheet			21
Cash flow statement — six months ended 30th June 2008			23
Statement of recognised income and expense			24
Additional information			25
Directors’ responsibility statement			29
Investor information			29
Auditors’ review report			30

GlaxoSmithKline (GSK) together with its subsidiary undertakings, the ‘Group’ — 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. GlaxoSmithKline’s website www.gsk.com gives additional information on the Group. Information made available on the website does not constitute part of this document.

An interview with Andrew Witty in video/audio is available from 2:30pm on 23rd July 2008 on: www.gsk.com and on www.cantos.com.

Enquiries:		UK Media		Philip Thomson		(020) 8047 5502
				Claire Brough		(020) 8047 5502
				Alice Hunt		(020) 8047 5502
				Gwenan White		(020) 8047 5502
		US Media		Nancy Pekarek		(215) 751 7709
				Mary Anne Rhyne		(919) 483 2839
		European Analyst / Investor		David Mawdsley		(020) 8047 5564
				Sally Ferguson		(020) 8047 5543
				Gary Davies		(020) 8047 5503
		US Analyst / Investor		Frank Murdolo		(215) 751 7002
				Tom Curry		(215) 751 5419

Brand names
Brand names appearing in italics throughout this document are trademarks of GSK or associated companies with the exception of Levitra, a trademark of Bayer, Bonviva/Boniva, a trademark of Roche, and Vesicare, a trademark of Astellas Pharmaceuticals in many countries and of Yamanouchi Pharmaceuticals in certain countries, all of which are used under licence by the Group.

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 ‘Business Review’ in the company’s Annual Report on Form 20-F for 2007 and are summarised in the list on page 28.

GlaxoSmithKline plc, 980 Great West Road, Brentford, Middlesex TW8 9GS, United Kingdom Registered in England and Wales Registered number: 3888792

Issued: Wednesday, 23rd July 2008, London, U.K.		6

Income statement

Three months ended 30th June 2008

		Business
		performance								Restructuring				Statutory				Q2 2007
		Q2 2008				Growth				Q2 2008				Q2 2008				(restated)
		£m				CER%				£m				£m				£m
Turnover:
Pharmaceuticals			4,923				(2	)							4,923				4,759
Consumer Healthcare			951				(1	)							951				915
TURNOVER			5,874				(2	)							5,874				5,674
Cost of sales			(1,375	)			8				(138	)			(1,513	)			(1,212	)
Gross profit			4,499				(5	)			(138	)			4,361				4,462
Selling, general and administration			(1,765	)			(8	)			(31	)			(1,796	)			(1,841	)
Research and development			(802	)			(1	)			(18	)			(820	)			(789	)
Other operating income			194												194				97
Operating profit:
Pharmaceuticals			1,960				4				(186	)			1,774				1,754
Consumer Healthcare			166				(15	)			(1	)			165				175
OPERATING PROFIT			2,126				2				(187	)			1,939				1,929
Finance income			96												96				77
Finance expense			(214	)											(214	)			(121	)
Share of after tax profits of associates and joint ventures			15												15				11
PROFIT BEFORE TAXATION			2,023				(2	)			(187	)			1,836				1,896
Taxation			(577	)							48				(529	)			(541	)
Tax rate %			28.5	%											28.8	%			28.5	%
PROFIT AFTER TAXATION FOR THE PERIOD			1,446				(2	)			(139	)			1,307				1,355
Profit attributable to minority interests			21								—				21				22
Profit attributable to shareholders			1,425								(139	)			1,286				1,333
			1,446								(139	)			1,307				1,355
EARNINGS PER SHARE			27.2p				5								24.6p				24.0p
Diluted earnings per share			27.0p												24.4p				23.7p

Issued: Wednesday, 23rd July 2008, London, U.K.		7

Operating profit — business performance Q2

		Q2 2008								Q2 2007								Growth
						% of								% of
		£m				turnover				£m				turnover				CER%				£%
Turnover			5,874				100.0				5,674				100.0				(2	)			4
Cost of sales			(1,375	)			(23.4	)			(1,212	)			(21.4	)			8				13
Selling, general and administration			(1,765	)			(30.0	)			(1,841	)			(32.4	)			(8	)			(4	)
Research and development			(802	)			(13.7	)			(789	)			(13.9	)			(1	)			2
Other operating income			194				3.3				97				1.7
Operating profit			2,126				36.2				1,929				34.0				2				10

Business performance operating margin increased 2.2 percentage points, as sterling operating profit increased 10% while sterling turnover increased 4%.

