GlaxoSmithKline PLC

LSE:GSK

Earnings Call Transcript 2021-Q2

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the analyst call on the GSK Second Quarter 2021 Results. I will now hand you over to Iain Mackay, CFO, who will introduce today's session.

[Iain James Mackay, CFO & Executive Director]

Good morning and good afternoon. Thank you for joining us for our second quarter 2021 results, which were issued earlier today. You should have received our press release and can view the presentation on GSK's website. For those who are not able to view the webcast, slides that accompany today's call are located on the Investors section of the GSK website. Before we begin, please refer to Slide 2 of our presentation for our cautionary statements. Our speakers today are Emma Walmsley, Luke Miels, Deborah Waterhouse, Dr. Hal Barron, Brian McNamara and myself, Iain Mackay. Joining us for the Q&A portion of the call will be Roger Connor and David Redfern. We request that you ask only a maximum of 2 questions so that everyone has a chance to participate. Our presentation will last for approximately 30 minutes in order to maximize the opportunity for questions. And with that, I'll hand the call over to Emma.

[Emma N. Walmsley, CEO & Director]

Thank you, Iain, and a very warm welcome to you all. We're pleased to report a strong financial performance and continued progress against our strategic priorities this quarter. Second quarter sales and adjusted EPS were up 15% and 71%, respectively at CER. These excellent results were driven by a combination of strong double-digit growth in New and Specialty Pharma products; a significant increase in Vaccine sales, reflecting both an improving picture for vaccination rates and a major sales contribution from our pandemic adjuvant; good growth in Consumer Healthcare, with double-digit growth in 6 of the 9 power brands; and continued discipline in control of costs. As expected, the quarter did benefit from a favorable comparison to the second quarter last year, which was heavily disrupted by the pandemic. And while further disruption cannot be ruled out, we are seeing positive momentum, which we expect to continue through the second half of the year, assuming a second half backdrop of improving demand for adult vaccinations. And normalizing health and consumer trends in key markets, we believe we are likely to deliver adjusted EPS at the better end of our guidance. I just want to remind you that this guidance excludes any contribution from COVID-19 solutions, which we expect to add between 4% and 6% to our adjusted EPS in '21. Alongside financial performance, we continue to make good progress in R&D and our strategic delivery. Among our key assets, we completed the filing of long-acting cabotegravir for prevention of HIV and we announced positive headline results for all five Phase III studies of our promising specialty medicine, daprodustat. Very importantly, we also continued to strengthen the pipeline this quarter, securing three exciting new collaborations in HIV, Immuno-oncology and Immuno-neurology. And lastly, this quarter also saw us lay out our new growth outlook for GSK and the proposed demerger of Consumer Healthcare. Delivering scale health impact and maximizing value for shareholders are at the core of these plans, and we've received widespread support from shareholders for them, together with a clear message to focus on execution and successful delivery. We are all strongly committed to doing so. Progress for this quarter is reflected across all 3 of our strategic priorities. In innovation, we continue to build a high-value pipeline across prevention and treatment of disease through organic and inorganic delivery. In performance, improved commercial execution is driving strong growth in New and Specialty Pharma products. For Shingrix specifically, we're clearly seeing the beginnings of a recovery in performance as COVID vaccination programs amongst older populations near completion. The U.S. new-to-brand prescriptions for Shingrix were up 73% in the quarter, and we saw good performance across the consumer business with the exception of sustained weakness in cold and flu in a few specific areas where consumer trends haven't yet returned to normal. And on trust, we continue to maintain leadership in ESG, as evidenced by new index ratings. We recently signed us principal partner for COP26 and continue to progress our environmental commitment to be net 0 in nature positive by 2030. As you heard at our investor update, the scale of the changes we've made in the last four years is unprecedented to improve performance, strengthen capabilities and prepare GSK for a new future. Our clear priority is to unlock the potential of two world-class businesses, and in so doing, maximize value for shareholders. With the platform we now have for GSK, we expect to deliver highly competitive sales and operating profit growth in the next five years, a step change in expected performance. And we aim to achieve sales of more than GBP 33 billion by 2031, all underpinned by an R&D focus on the power of the immune system, a portfolio shift to vaccines and specialty medicines to prevent and treat disease, and impacting the life of 2.5 billion people over the next 10 years. And through the proposed demerger, we'll create a new category leading Consumer Healthcare business, serving over 100 markets with annual sales in 2020 of GBP 10 billion, driven by brands and innovation to deliver better everyday health. This business has strong prospects for sustainable sales and profit growth, high cash generation and to deliver attractive returns for shareholders. So let me now hand over to the team to talk you through this quarter's performance in more detail. Luke, first, over to you.

[Luke V. Miels, President of Global Pharmaceuticals]

Thanks, Emma. So we continue to make progress on commercial execution and competitiveness in the quarter against a complicated external environment due to COVID. The strong in-market performance I highlighted in the recent quarters for products such as Trelegy, Nucala and Benlysta has continued, driving growth of New and Specialty Pharma products were 25% in the second quarter and 14% in the half year. We also saw a good recovery in the quarter in Meningitis and established vaccines. For today, I want to focus my remarks on the performance and growth prospects for Shingrix and oncology conference. For Shingrix, our confidence in recovery has been tied to the prioritization and successful rollout of COVID-19 mass vaccination, particularly in the U.S. Underlying trends illustrated Shingrix volumes are expanding as we move into the second half of the year. Overall, despite a slower rate of recovery in ex U.S. markets, we anticipate a strong half Q global performance from Shingrix with the potential for slight growth in sales on a full year basis. In the U.S., with nearly 80% of adults aged 50 plus now fully vaccinated for COVID, we've now seen a related increase in weekly NBR volumes, which have grown 73% since the start of quarter two. In the coming months, it's going to be important for the recovery of Shingrix in the U.S. as our updated research shows that around half of those eligible to receive Shingrix have indicated that they expect to get it within one to three months following the completion of their pandemic vaccine series. We've been implementing activities to drive this recovery with a comprehensive multichannel DTC campaign and by focusing our maxim and relationships with U.S. retailers, particularly as we focus on the flu vaccination season, where adult vaccinations become increasingly top of mind for consumers. And we're starting to see similar trends in Germany where volumes are improving as more adults complete their COVID-19 vaccination series. And in China, we continue to make steady progress in the private pay market with Shingrix now in 50 cities. Overall, though, we're seeing a slower rate of shingles recovery ex-U.S. due to the different rates of deployment of COVID vaccinations. Looking ahead, we continue to roll out in new markets, including the U.K. And we're now benefiting from an unconstrained supply position. Now this is going to support the expected significant step-up in Shingrix sales in 2022, assuming a continuation of the improved operating environment as well as our ambition to double revenues in the next 5 years, protecting more than 100 million adults. I now move to oncology. Zejula had a strong performance despite the impact of COVID on the ovarian cancer market. Sales were up 38% versus Q2 '20, and we're pleased that in the U.S., we are significantly leading a new patient starts with 59% of patients done to a part receiving Zejula. We're also seeing progress in U.S. patient awareness, which has significantly increased from 29% in April 2020 to almost 50% in June 2021. And it decreased pleasingly in the watch and wait usage now at 57%, although there are room for improvement. Unfortunately, with the backdrop of COVID, there's still a 20% decrease in ovarian cancer diagnosis. And we know that with delayed diagnosis, there are less patients getting to bulking surgeries. And therefore, less patients going on to maintenance about six months later. So we expect that this impact will continue until the market returns to pre-pandemic levels. For Blenrep, we're seeing encouraging progress despite competitive entrants. And we're especially pleased to see demand increasing with community oncologists in the U.S. and also Germany. We had a very robust clinical program designed to continue to improve the product profile of Blenrep through various combinations, optimized dosing and scheduling. On this slide, we have outlined the patient opportunity and the associated clinical trials that align to earlier lines of treatment. The outcome of these trials will evolve our strategy, including potential use of novel combinations and the substantial opportunity we could see in second line, where we have dose-optimized pivotal trials. And with that, I'll pass over to Deborah for an update on the HIV portfolio.

[Deborah Jayne Waterhouse, Chief Executive Officer of ViiV Healthcare]

Thank you, Luke. Second quarter HIV sales rebounded strongly, growing by 14% and more than reversing the 11% decline that we reported in Q1 due to COVID impacts and a strong 2020 comparator. Growth in the first half of the year was 1%. Strong commercial execution continues to drive the performance of Dovato, particularly in the switch market in the U.S. and Europe. Dovato and Juluca are on track to deliver GBP 1 billion in sales this year. Our recently launched innovative medicines, including Rukobia, now accounts more than 25% of our total sales. A highlight this quarter was the market share of dolutegravir date regimens in Europe, which for the first time exceeded 30%, driven by Dovato. Share continues to hold firm in the U.S. Turning to our portfolio of long-acting injectables. In January, we received FDA approval for Cabenuva, the world's first long-acting injectable treatment for HIV. It is also approved in Europe under the brand name of Vocabria/Rekambys and dosing every two months. We anticipate approval of two monthly dosing in the U.S. by year-end and launch in early 2022. Early signals are positive with strong brand recognition from people living with HIV and high levels of physician attendance at our virtual launch meetings, which we believe will translate into increasing intent to prescribe. As with any new class of medicine, Cabenuva will take time to build. And furthermore, the COVID backdrop is significantly constraining switch activity, particularly where a patient needs to be at a physician's office. We're confident about its potential to transform the HIV treatment paradigm. And with an anticipated 5-year head start over competitors, we expect Cabenuva to capture a leading share of a long-acting treatment market that could reach GBP 4 billion to GBP 5 billion by 2030. This quarter, we also made significant progress with cabotegravir long-acting for prevention. We've completed the rolling submission with the FDA and anticipate launch in early 2022. If approved, we believe cabotegravir long-acting will present a new and compelling option in the PrEP market, dosed every two months with efficacy that is superior to the current standard of care. As for the treatment market, we believe the long-acting PrEP market could ultimately reach GBP 4 billion to GBP 5 billion in value, and cabotegravir long-acting is poised to play a leading role. Last week at the International AIDS Conference, we presented week 48 data from the Phase III SALSA study, which demonstrated that Dovato is a compelling option irrespective of the type of 3-drug regimen a patient may be switched from. We also presented the STAT study which shows that Dovato is acceptable for same-day test and treat. For Cabenuva, we presented the CUSTOMIZE data, which not only shows that Cabenuva is applicable in a range of health care settings but the 97% of people enrolled in the study prefer the long-acting injectable over daily oral therapy. And in PrEP, we presented more data from the pivotal HPTN 084 women study, demonstrating that cabotegravir long-acting is the first and only long-acting injectable for PrEP to demonstrate superior efficacy and comparable safety to daily ores in preventing HIV acquisition in a diverse population. Taken together, I'm delighted with the progress we're making in HIV in both returning the franchise to growth and building our portfolio of innovative and pioneering long-acting medicines. I would like to turn the call next to Hal.

[Hal V. Barron]

Thanks, Deborah. I'm going to provide a short update on some recent news flow since the June event and highlight some of the upcoming pipeline milestones over the next 18 months. Starting with daprodustat. We recently announced positive headline results from each of the five trials in the ASCEND clinical program. As a reminder, the ASCEND program recruited over 8,000 patients from both the dialysis and non-dialysis populations, and was designed to demonstrate the safety and efficacy of daprodustat as a novel oral treatment for patients with anemia due to chronic kidney disease. We're very pleased with the results from the ASCEND-ND and ASCEND-D studies, which met the co-primary endpoints on both safety and efficacy. Daprodustat demonstrated an improvement in hemoglobin levels in untreated patients and maintain hemoglobin levels in patients previously treated with erythropoietin-stimulating agent, a standard treatment option in patients with amenia chronic kidney disease. Importantly, the two cardiovascular outcome study, ASCEND-ND in nondialysis and ASCEND-D for dialysis patients, both demonstrated that daprodustat was non-inferior when compared with erythropoletin stimulating agents in the risk of Major Adverse Cardiac Events, or MACE. Additional analysis are ongoing, and we aim to present these data at a medical conference later this year. Moving to business development. As I highlighted in June, our strategy has been to leverage business development to augment our organic pipeline, and we've made some recent progress on those with three deals, which I'll cover briefly now. First is our global collaboration with Alector for two clinical stage first-in-class monoclonal antibodies targeting sortilin for neurodegenerative diseases. This collaboration brings together Alector's leading immuno-neurology expertise with our focus on the science of the immune system and human genetics and proven late-stage drug development capabilities. The lead asset AL001 is currently recruiting a Phase III trial for people with a progranulin gene mutation who have frontal temporal dementia or are at risk for developing FTD. Both antibodies AL001 and AL101 are designed to elevate progranulin levels by blocking the sortilin receptor. Progranulin is a key regulator of immune activity within the brain through modulating lysosomal function. There are compelling genetic links to multiple neurodegenerative disorders, including FTD, Parkinson's and Alzheimer's disease. And these assets could offer a new approach to the treatment of patients with these considerable unmet need. Second is our collaboration with iTeos for an anti-TIGIT monoclonal antibody in Phase I development, which I highlighted at our investor event in June. This deal complements our focus on the CD226 axis, where we now have an anti-TIGIT in anti-CD96 and an anti-PD rig, all of which can be combined with our PD-1 and inhabitor Jemperli. Preclinical data, human genetics and recent randomized clinical trial all highlight the benefit for moduling CD226 axis, which we believe could deliver transformational medicines for patients and usher in the next generation of vital medicines. Finally, the recent Halozyme deal announced by Deborah and the ViiV team, which offers the opportunity for ultra long-acting regimens containing cabotegravir and other lead pipeline assets. I also want to remind everyone that these three deals are not factored into the 2031 sales ambition we issued in June and would represent upside if successful. Lastly, this slide summarizes key data we expect to report over the next 18 months. As you can see, we anticipate a large number of pivotal data readout in 2022 as well as some important data points in the second half of 2021. Among our specialty products, I've already spoken about the five positive Phase III studies with daprodustat, which we recently reported. We also have a number of data readouts on Blenrep on next 12 to 18 months, including pivotal readouts looking to demonstrate a progression-free survival benefit compared to standard of care for patients with multiple myeloma. Later this year, we should have data from the proof-of-concept DREAMM-5 substudy of low-dose Blenrep in combination with the gamma secretase inhabitor for the treatment of patients with multiple myeloma. We are investigating a number of strategies to optimize the dosing schedule for Blenrep, but we hope that this substudy will maintain the efficacy of Blenrep but at a lower dose, which could reduce or delay the incidence of ocular events and support the potential use of Blenrep in earlier lines of treatment. As I previously mentioned, not only is this study important for advancing Blenrep's potential, but it could also serve as a potential additional proof point for our functional genomics strategy. Other pivotal readouts on key assets in 2022 include otilimab in patients with rheumatoid arthritis, as stated from several important vaccine candidates, including RSV for older adults, RSV maternal vaccine and data from our MenABCWY pivotal studies. Finally, we should receive a number of readouts from our COVID vaccines and therapeutics over the remainder of 2021, including pivotal data from our vaccines collaborations with Medicago and Sanofi and a Phase II data from the OSCAR trial of otilimab and the COMET-PEAK study with sotrovimab. With that, let me hand it over to Brian.