Cost of sales as a percentage of turnover increased by 2.0 percentage points, reflecting generic competition to higher margin products and lower Avandia sales.

SG&A costs as a percentage of turnover decreased 2.4 percentage points compared with Q2 2007. SG&A fell by 8% owing to lower legal charges and the benefits arising from the new operational excellence programme. There was a £3 million credit from legal, reflecting a number of settlements achieved in the quarter, compared with a £103 million charge in Q2 2007. SG&A costs excluding legal fell by 2% compared with Q2 2007.

R&D expenditure decreased 0.2 percentage points as increased investment in vaccines R&D was offset by savings from the operational excellence programme elsewhere. Pharmaceuticals R&D expenditure in the quarter represented 15.7% (Q2 2007: 16.0%) of pharmaceutical turnover.

Other operating income includes royalty income, equity investment disposals and impairments, product disposals and fair value adjustments to financial instruments. Other operating income was £194 million in Q2 2008 (Q2 2007: £97 million). Other operating income in Q2 2008 included royalty income of £68m (Q2 2007: £49m), product disposals, including the disposal of non patent protected products to Aspen, of £162 million (Q2 2007: £34 million), adverse fair value movements on derivative financial instruments of £34 million (Q2 2007: £12 million adverse) and equity investment disposals of £5 million (Q2 2007: £21 million).

The operating profit in Consumer Healthcare fell by 15% compared with Q2 2007 as a result of the adverse comparison with last year on alli and increased investments in new product launches.

Operating profit — statutory results
Statutory operating profit for Q2 2008 was £1,939 million, up 1% in sterling terms but down 7% CER compared with Q2 2007. This included £187 million of restructuring charges related to the new operational excellence programme and Reliant Pharmaceuticals; £138 million was charged to cost of sales, £31 million to SG&A and £18 million to R&D. There were no such charges in Q2 2007.

Currency impact
The 8 percentage point difference between CER and sterling business performance EPS growth in the quarter arose from the strength of the Euro, the Yen and a number of other currencies against Sterling.

The Q2 2008 results are based on exchange rates disclosed on page 25. If exchange rates were to hold at the average Q2 2008 levels for the rest of the year, the positive currency impact on business performance EPS growth for the full year would be around 7 percentage points.

2008 earnings guidance
GSK continues to expect a mid-single digit percentage decline in business performance EPS at constant exchange rates.

Issued: Wednesday, 23rd July 2008, London, U.K.		8

Turnover

Pharmaceuticals including vaccines
Three months ended 30th June 2008

		Total								USA								Europe								Rest of World
		£m				CER%				£m				CER%				£m				CER%				£m				CER%
Respiratory			1,383				4				616				4				497				—				270				12
Seretide/Advair			964				6				473				2				355				4				136				31
Flixotide/Flovent			158				(3	)			68				5				43				(7	)			47				(9	)
Serevent			66				(11	)			16				(11	)			34				(11	)			16				(12	)
Veramyst			17				89				14				56				1				—				2				—
Flixonase/Flonase			65				13				33				32				16				(13	)			16				7
Anti-virals			751				(5	)			355				(2	)			218				(12	)			178				(2	)
HIV			361				(6	)			142				(10	)			164				(2	)			55				(7	)
Epzicom/Kivexa			104				24				39				6				54				33				11				71
Combivir			104				(15	)			41				(18	)			44				(19	)			19				—
Trizivir			50				(23	)			23				(25	)			24				(13	)			3				(60	)
Agenerase, Lexiva			38				9				18				—				16				8				4				>100
Epivir			34				(20	)			11				(8	)			15				(19	)			8				(33	)
Ziagen			26				(7	)			11				—				10				—				5				(29	)
Valtrex			277				19				195				22				36				10				46				14
Zeffix			47				—				4				33				6				20				37				(6	)
Relenza			3				(97	)			2				(94	)			1				(96	)			—				—
Central nervous system			818				(4	)			547				(6	)			143				1				128				1
Lamictal			323				18				268				22				38				(3	)			17				—
Imigran/Imitrex			173				2				139				2				24				—				10				—
Seroxat/Paxil			127				(18	)			16				(47	)			31				(13	)			80				(7	)
Wellbutrin			97				(27	)			89				(30	)			3				—				5				—
Requip			58				(37	)			18				(69	)			31				27				9				>100
Treximet			8				—				8				—				—				—				—				—
Cardiovascular and urogenital			435				(5	)			251				(14	)			129				12				55				15
Avodart			92				33				55				38				28				19				9				50
Lovaza			67				—				66				—				—				—				1				—
Coreg			44				(78	)			43				(78	)			—				—				1				(100	)
Coreg CR			39				>100				38				>100				—				—				1				(100	)
Coreg IR			5				(97	)			5				(97	)			—				—				—				—
Fraxiparine			58				13				—				—				46				3				12				71
Arixtra			36				31				16				21				17				50				3				—
Vesicare			16				25				16				25				—				—				—				—
Levitra			13				18				13				18				—				—				—				—
Metabolic			285				(35	)			139				(44	)			73				(19	)			73				(23	)
Avandia products			194				(46	)			104				(54	)			49				(31	)			41				(33	)
Avandia			125				(51	)			72				(57	)			20				(40	)			33				(36	)
Avandamet			61				(33	)			25				(44	)			28				(23	)			8				(11	)
Bonviva/Boniva			56				47				36				38				18				60				2				—
Anti-bacterials			329				(1	)			39				(20	)			140				(2	)			150				7
Augmentin			129				(1	)			8				(47	)			57				—				64				13
Altabax			4				(20	)			4				(20	)			—				—				—				—
Oncology and emesis			117				(11	)			57				(24	)			41				6				19				12
Hycamtin			35				18				19				19				12				—				4				100
Zofran			31				(49	)			4				(84	)			16				(13	)			11				(29	)
Tykerb			22				75				11				20				8				>100				3				—
Vaccines			577				34				124				19				276				41				177				37
Hepatitis			167				23				66				43				72				3				29				35
Infanrix/Pediarix			167				13				49				(4	)			94				26				24				16
Fluarix, FluLaval			5				25				—				100				(1	)			—				6				—
Flu-prepandemic			34				—				—				—				35				—				(1	)			—
Cervarix			15				—				—				—				11				—				4				—
Rotarix			35				>100				—				—				10				33				25				>100
Boostrix			18				21				9				29				7				20				2				—
Other			228				(6	)			1				(67	)			81				19				146				(12	)
			4,923				(2	)			2,129				(8	)			1,598				4				1,196				4

Pharmaceutical turnover includes co-promotion income.

Issued: Wednesday, 23rd July 2008, London, U.K.		9

Regional pharmaceuticals including vaccines

		Q2 2008
		£m				CER%
USA			2,129				(8	)
Europe			1,598				4
Rest of World			1,196				4
Asia Pacific/Japan			464				—
Emerging Markets			563				15
			4,923				(2	)

As a result of the review of the strategic direction of the Group, the regional reporting structure within the Pharmaceuticals business has been realigned. The Group has also taken the opportunity to review the allocation of entities and costs between the Pharmaceuticals and Consumer Healthcare businesses. Comparative information has been restated onto a consistent basis and the effect of the restatement is available on the company’s website.

Q2 Pharmaceuticals turnover including vaccines update

Total pharmaceutical turnover for the second quarter fell by 2% to £4.9 billion. In the United States, turnover fell 8% to £2.1 billion, impacted by increased generic competition and a reduction in Avandia sales. Excluding these products US turnover grew 13%. In Europe, turnover was up 4% to £1.6 billion, with improving sales growth from vaccines and newer products. Sales in Emerging Markets were up 15% to £563 million and in Asia Pacific sales were level at £464 million.