[Brian McNamara]

Thanks, Hal. Now turning to Consumer Healthcare in Q2. Continuing sales, excluding brands divested and under review, were strong, up 7% at constant exchange rates, which included a 2% drag from retailer stocking last year ahead of the systems cutover in North America, which reversed in the following quarter. Our Q2 results were supported by an easier comparator given the destocking in the same quarter last year following the pantry loading in Q1. The 2-year CAGR removes the distortion from the pandemic and was up 3% in Q2, which would have been up 4%, excluding the impact of the unusually weak cold and flu season. Let me talk specifically about our category performance in the second quarter. In oral health, sales increased 12% with a 2-year CAGR of 5%, demonstrating good execution and successful innovations, with Sensodyne and gum health more than offsetting lower growth in denture care. Pain relief saw Q2 sales up 13% and delivered a good 2-year CAGR up 5%. In vitamins, minerals and supplements, sales declined 6% as we cycled the demand spike in the prior year. Although the 2-year CAGR was up 6%, including partially -- particularly good growth in Centrum, Emergency and Caltrate. Digestive health and other sales were up 3% in the quarter with a flat 2-year CAGR. Performance in this category was mixed, with strong performance of smokers health products and digestive health brands, but continued weakness in brands more dependent on impulse purchase such as Chapstick. Respiratory sales increased 6% in the quarter and the 2-year CAGR was down 3%. This reflected very different results in the two subcategories with strong allergy performance and continued weakness in cold and flu. Don't forget that given seasonality, Q2 is a smaller quarter for the cold and flu business. Our focus on innovation continued, and we saw further positive momentum with Sensodyne sensitivity and gum as well as good performance from new innovations, such as Centrum Essentials in Brazil and Pronamel Intensive Enamel Repair Whitening in the U.S. In e-commerce, we grew approximately 30%, and this was 7% of sales. Our ongoing investment in digital capabilities positions us well for growth. And with continued strong results in the last month, particularly in the U.S., we remain confident in our ability to outperform in this key channel. Turning to our power brands, 6 of the 9 brands gained or held share, with 6 brands reporting double-digit growth in Q2. And collectively, power brands were up double digits. Additionally, we saw a double-digit growth in our continuing business in emerging markets with particularly strong performance in India and China. Our full year sales outlook remains unchanged. Our separation and integration plans all remain firmly on track. The commercial integration is now fully complete. Our manufacturing site cutover is well underway, and separation activity is progressing well and to plan. Importantly, all of our guidance for 2022 shared in 2018, including margin and synergies, remain unchanged. Finally, I'd like to take a minute to remind you of who we are and what we have created through the two largest Consumer Healthcare transactions in the last 6 years. A separation will be the first listed 100% focused Consumer Healthcare company as well as the global leader in consumer health care, operating in a sector with compelling fundamentals and leadership positions in categories now more relevant than ever. We have a fantastic portfolio of brands and strong capabilities to drive sustainable market outperformance. And I'm excited to share more information with you on this incredible business as we move closer to separation. With that, I'll hand it over to Iain.

[Iain James Mackay, CFO & Executive Director]

Thanks, Brian. As I cover the financials, references to growth are at constant exchange rates, unless stated otherwise. On Slide 18 is a summary of the group's results for Q2 and the half year. In Q2, turnover was GBP 8.1 billion, up 15%. And adjusted operating profit was GBP 2.2 billion, up 43%. Total earnings per share was 27.9p, down 28%. While adjusted earnings per share was 28.1p, up 71%. In the year-to-date, turnover was GBP 15.5 billion, down 1%. And adjusted operating profit was GBP 4 billion, up 3%. Total earnings per share was 49.4p, down 27%. And adjusted earnings per share was 51p, up 2%. We generated free cash flow of GBP 313 million in year-to-date, in line with our expectations. On currency, there was a headwind of 9% on sales and 25% in adjusted EPS, in particular due to the strengthening of sterling against the U.S. dollar relative to the second quarter of 2020. Slide 19 summarizes the reconciliation of our total to adjusted results. The adjusting items of note for the quarter were on disposals, significant legal and other, which reflected a GBP 325 million tax credit due to a significant positive revaluation of deferred tax assets in the U.K. resulting from the Q2 enactment of the 2021 U.K. finance bill. My comments from here onwards are on adjusted results, unless stated otherwise. Key drivers of revenue and profits for the group in the second quarter compared to the prior year are set out on Slide 20. Revenues grew 15% overall. Excluding revenues from our COVID Solutions, sales were up 11%. The pandemic adjuvant sales of GBP 258 million represent delivering around 2/3 of contracted volumes with the U.S. and Canadian governments. The positive operating leverage from higher sales in the quarter was bolstered by continued focus on cost control and the benefits of restructuring across the group. This was partly offset by increased investment in R&D, up 6% as expected, and additional investment behind product launches with SG&A up 5%. The resulting Q2 margin was 26.7% and the year-to-date margin was 26%. We expect R&D growth to be around 10% in the full year, with the first half increase of 5%, reflecting phasing, particularly in 2020. Moving to bottom half of the P&L, I'd highlight that interest expense was GBP 185 million compared to GBP 227 million last year. The decrease is primarily as a result of reduced interest expense from lower debt levels and favorable movements in foreign exchange. On share of associates, in May, we sold our stake in Aviva, which was the main contributor to this income line. The effective tax rate of 18.4% was in line with expectations and reflects the timing of [indiscernible] -- in the tax authorities. And finally, lower noncontrolling interest reflected reduced allocation of Consumer Healthcare JV and ViiV Healthcare profits. Next, I'll cover free cash flow for the quarter before going into more detail and performance drivers in each business. In the first half of the year, we generated GBP 313 million of free cash flow. An improving cash flow performance continues to be a constant focus for the team. The significant step down in the year-to-date was as expected and in line with our full year outlook. In the first half, increased adjusted operating profit and lower dividends to noncontrolling interests were more than offset by adverse timing of returns and rebates and taxes compared to the first half of 2020, an increase in working capital, adverse exchange impacts and increase of intangible assets as well as reduced proceeds from disposals of intangible assets with the Consumer Brands disposal program now complete. Turning to performance of the Pharma business on the next slide. Overall, revenues grew 12%, driven by strong growth in new and specialty medicines, a prior year comparator that was impacted by destocking and favorable U.S. return on rebate adjustments in the quarter. Impact of prior year destocking and the prior period RAR adjustments, including the impact of lower-than-expected Medicaid usage on a number of products, accounted for approximately 3 and 4 percentage points of growth, respectively. In the year-to-date, revenues grew 2%, and our full year outlook remains unchanged. The Established Pharma portfolio was flat. Within this, Established Respiratory grew 6%, while the rest of the Established Pharma portfolio stands at 7%. We still expect Established Pharma sales to decline high single digits in the full year. The Pharma operating margin was 29.3% in Q2 and 29.1% for the first half. The increase in Q2 primarily reflected the positive operating leverage from the increased sales as well as continued tight cost control and restructuring benefits. R&D expense grew 3% in the quarter and year-to-date R&D spend also grew 3%, which reflected phasing of spend, particularly in 2020. And we expect a higher growth rate in the third quarter. Slide 24 gives you an overview of Vaccines performance with overall sales growth of 49%. Excluding pandemic adjuvant revenue, sales growth was 24%. And year-to-date, total vaccines revenues were flat and down 9% excluding the pandemic adjuvant sales. In the quarter, we saw improving pediatric and adolescent vaccination rates. Adult vaccination rates, although improving, continue to be affected by COVID-19 vaccination deployment. This resulted in Shingrix sales growing 1%, while Meningitis sales grew 46%; and Established Vaccines 28%. The operating margin was 32.7%. The increase in operating profit and margin primarily reflected the positive operating leverage from sales growth, including the pandemic adjuvant sales mix. R&D spend increased 34% as we continued investment behind our RSV and Meningitis development programs. Increased SG&A reflected investment to support -- The year-to-date operating margin in Vaccines was 29.3%. Recent trends in the U.S. are gaining strong recovery of pediatric, adolescent and old adults vaccines are very encouraging. There remains, however, uncertainty as to the impact of COVID-19, the speed of deployment of mass immunization programs and easing of pandemic conditions. This is notable in other key markets across the group, such as Germany and China. With these dynamics in mind, and excluding pandemic adjuvant sales, we expect Vaccines revenues in the full year to be broadly flat. Turning to Slide 25. Q2 revenues in Consumer Health care increased 7%, excluding brands either divested or under review. Including those brands, turnover grew 3%. And Brian outlined the main drivers of this area. In the year-to-date, revenues, excluding brands either divested or under review decreased 2%. This reflected the continued negative effects of COVID-19 consumer behavior, which has significantly impacted the cold and flu category, and to a lesser extent, denture care. The operating margin for Q2 was 21.7%, up 50 basis points at CER versus last year. And this included 110 basis points negative impact from divestments. The year-to-date operating margin was 22.4%. The strengthening of sterling against the U.S. dollar in 2021 year-to-date, given the scale of the U.S. consumer business, has had a significant impact on operating margins. We remain on track to deliver mid- to high 20s operating margins in 2022 at 2017 exchange rates. For consumer, in the full year, excluding brands divestiture under review, we continue to expect low to mid-single-digit percent revenue growth. I'll close with consideration for our 2021 outlook. We're maintaining our full year guidance for adjusted EPS to decline mid- to high single digits. This excludes any contribution from COVID-19 solutions. Our strong Q2 performance gives us confidence that if we continue to see improvement in demand for adult vaccinations through the balance of the year as well as health care systems and consumer trends approaching our [indiscernible] in the second half in our key markets, we're likely to deliver adjusted earnings per share towards the better end of our guidance range. However, as the pandemic landscape evolves, we continue to see global differentiation in the pace of deployment of COVID-19 vaccination programs and the speed of economic recovery. As a result, there remains potential for further pandemic disruption, and we believe it's premature to change guidance. [indiscernible] specifically, were some one-off items in the comparative period, which will adversely impact the next quarter. These include a Blenrep recognition of prelaunch inventory in pharma R&D of slightly more than GBP 50 million and a onetime benefit from the restructuring of postretirement benefits of a similar magnitude, which was primarily in SG&A. With these one-off items in mind, we expect earnings growth in the second half to be weighted towards Q4. Turning specifically to contribution from COVID-19 solutions. The positive impact on first half adjusted earnings per share was approximately 7 percentage points. As mentioned earlier, we fulfilled around 2/3 of contracted volumes for pandemic adjuvant and expect that the full year contribution will be approximately 4 to 6 percentage points of adjusted EPS growth. The outcome within that range is dependent upon pandemic adjuvant contracting for '22 and the resulting potential charges within cost of goods sold as we continue to manufacture for this potential. As part of keeping you informed of our progress in executing against our strategy, in the coming months, we'll host business and pipeline information sessions covering among other topics, growth drivers in HIV, an updated outlook for daprodustat and early next year, we'll provide insights on our General Medicines product area. We hope you'll be able to join us for these events. With that, operator, we're ready for Q&A.

[Operator]

[Operator Instructions] And the first question comes from the line of Andrew Baum of Citi.

[Andrew Simon Baum]

One question to Deborah and the second for Hal. So for Deborah, the translocation inhibitor that you're about to take into the clinic for HIV, you highlighted it as one of the long-term growth strategies. How confident are you in the freedom to operate on the intellectual property given I believe it's a prodrug of Merck's islatravir, which has a very extensive passenger state. And last time I looked, I couldn't see much in terms of ongoing activity between you and the U.S. PTO on securing a patent for your compound. So that's the first question. The second on Alector. Hal, I understand the interest in progranulin from an FTD point of view, but that's sort of relatively modest indication. So my question is, how are you thinking about selecting patients in the larger indications, Alzheimer's, Parkinson's, given that some of the surrogate markets we've seen a questionable significance in those indications.

[Emma N. Walmsley, CEO & Director]

Well, thanks, Andrew. I think you directed your question very directly. So Deborah, why don't you kick off, and then Hal.

[Deborah Jayne Waterhouse, Chief Executive Officer of ViiV Healthcare]

Sure. So Andrew, as we talked about at the business investor update, we have a strong pipeline, which is core -- at its core has integrase inhibitors, which we believe will form the heart of any 2-drug regimen, either oral or long-acting moving forward. We have a number of products in the pipeline of which we have an NRTTI. But obviously, we have others as well Capsid [ vaNab ] maturation inhibitor, et cetera. And our plan is to progress all of those medicines to the point at which we will make choices around which of them is the strongest moving forward. So that's all I want to say on where we are today with that pipeline. I think we talked about it in more detail at the [ BIU ]. But I guess, for us, our objective is to have maximum shots on goal. And also with the help of our Halozyme partnership, to be able to deliver for people living with HIV longer and longer-acting medicines.

[Emma N. Walmsley, CEO & Director]

Hal?

[Hal V. Barron]

Thank for the question. it's a good question. The genetics really give us extreme confidence, I think, in the FTD progranulin gene-deficient patients and a number of diseases, both from the sort of biology of non-progranulin FTD as well as potential ALS, PD, we know is a lysosomal disease from a lot of genetic data and other sources. And even Alzheimer's has been -- there's been some genetics suggesting that progranulin may be playing a role. So that's why we're excited. Of course, neurodegeneration is a massive unmet medical need where the number of patients with these terrible disease is growing and the treatment options are limited. So we're very excited about this. You point out that in drug development for ALS, to some extent, more so for PD and a lot -- very clear in AD that the Phase II circuits haven't been as compelling as I'd like them to be. I think there's a lot of opportunity using genetics to identify subgroups. We're exploring a lot of different markers of lysosomal function of immune activation. Imaging data can also help and other biomarkers like NFT and other sort of neuro markers of degeneration are being explored. And we're hoping to field advances over the next few years to enable some of those to be used for Go/No Go criteria. But I think to really be specific, I think it's the massive unmet medical need, the genetics and our confidence that with stratification variables in these biomarkers that are emerging, we'll be able to make informed decisions when we progress these things through Phase II.