Key product movements impacting turnover growth for the quarter:

•		Sales of Seretide/Advair, for asthma and COPD, were £964 million, up 6%. In the USA, sales grew 2% to £473 million. The asthma controller market in the USA has declined slightly year over year while the use of short acting inhalers such as albuterol has increased. GSK has recently focused its asthma sales force on communication of the newly revised treatment guidelines which recommend combination therapy for those asthma patients who use rescue inhalers such as albuterol daily. Use of Advair for treatment of COPD continues to grow, and in April GSK received FDA approval for the expanded use of Advair for reduction of exacerbations in COPD. Advair is the only currently available treatment approved for this use.
•		Vaccines sales grew 34% to £577 million, driven by strong US sales of hepatitis vaccines (up 43% to £66 million). Also contributing to sales growth this quarter were sales of GSK’s recently introduced pre-pandemic flu vaccine of £34 million. Q2 vaccine sales also benefited from the timing of certain shipments.
•		Sales of Lamictal grew 18% to £323 million in the quarter and sales of Valtrex grew 19% to £277 million. Sales of Lovaza, which was acquired by GSK in 2007, were £67 million for the quarter.
•		Global Avandia sales declined 46% in the quarter to £194 million, with the largest decline in the US market with sales down 54% to £104 million.
•		Generic competition to Wellbutrin (down 27% to £97 million) increased this quarter with the introduction of a generic version of the 150mg dose. Sales of Zofran (down 49% to £31 million) also continue to be impacted by generic competition.
•		Requip, for Parkinson’s disease/Restless Legs Syndrome, declined 37% to £58 million, following the introduction of generic competition in the USA in May. GSK received FDA approval for Requip XL, a once a day treatment for Parkinson’s disease, in June and will launch the product in July.
•		Coreg IR sales declined 97% to £5 million, due to generic competition in the USA. Sales of Coreg CR, which was launched last year, were £39 million.
•		Sales of Relenza, an anti-viral treatment for influenza were lower than the comparative quarter of 2007 at £3 million, reflecting the variable timings of tender orders from governments.

Issued: Wednesday, 23rd July 2008, London, U.K.		10

GSK’s late-stage pharmaceuticals and vaccines pipeline

The following table is provided as part of GSK’s quarterly update to show events and changes to the late stage pipeline during the quarter and up to the date of announcement.

Cardiovascular & Metabolic				USA		EU		News update in the quarter
Arixtra		Acute Coronary Syndromes		Filed		Approved
Volibris		PAH Class II/III		n/a		Approved		Approved in Europe on 25th April
Avandamet XR		Type II diabetes		Ph III		Ph III
Avandia + statin		Type II diabetes		Ph III		Ph III
Coreg CR + ACEi		Hypertension		Ph III		n/a		Filing under review
MIGU
Entereg		Post operative ileus		Approved		n/a		Approved in USA on 20th May
Avodart		co-Rx with a blocker		Approved		Approved		Approved in Europe on 18th April and in USA on 19th June
		Prostate cancer prevention		Ph III		Ph III
belimumab		Lupus		Ph III		Ph III
mepolizumab		HES		Ph III		Ph III
ofatumumab		RA		Ph III		Ph III
Neurosciences
Requip XL		Parkinson’s disease		Approved		Approved		Approved in USA on 17th June
Treximet		Migraine		Approved		n/a		Approved in USA on 15th April
Lamictal XR		Epilepsy		Filed		n/a		Response to FDA Approvable letter submitted on 10th July
Lunivia		Sleep disorders		n/a		Filed
Solzira		RLS		Ph III		Ph III
rosiglitazone XR		Alzheimer’s disease		Ph III		Ph III
almorexant		Primary insomnia		Ph III		Ph III		GSK entered agreement with Actelion on 14th July
Oncology
Tykerb/Tyverb		Refactory breast cancer		Approved		Approved		Approved in Europe on 13th June
		Adjuvant breast cancer		Ph III		Ph III		Neo-ALTTO study started on 12th May
		Head & Neck cancer		Ph III		Ph III
Rezonic/Zunrisa		CINV/PONV		Filed		Filed		Filed in USA on 29th May and in Europe on 2nd July
Promacta/Revolade		Short term ITP		Filed		Ph III		FDA ODAC unanimous vote in favour of the risk-benefit profile for short-term treatment in patients with chronic ITP. PDUFA extended to 19th September
		Long term ITP		Ph III		Ph III
		Hepatitis C		Ph III		Ph III
Armala		Renal cell cancer		Ph III		Ph III
Armala + Tykerb		Inflammatory breast cancer		Ph III		Ph III
elesclomol		Metastatic melanoma		Ph III		Ph III
ofatumumab		CLL / NHL		Ph III		Ph III