[Operator]

The next question is from the line of Simon Mather of Exane.

[Simon Mather, Pharmaceutical Equity Analyst]

I've got two as well. And first one on the pipeline. And secondly, on the opportunities of COVID-19. And just on the pipeline, on daprodustat, obviously a less than straightforward advisory committee meeting for Astra and daprodustat. I mean, can you believe -- I mean, can you -- you can maybe comment if you believe you've got the right dosing to reduce the risk of [indiscernible] and where any imbalance in the strong [indiscernible] in your trials? And does your -- do the issues that AstraZeneca faced in the AdCom in any way change your commercial plans, given your lack of a renal franchise. And then just secondly, on COVID-19 solutions, initially, I was under the impression it was nonprofit, but clearly a strong contribution for the quarter. Could you maybe help us understand the large opportunity you could have? Because obviously, I think the last count, Sanofi had signed up 2 billion doses for 2021, 2022. And sort of any help here with respect to the doses about [ 17/16 ] million relates to could potentially help us forecast the strong growth potential in 2022 and beyond.

[Emma N. Walmsley, CEO & Director]

Thanks, Simon. Well, I think there's a lot of questions across the industry about the outlook for the COVID market in '22 and beyond. But we'll come to Roger in a moment to comment on where we're at and how we see things evolving. But you're obviously right that we also depend on our partners' supply even more than our own. Let's first come to Hal on dapro dosing. And I think because, Luke, as well, if you would like to make some comments [ silling ] on our proven commercial momentum more generally on how you see plans forward and approach commercially to -- but Hal first, then Luke, then Roger.

[Hal V. Barron]

Yes. Thanks for the question. I'm not going to comment too much on the roxa ADCOM. But let me just say that we're very proud of the program we ran. It's a very robust program had over 8,000 [indiscernible] treated for up to almost 4 years, 2.75 years in a variety of patients, as you know, dialysis, nondialysis, incident dialysis patient trial as well. We looked to quality of life, et cetera, et cetera. The study is really very robust but also because these were single trials where they were powered for -- in the ASCEND-D and the ASCEND-ND for noninferior and MACE. And we've looked at the primary endpoint. We haven't looked at all the -- both on safety and efficacy, but we haven't done all the subgroup analysis you want -- you mentioned, but we will be doing that later and hopefully presenting that at a major medical meeting ideally later this year. What I can say is that the hemoglobin targets that we were pursuing as well as the interactions with regulators give us a fair amount of confidence that we've really designed what we think is a very large, simple but robust program and gives us a clear understanding of both the safety and efficacy of the drug.

[Emma N. Walmsley, CEO & Director]

Luke?

[Luke V. Miels, President of Global Pharmaceuticals]

Yes. I think from a commercial perspective, I hope the results that you're seeing today give you confidence and the evidence that we can commercialize a diverse set of specialty care products in what I think a competitive segment. I think from a forecasting point of view, it still remains quite dynamic. It's certainly radically different from what it was, say, 12 months ago in terms of our assumptions. But yes, we're quite excited about this. Alternative COVID assets in commercialization. I mean, I don't know if you have the vaccines component. But with sotrovimab, you're sort of just starting to deal with the European community for up to 220,000 doses. Just for clarity, that 16 countries within the EC part of that framework, and they have until between now and July 2022 to purchase that. Just before this call, we had another contract come through from another government. I mean there's another attractive order that came through on Friday. So we're starting to make progress there with sotrovimab.

[Emma N. Walmsley, CEO & Director]

Roger, would you like to talk about the vaccines?

[Roger G. Connor, President of Global Vaccines]

Yes. Yes, certainly. Thanks for the question. I think on the adjuvant partnerships, what we've seen book this quarter are contracted volumes that we have in place between the U.S. and Canada, but they represent about 2/3 of that overall expected demand for this year. I think it shows the strength of the adjuvant platform actually. First of all, we contracted separately on this. And governments understand that the adjuvant isn't just for COVID-19. The adjuvant can be held and then used for future pandemics as well, whether that be a flu or further COVID play. So there's optionality in this platform from a pandemic preparedness perspective. There's two variables, I'd say, that will determine sales going post 2021. Emma mentioned that we have to be able to match this up with [indiscernible] antigen supply going forward, so whatever those volumes are will be a key variable. And then secondly, we're talking to governments now on pandemic preparedness and potential use of the adjuvant as well, so those discussions could play to some uncertainties, there is difficult to say. But there is certainly a lot of activity going on, and I think governments are realizing the positive nature of a stock build of ASM [ III ] in particular, which were -- some government had in place before this pandemic as well. And we will just continue to update you as those discussions with governments conclude.

[Emma N. Walmsley, CEO & Director]

I think more medium term as well, I mean, it is worth remembering the rather alarming statistics that only 13% of the world is currently doubly vaccinated. And there is, as you all know, an ongoing debate around what the medium-term profile is for a booster market or not. And as you know, beyond our current adjuvanted partnerships, we're very involved in -- run the mRNA platform, too. And so we'll continue to keep you updated on all of that. But let me reiterate, none of this is in either this year's guidance nor indeed in the outlooks that we shared with you in June. Next question, please.

[Operator]

The next question is from the line of Laura Sutcliffe of UBS.

[Laura Sutcliffe, Equity Research Analyst]

Firstly, a more specific question on the size of the opportunity for dapro. I think you mentioned an unrisk-adjusted peak sales range of GBP 0.5 billion to GBP 1 billion back in June. Is that [indiscernible] by using dialysis and nondialysis? Or are there some scenarios at this point where the peak sales could be greater than that GBP 1 billion? And then secondly, could you maybe just give us your thoughts on combination opportunities for your older adult RSV vaccine?

[Emma N. Walmsley, CEO & Director]

Yes. So let's come to Hal, please. And I think, Laura, Iain said -- well, Iain said during his remarks that we would bring you an updated review once we've got more published data, but also on the outlook for dapro. And just to refer you to what Luke just said, the assumptions on the environment obviously shift according to competitors situations. And still today, unclear outcomes there as well as our own data, which is across dialysis and nondialysis. You'll get an update on that more later in the year. But Hal, do you want to -- I don't know if you want to add any further comments on either dapro but more specifically on combo possibilities for our exciting RSV pipeline?

[Hal V. Barron]

Maybe I'm not totally understanding the question, but is it combinations, meaning the adjuvant plus the pre-fusion, is that -- Laura, is that what you mean by combinations? Or do you mean multiple vaccines combined? I didn't quite understand the question. Maybe she's got -- I'll assume it's the combination, meaning why we've decided to use an adjuvant plus the pre-fusion protein, if that's what you think your question...

[Emma N. Walmsley, CEO & Director]

Go ahead.

[Hal V. Barron]

Yes, I think, Laura, when we did the Phase II study, we looked at the pre-fusion protein alone and with various adjuvants and various doses. And the summary of the data, there was a lot of complicated data. But the bottom line, I think, is that when you look at the cell-mediated immunity, the pre-F specific CD4 positive cells, you can see that in the elderly, when you give the adjuvant, the AS01, you can see a very nice bump in the CD4 immune cells, which actually elevates a level that's pretty close to what you see in young adults. And we think that not only is a robust B-cell response, which we saw actually both with the unadjuvated and adjuvant components. This T-cell immune response, we think, is very important, possibly for efficacy as well as duration. And so that's why we decided to combine it with AS01, the same adjuvant that's used with Shingrix, which as you can see in the elderly is particularly effective and has long duration. So that was why we went ahead as opposed to others with an adjuvant approach with the pre-fusion protein.