Issued: Wednesday, 23rd July 2008, London, U.K.		11

Respiratory				USA		EU		News updates in the quarter
Seretide/Advair		COPD		Approved		Approved		COPD exacerbation claim approved in USA on 30th April
Vaccines
Rotarix		Rotavirus prophylaxis		Approved		Approved		Approved in USA on 3rd April and positive ACIP on 25th June
Kinrix		DTaP-IPV prophylaxis		Approved		n/a		Approved in USA on 24th June and positive ACIP on 26th June
Cervarix		HPV prophylaxis		Filed		Approved		Response to FDA CR letter submitted in June. 6.4 year data published at ESPID on 14th May
Prepandrix		H5N1 pandemic influenza prophylaxis		Ph III		Approved		Approved in Europe on 15th May
Synflorix		S pneumoniae and NTHib prophylaxis		Ph III		Filed		Phase III data presented at ISPPD 8th -12th June. US filing under review
MAGE-A3		NSCLC		Ph III		Ph III
HibMenCY-TT		MenCY and Hib prophylaxis		Ph III		n/a
MenACWY		MenACWY prophylaxis		Ph III		Ph III
New		Influenza		Ph III		Ph III
generation flu		prophylaxis
Simplirix		Genital herpes prophylaxis		Ph III		Ph III

Issued: Wednesday, 23rd July 2008, London, U.K.		12

Turnover

Consumer Healthcare
Three months ended 30th June 2008

		Total								USA								Europe								Rest of World
		£m				CER%				£m				CER%				£m				CER%				£m				CER%
OVER-THE-COUNTER MEDICINES			443				(9	)			143				(30	)			134				4				166				11
Panadol franchise			78				11				—				—				17				14				61				10
Smoking cessation products			65				(15	)			47				(8	)			13				(33	)			5				(17	)
Tums			22				5				19				5				—				—				3				—
Cold sore franchise			19				20				9				50				9				14				1				(50	)
Breathe Right			18				42				10				—				5				100				3				—
alli			18				(76	)			17				(76	)			—				—				1				—
ORAL HEALTHCARE			298				3				50				(7	)			169				5				79				7
Aquafresh franchise			107				(3	)			18				(21	)			66				4				23				—
Sensodyne franchise			87				9				15				7				43				8				29				13
Dental healthcare			66				7				15				—				27				9				24				11
NUTRITIONAL HEALTHCARE			210				11				—				—				134				6				76				21
Lucozade			107				11				—				—				95				9				12				25
Horlicks			48				14				—				—				5				—				43				16
Ribena			43				5				—				—				34				3				9				13
			951				(1	)			193				(25	)			437				5				321				13

Q2 Consumer Healthcare turnover update

Overall Consumer Healthcare sales declined 1% to £951 million, with US sales down 25% due to lower reported sales of alli and continued competition to GSK’s smoking control franchise. European and Rest of World sales grew 5% and 13%, respectively. Excluding sales of alli and smoking cessation products, Q2 Consumer Healthcare sales grew 7%.