[Operator]

The next question is from the line of Jo Walton of Credit Suisse.

[Jo Walton, Managing Director]

I wonder if I could ask Luke a little bit more about his expectations for Shingrix in the second half of this year. There's clearly very little progress in the ex-U.S. sales overall in the first half of the year. So can you tell us a little bit more about your confidence in the second half, which additional countries you can go into? How the pricing is forming in those new countries now that you are unconstrained in supply? And can you just give us some idea of your assumptions on use of, say, a third dosage versus the ability to put your Shingrix vaccine in the other arm when someone goes to get a flu vaccine around September time. And my second question would be, again, probably to Luke. On the marketing side, you were down 15% on your marketing spend in the first quarter, up 5% in the second quarter. Given what we've learned about the ability to do more digital, et cetera, going forward, can you give us some help as to what you think a reasonable rate of CER marketing growth should be over the next year or so?

[Emma N. Walmsley, CEO & Director]

Okay. Luke?

[Luke V. Miels, President of Global Pharmaceuticals]

Yes. Thanks, Emma. So on the second one, I mean it's interesting people out of the field not spending or traveling. If we look at face-to-face activity now, in Europe and the U.S., with the exception of oncology, which is a bit lower, we're sort of 80% to 85% versus pre-COVID levels. If you add in non-face-to-face digital, the total activity is actually higher than that. So in terms of expenditure, we'll continue to allocate it to where we can drive the top line and where we see a good return. So I think the trends that you're seeing historical are probably a better indicator than quarter 1 and quarter 2. In terms of Shingrix, it's really, really interesting. We track these, as you can imagine, very, very closely. And it's a consistent pattern where you see countries vigorously pursue adult vaccination, it's highly disruptive to Shingrix vaccination. The good thing is those patterns are consistent. So Germany, we're now seeing more than 80% of 60-plus year olds, which is the population where it's reimbursed, are now covered with COVID. And we saw the beginnings of a rebound in June in Germany of Shingrix. In China, the emphasis is still on government vaccination centers deploying COVID vaccines, so we continue to see that disruption. In terms of other markets, we're also seeing that disruptions. So Hong Kong, Australia, for example, where we've just launched. They're obviously at the same point. But we have other launches in Spain and Italy and the U.K. in broader populations but also subpopulations. In terms of pricing, we're seeing that level hold up. Now sometimes when we go into these markets, we go in with immunocompromised population first because we can get the most attractive price at that point. And right now, we can use all the volume in those settings. So I think for the second half, we remain confident that we'll see a collective response in Shingrix. In terms of boosters, we don't assume the booster this year. And it's interesting when you look at the market research in terms of people's intention for vaccines, we've covered the 50% on the slide. But also if you ask them relative to other vaccines, it's significantly higher than pneumonia and pediarix and other options for adults and second only to flu in terms of future intention to get a vaccine. I think there may be some vaccine fatigue on the part of adults. But again, everything that we're seeing indicates that the second half will be as expected.

[Emma N. Walmsley, CEO & Director]

Lastly, Jo, as well on [indiscernible] I mean, the guidance is that it is possible. But as Luke said, the experience would be that people, there's a bit of sort of just human instinctive of fatigue that people would rather leave it for a few months, but we have the stats on that, and we are running co-ad studies as well. So that should equip us well. Fundamentally, this is a disease that one in three get. We know the underlying demand is good. And as Luke said, we're being able to maintain economics and confidence in the outlook that we laid out for the five years. Included with life cycle innovation, which you also saw some recent announcements on in terms of expansion of the cohort. So next question, please.

[Operator]

The next question is from the line of James Gordon of JPMorgan.

[James Daniel Gordon, Senior Analyst]

James Gordon, JPMorgan. Two questions. First question was on the old adult RSV vaccine competition. So potentially the biggest product in the pipeline, but I saw Pfizer just announced that in their Phase II challenge study, they had 100% efficacy in adults. And they also said they're going to kick off the Phase III in September this year, they could report with earlier Q1 next year. So my question is, what does that mean for GSK's older adult program? Does the Pfizer data suggest their product could be at least as effective as yours? Or do we need to be careful trying to compare quite different endpoints. And could you do the same thing? Could you accelerate your Phase III and have data in the same sort of time lines? Or is there reasons yours might take a bit longer? And the second question was just a clarification on daprodustat. So as already mentioned, your [ boxer ] had a tough outcome, although they had a non-inferiority headline on the safety, the point estimate looked worse than [indiscernible] and that didn't go very well at the AdCom. But it sounds like you are very very confident in your product. So can you give us on firm that's because you also look differentiated from [indiscernible] as in your point estimate or may safety does actually look better?

[Emma N. Walmsley, CEO & Director]

Hal, why don't you take both of those? And Roger, if you want to add anything on the broader RSV perspective, we can come back to you. Hal?

[Hal V. Barron]

Thanks, James. Look, I'm not going to make too many comments on the -- the announcement of Pfizer. But let me just highlight a few things about what we know about our project and why we're so excited about it. First of all, just to anchor everyone, of course, RSV in older adults is an enormous unmet medical need with, just in the United States alone, over 180,000 people hospitalized and as many as 14,000 of those unfortunately die. Our Phase II, as I was alluding to this earlier, really does show pretty robust B-cell response with neutralizing titers that are very comfortably in the range where we expect significant efficacy. I'm personally very pleased that this data that the pre-fusion antigen is the right one, as evidenced by our data as well as now with Pfizer's, so that's exciting. It's also important to remember that our program has this AS01 adjuvant, which I explained earlier provides this T-cell immune response, which we think will actually increase efficacy like we saw with RSV, but also maybe potentially duration, et cetera. So it's a differentiated vaccine combination, if you will, with the pre-F antigen as well as the very effective proprietary AS01 adjuvant. I think it's also important, if I understood it correctly, that while we are very confident that the immune response will be mounted effectively in the 18- to 50-year-olds, this is, again -- the older adults is an older population where, again, we need to be ensuring we have the most robust immune response to protect them as their immune systems are different. And as I said earlier, the T-cell immune response wasn't normal in an unadjuvanted RSV vaccine, and that's why we chose to use the adjuvant because the T-cell response became much closer, actually almost identical to young adults. In terms of the time lines and speed, it's important to remember that as we said, we're choosing the older adult population where we think the greatest unmet medical need is. And the timing of these studies are difficult to predict because, first of all, it has a lot to do with the size of your trial. Our study is very robust. We're enrolling 25,000 patients that we understand the safety and as profile and potentially do subgroup analyses where, of course, the number of events determine how long the trial lasts. Of course, the enrollment rate has a strong impact on that as well as the treatment effect of the drug. So I can tell you that we're very confident that this is one of the most important projects in our pipeline, and we're doing everything we can to expedite it as fast as we can, and we're optimistic that we'll complete this in a very timely manner. So as far as daprodustat, I'm not, again, going to comment on the rox-AdCom. Although what you stated, I think, was pretty clear from the discussion. We -- any data from the [indiscernible] be inappropriate for me like today, just to comment directly on the point estimate and confidence intervals. I will say, however, that recent -- as you said, the recent advisory committee meetings have disclosed, I think, pretty clearly that the FDA wanted to see a noninferiority margin of 1.25. I think that was pretty clear from the meeting and stated a many times. We have previously said that our design clinical studies were done with input from regulators and agreement from regulators. So I don't want to say more than that. But I'm very excited about the fact that we had 5 Phase III studies that were positive and that this robust program really was -- I think is going to be a very robust package for the regulators to review.

[Operator]

The next question is from the line of Kerry Holford of Berenberg.

[Kerry Ann Holford, Analyst]

Two questions, please. So firstly, on the COVID antibody. I wonder if you're willing to give us an idea or you have the effective price per dose that you've secured for the dose order you've secured to date and maybe what time frame you should expect those orders to be delivered to book. And then on the flu vaccine. Following the recent news you've begun to ship over 50 million doses in the U.S. Is it fair to conclude that the sales of flu vaccines this year should likely exceed 2020 figure, which I think is around GBP 730 million? Is that fair?

[Emma N. Walmsley, CEO & Director]

Thanks, Kerry. Well, I'm going to ask Iain, because I think he should have a question, Iain, to talk about the flu outlook. And we'll come back to Luke on the timing. I would say the short answer to are we going to give you the precise pricing of our contracts will be no. But let's go to Iain first and then come over to Luke.

[Iain James Mackay, CFO & Executive Director]

Don't feel compelled to...

[Emma N. Walmsley, CEO & Director]

And Brian is available as well.

[Iain James Mackay, CFO & Executive Director]

So Kerry, on a volume basis, we would expect numbers to be broadly similar to last year. However, you'll recall from our commentary in the fourth quarter last year results, which we didn't in early February that we had a very significant RAR adjustment in flu last year. And so netting out that RAR adjustment, which we clearly wouldn't see the benefit of again, I think volumes, we expect to be broadly similar. But in dollar terms or sterling terms, rather, will be slightly less.

[Emma N. Walmsley, CEO & Director]

Yes. And I would say that in the outlook of the 4% to 6% beyond guidance EPS, that includes the recent contract.

[Iain James Mackay, CFO & Executive Director]

It does indeed.

[Emma N. Walmsley, CEO & Director]

Yes, it does. So that's worth noting. Luke, you mentioned it before. Is there anything else you want to add on the delivery.

[Luke V. Miels, President of Global Pharmaceuticals]

Yes. Yes. I mean I think what we now need to do, we've got this overarching contract we need to approach the 16 countries, which include all of the major European countries and sign up volumes. And we've also got a number of other countries outside Europe that we've got contracts for. So I'm hoping in Q3, we can give you a lot more granularity because we'll have those in hand. In terms of pricing, the only price that we've given publicly is 2,100 WACC in the U.S. where we're selling a small number commercially. For Europe, you should just assume it's in the range of industry pricing.

[Operator]

Next question from the line of Geoffrey Porges of SVB Leerink.

[Geoffrey Craig Porges]

A couple of questions for Hal. First, just on the IO portfolio. You've highlighted the CD226, sorry, portfolio many times. I'm just wondering if you could give us a sense of when we could see the first clinical proof of concept for your combinations, the different combinations there for that whole strategy? And then secondly, on, again, daprodustat. Do you believe that we should expect class labeling for daprodustat for infection risk, thrombosis risk and seizure risk given the imbalances seen in your competitors' trials? As you know, the FDA has been extraordinarily cautious about labeling in the CKD population for the ESAs. And so would that be prudent on our part?

[Emma N. Walmsley, CEO & Director]

Hal?

[Hal V. Barron]

Thanks, Geoff. Yes. Thanks, Geoff. The IO portfolio is actually quite robust now. And the CD226 axis, I think, is well covered with both the now anti-TIGIT from IPOs. We have the CD96 inhibitor, is just advanced in our collaboration with 23andMe. And the furthest behind, but also exciting is the anti-PV rig, which should get into the clinic next year with a deal with Service Oncology recently. All of those, of course, can be combined with each other as well as with dostarlimab. So the four drug combos are quite complicated, and there'll be a lot of dose ranging that's needed, indication ranging, if you will. And we will be getting data from combinations with CD96 and dostarlimab first. So that will be the first readout that should occur in 2022. We should be able to get some PV rig data probably in 2022 as well. The TIGIT combinations with dostarlimab we'll be seeing in 2022 hopefully some data at all, of course, depends on how robust the data is and what the -- whether we see activity at various doses. The triplet will take a little longer just because we have to get through all the dose ranging and safety, but that should come following the observation of proof of concepts with those combinations. So exciting opportunity, we think, to take the field beyond the PD-1 era and enter into a CD226 era possibly a doublet or maybe even a triplet, if the cards fall appropriately, we can make a triplet that would be profoundly beneficial for patients, if that was the case. So excited about that opportunity. In terms of dapro, I really don't want to comment on discussions that we haven't yet even started with regulators. The data that I mentioned that we are very excited by was the primary endpoint. We haven't done any of the subgroup analyses and other sensitivity analyses that are going to be, of course, needed, we'll be doing those very soon. We should have that data and hopefully be able to present that later this year. Of course, then that's followed by discussions with regulators digestion of the class, as you say. And I think it would be premature to have any speculation on what anyone else's labels might show for sure. And ours will, of course, follow the data. Thanks for the question, Geoff.

[Operator]

The next question is from the line of Keyur Parekh of Goldman Sachs.

[Keyur Parekh, Equity Analyst]

Two questions, please. One on commercial opportunity for BLENREP. Luke, I noticed that Bristol kind of reported first quarter revenues for the BCMA CAR-T of $24 million. That's roughly similar to the GBP 21 million you reported for BLENREP. So just give us a sense for where kind of Bristol is taking share and how confident you are for growth of BLENREP even without the additional studies kind of reading out? And then separately, for Brian, congratulations on kind of the CEO designate, not surprising that at all. But your slide talks about e-commerce being 7% of sales for the Consumer Healthcare business, up 30% for the quarter. Just wondering if you can kind of give us a sense for how the 7% tax relative to your peer group? What was this corresponding number last year? So just give us a sense for how big you think e-commerce might be for the Glaxo Consumer Health business going forward?

[Emma N. Walmsley, CEO & Director]

Thanks, Keyur. So Luke first.

[Luke V. Miels, President of Global Pharmaceuticals]

Sure. So I mean, I think Keyur, I'll just lay this out. I mean, right now, we have about 1/4 of patients in the U.S. who are fifth line in terms of patients on drug. But at that a 1/3 of them are now -- about 1/4 of fifth line. The rest are sixth, seventh line. But one in three new patients coming on a fifth line. So we're starting to move up there. I think there has been a bit of pressure in that fourth plant setting. It's a relatively small number of patients. There's a lot of competition for them with studies such as teclistamab, the bispecifics. In terms of the CAR-T, I mean, let's see, there's some ordering patterns probably there. Again, it's concentrated in academic centers. Where we're now seeing our growth is in the community, which is a natural progression. I mean, in the end, though, we need to address the dosing and it's how outlined. There's a lot of activities to do that to penetrate the earlier lines of treatment where the vast majority of the opportunity for this product exists. We're less concerned around [indiscernible]. Again, I think that is being used in the EMD population and some of the talk around him is impacting treatment length. So I think we've got more work to do to capture those fourth-line patients in the community, and we're working very hard to do it.

[Emma N. Walmsley, CEO & Director]

Thank you. Brian, digital.