Key product movements impacting turnover growth for the quarter:

•		Panadol sales grew 11% to £78 million, aided by new consumer and physician communication campaigns.
•		GSK’s smoking cessation franchise continued to be impacted by strong competition from prescription treatments and retailers’ own-label brands in the USA, with overall sales declining 15% to £65 million. GSK has a series of initiatives underway to improve growth of these brands.
•		Sales of Breathe Right strips grew 42% to £18 million following further launches of the brand in the Rest of World markets.
•		Q2 sales of alli were £18 million impacted by lower demand from retailers for stock following a year-end promotion and an adverse comparison with Q2 2007 (sales of £76 million) when the product was launched. Based on retail market data, underlying demand for alli was estimated to be £23 million in Q2.
•		Sales of Sensodyne grew 9% to £87 million benefiting from the successful launch of Sensodyne Pronamel.
•		Sales benefited from strong growth of Lucozade up 11% to £107 million, aided by the introduction of Lucozade Alert, and Horlicks up 14% to £48 million.

Issued: Wednesday, 23rd July 2008, London, U.K.		13

Cash flow statement

Three months ended 30th June 2008

		Q2 2008				Q2 2007
		£m				£m
Profit after tax			1,307				1,355
Tax on profits			529				541
Share of after tax profits of associates and joint ventures			(15	)			(11	)
Net finance expense			118				44
Depreciation and other non-cash items			288				250
Increase in working capital			(52	)			(164	)
(Decrease)/increase in other net liabilities			(70	)			93
Cash generated from operations			2,105				2,108
Taxation paid			(732	)			(723	)
Net cash inflow from operating activities			1,373				1,385
Cash flow from investing activities
Purchase of property, plant and equipment			(345	)			(372	)
Proceeds from sale of property, plant and equipment			6				—
Purchase of intangible assets			(121	)			(29	)
Proceeds from sale of intangible assets			—				5
Purchase of equity investments			(5	)			(9	)
Proceeds from sale of equity investments			14				30
Purchase of businesses, net of cash acquired			(324	)			—
Investment in associates and joint ventures			(5	)			—
Interest received			92				78
Dividends from associates and joint ventures			2				2
Net cash outflow from investing activities			(686	)			(295	)
Cash flow from financing activities
Decrease/(increase) in liquid investments			793				(20	)
Proceeds from own shares for employee share options			—				43
Shares acquired by ESOP Trusts			(2	)			—
Issue of share capital			7				118
Purchase of own shares for cancellation			(1,390	)			—
Purchase of Treasury shares			—				(642	)
Increase in long-term loans			4,522				983
Net increase in/(repayment of) short-term loans			(571	)			(715	)
Net repayment of obligations under finance leases			(10	)			(13	)
Interest paid			(241	)			(150	)
Dividends paid to shareholders			(859	)			(785	)
Dividends paid to minority interests			(31	)			(11	)
Other financing cash flows			(39	)			14
Net cash inflow/(outflow) from financing activities			2,179				(1,178	)
Increase/(decrease) in cash and bank overdrafts in the period			2,866				(88	)
Exchange adjustments			17				(24	)
Cash and bank overdrafts at beginning of period			1,956				1,689
Cash and bank overdrafts at end of period			4,839				1,577
Cash and bank overdrafts at end of period comprise:
Cash and cash equivalents			4,988				1,894
Overdrafts			(149	)			(317	)
			4,839				1,577

Issued: Wednesday, 23rd July 2008, London, U.K.		14

Cash flow

Cash generated from operations was £2,105 million in Q2 2008. This represents a decrease of £3 million compared with Q2 2007. The operating cash flow is in excess of the funds needed for the routine cash flows of tax, capital expenditure on property, plant and equipment and dividend payments to shareholders, together amounting to £1,936 million. The purchase of businesses relates to the acquisition of Sirtris Pharmaceuticals Inc. at a cost of £324 million, net of cash acquired. Receipts of £7 million arose from the issue of new shares. In addition, £1,390 million was spent in the period on purchasing the company’s shares for cancellation. The increase in the cash position arose primarily from issuing $9 billion of bonds under the US debt programme.

Legal matters

The Group is involved in various legal and administrative proceedings principally product liability, intellectual property, tax, anti-trust and governmental investigations and related private litigation concerning sales, marketing and pricing which are more fully described in the Legal proceedings note in the Annual Report.