[Brian McNamara]

Yes, for the question, and thanks for the congratulations also. As you said, our e-commerce as a percent of sales is 7%, up 30%. Last year, we were at 6% of sales. We continue to see progression. As far as how that compares to competitors, it really is dependent on -- quite dependent on portfolio. If you look across our portfolio, it's in oral care, we are overdeveloped where we have higher shares in many of our brands online versus off-line. In OTC we're pretty much in line but skewed towards, again, being overdeveloped. So slightly better than, I would say, the competitive set. And on VMS actually is an area we're catching up. So we were underdeveloped on VMS as there's many more digital-native brands in that space. But we're growing in that area very aggressively, and we're seeing really good progression in that area. So I continue to believe this is an area that's going to continue to grow really healthy. We've seen a massive shift in these categories to online shopping as part of the behavior that came with the pandemic. And we see that consumer behavior continuing. And I feel really great about where we're at and our capabilities in this area to continue to win in the space.

[Emma N. Walmsley, CEO & Director]

Thanks, Brian. And I would also like to add my very public congratulations and pride in your appointment.

[Brian McNamara]

You got a question along...

[Emma N. Walmsley, CEO & Director]

The other thing I would just overlay is it's not only the brand power on digital, it's also the geographic mix, where because of our strong presence in consumer in both the U.S. and China, which are very e-commerce-friendly regions that also helps drive both our capability and competitiveness on that.

[Operator]

The next question is from the line of Emmanuel Papadakis of Deutsche Bank.

[Emmanuel Douglas Papadakis, Research Analyst]

I'll make it too for Brian, actually. Question on margins, please. You reiterate the mid-high 20s for next year, I think. But obviously, that's as part of the current business, not as a stand-alone, I know there's been some discussion of what additional stand-alone costs you would incur. So any insight you can offer us at this stage in terms of the step down in margins, we'd likely to see as a stand-alone business. And if not now, anything qualitive if not now, when are we likely to get that number. And then maybe a question on the R&D side. You reported a moon stone. Perhaps you could give us some comments on that agent missed the target you're after on RAR? What does that imply if anything, the clinical development program for Zejula. I don't actually think would you any pivotal or proof of base points for the rest of this year or even next. Are we just waiting for that [indiscernible] maintenance study in 2024? Or are there other things we should be thinking about looking at for what you're considering?

[Emma N. Walmsley, CEO & Director]

Thanks very much. We'll turn over to Hal, but first of all, Brian, do you want to comment on when will be shared?

[Brian McNamara]

Yes. As Emma mentioned, we'll be doing a Capital Markets Day in the first half of next year. We haven't identified that date yet. But at that time is when we would share much more detail around the business in a lot of areas around our cash flow and our margin progression and included in that would be any of the one-off costs. So you'd expect to hear about that next year before separation.

[Emma N. Walmsley, CEO & Director]

Hal? An implication?

[Hal V. Barron]

Yes. Could you just -- part of Emmanuel's question dropped out, could you just repeat it briefly?

[Emmanuel Douglas Papadakis, Research Analyst]

I can repeat it if you can hear me. It was just a question on the miss in MOONSTONE's [indiscernible] to the clinical development and next data points we should be looking for or thinking about.

[Hal V. Barron]

That's what I thought I said, I just wanted to confirm. You're correct. MOONSTONE has been stopped. I think it's important to point out, MOONSTONE was a single arm open-label Phase II study where we were looking at response rate. It was in the most difficult -- patients with ovarian cancer to treat the so-called platinum-resistant ovarian cancer patient populations who actually do not very well even with chemo and bevacizumab, but these are second line those who failed bevacizumab. So very resistant population, but was based on some very small numbers of patients that suggested maybe the combination of PD-1 plus PARP would be beneficial. So we had a very high bar. And the study where we looked at the response rates didn't suggest that it was going to achieve the bar we had. Now the study that we've always been more optimistic about because, again, MOONSTONE was in the treatment setting where, frankly, PARPs -- the data for PARPs in the treatment setting has been very [indiscernible] in terms of efficacy in the maintenance setting is where you really see the benefit in a study that we thought would most definitively identify an opportunity for the combination of a PARP plus PD-1 was the so-called first clinical -- the first trial, which is in as where patients received chemo with [indiscernible] and niraparib versus standard of care platinum-based regimen. And that is enrolling well, and we should see data for that before as the next opportunity to have a direct read-through for this synergistic -- potential synergistic impact. We're also, as you mentioned, committed to other combinations of Carapa with destarimab. We have the Phase III RUBY Part 2 section where we're imperiling destatiab in combination with niraparib for patients with endometrial cancer. And of course, we have the ZEST and ZEAL, both of which could be transformational for patients [ Zeobeing ] in the frontline lung cancer setting and vesting a novel study designed for patients who are surgically -- women with breast cancer who were surgically treated for the intent of cure, but who have evidence through tumor measurements in the blood, the cell-free DNA from the tumor being evident as a biomarker that we're using to start treating people to potentially prevent the disease from recurring. So two innovative and, I think, exciting trials in addition to first, we'll add hopefully a lot of patient benefit into the life cycle of niraparib.

[Operator]

Thanks, Hal.

[Iain James Mackay, CFO & Executive Director]

We got time for one more question, and then we'll have to wrap it up. If there is one more question.

[Operator]

The next question is from the line of Graham Parry of BofA.

[Graham Glyn Charles Parry]

So just firstly, on Shingrix, I was just wondering if you could just help us kind of square the circle of the different commentary. So the guidance is a little cautious but you're still talking confidence in strong recovery in 2H. So are you still expecting a very strong 2022? I think consensus is looking for 25% year-on-year growth. So does that sit within the range of your outcomes internally? And then secondly, just following up on the question on Pfizer's RSV vaccine timing. That suggests perhaps they might be expecting more RSV events coming this season, if they think they can get a data readout in Q1. So is it also the case that perhaps the RSV incidence is picking up relative to what you assumed when you originally planned your studies, meaning your data could also come earlier?

[Emma N. Walmsley, CEO & Director]

Hal, we will come back again to the RSV study. And just on Shingrix, yes, we do see a significant step up in rent going to start commenting on versus a specific guidance on that one [ grant ]. Hal, would you like to comment on the RSV study?

[Hal V. Barron]

Yes, just to reiterate, we -- there's a lot of assumptions that go into determining how long a trial will take, of course, as I mentioned before, it has a lot to do with sample size. So we are enrolling 25,000 people that enrollment is going very well. It does have a lot to do with the number of events, which is actually related to some extent to the treatment effect. And there is some reason to believe that the events might be higher than anticipated based on the fact that in 2020, there was very limited RSV and sometimes there's -- without the prior season immunity, sometimes there's more clinically significant cases. But again, we're all estimating these things. And it would be probably more like a class effect, if you will, that if there's more events, it's going to -- we'll be seeing that in any trials in RSV will be obviously unique to us or Pfizer or anybody else. So we just have to wait and see. And of course, anything is possible. But the idea that maybe there's more RSV because of the 2020 low levels, there is some data suggest that might be the case. We'll just have to wait and see.

[Emma N. Walmsley, CEO & Director]

Thank you very much. And with that, everybody, we'll finish today's call and look forward to catching up with you in the coming days for those that we don't get to speak to, I hope whether it's [indiscernible], you get some kind of break and look forward to catching up again soon. All right. Thank you. Goodbye.

[Operator]

Thank you.