At 30th June 2008, the Group’s aggregate provision for legal and other disputes (not including tax matters described under ‘Taxation’ on page 25) was £1.1 billion. The ultimate liability for legal claims may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement negotiations.

Significant developments since the date of the 2007 Annual Report are as follows:

With respect to the Group’s settlement agreement with Mylan related to Paxil CR, Mylan was permitted to and entered the market for all strengths of Paxil CR in May 2008.

In July 2008, two actions were filed against the Group, one by a purported class of direct purchasers and another by a purported class of indirect purchasers, in the US District Court for the Eastern District of Pennsylvania. These actions allege anti-trust violations related to the Group’s petitioning activity before the FDA regarding Flonase. These actions are in their early stages.

With respect to the remaining civil lawsuits brought by ten states and several New York counties against the Group and other drug companies regarding the process for reporting the ‘average wholesale price’ (AWP) for drugs reimbursed by Medicaid, a joint trial was held in the State of Alabama’s case against the Group and Novartis. On 1st July 2008, the Alabama jury awarded a verdict against the Group for $81 million for compensatory damages and interest but declined to award any punitive damages. The Group intends to appeal the verdict.

With respect to the complaint filed by Biota Holdings Limited in the Victorian Supreme Court in Australia alleging that the Group had failed to fulfil its obligations for Relenza (zanamivir), the parties held a mediation meeting on the 17th and 18th July and reached agreement on a settlement. Under the terms of the settlement, GSK admits no liability but will make a payment of AUD 20 million (£10 million) to Biota.

With respect to the Paxil Securities Litigation, the US Court of Appeals for the Second Circuit affirmed on May 9, 2008 the District Court for the Southern District of New York’s dismissal of the plaintiffs’ complaint. As the plaintiffs did not seek review from the US Supreme Court of the Second Circuit’s decision, the matter is now closed.

As previously reported in the Q1 2008 Results Announcement, in April 2008 an action was filed against Biovail and GSK by a purported class of direct purchasers in the US District Court for the District of Massachusetts alleging anti-trust violations related to the enforcement of Biovail’s Wellbutrin XL patents. The action is in its early stages.

Developments with respect to tax matters are described in ‘Taxation’ on page 25.

Issued: Wednesday, 23rd July 2008, London, U.K.		15

Income statement

Six months ended 30th June 2008

		Business
		performance								Restructuring				Statutory				H1 2007
		H1 2008				Growth				H1 2008				H1 2008				(restated)
		£m				CER%				£m				£m				£m
Turnover:
Pharmaceuticals			9,690				(3	)							9,690				9,545
Consumer Healthcare			1,870				3								1,870				1,721
TURNOVER			11,560				(2	)							11,560				11,266
Cost of sales			(2,674	)			5				(198	)			(2,872	)			(2,446	)
Gross profit			8,886				(4	)			(198	)			8,688				8,820
Selling, general and administration			(3,485	)			(5	)			(56	)			(3,541	)			(3,514	)
Research and development			(1,582	)			2				(18	)			(1,600	)			(1,515	)
Other operating income			355												355				304
Operating profit:
Pharmaceuticals			3,854				(4	)			(270	)			3,584				3,785
Consumer Healthcare			320				(8	)			(2	)			318				310
OPERATING PROFIT			4,174				(4	)			(272	)			3,902				4,095
Finance income			178												178				135
Finance expense			(382	)							(2	)			(384	)			(217	)
Share of after tax profits of associates and joint ventures			14												14				26
PROFIT BEFORE TAXATION			3,984				(7	)			(274	)			3,710				4,039
Taxation			(1,140	)							69				(1,071	)			(1,151	)
Tax rate %			28.6	%											28.9	%			28.5	%
PROFIT AFTER TAXATION FOR THE PERIOD			2,844				(8	)			(205	)			2,639				2,888
Profit attributable to minority interests			46								—				46				41
Profit attributable to shareholders			2,798								(205	)			2,593				2,847
			2,844								(205	)			2,639				2,888
EARNINGS PER SHARE			52.9p				(3	)							49.0p				51.0p
Diluted earnings per share			52.5p												48.7p				50.4p