SecProbe.io

August 13, 2010

Mr. Julian Heslop
Chief Financial Officer
GlaxoSmithKline plc
980 Great West Road
Brentford, TW8 9GS England

Re: GlaxoSmithKline plc
  Form 20-F for Fiscal Year Ended December 31, 2009
  File No. 001-15170

Dear Mr. Heslop:
 We have limited our review to only your fina ncial statements and related disclosures and
do not intend to expand our review to other por tions of your documents.  In our comments, we
ask you to provide us with information so  we may better underst and your disclosure.
 Please respond to this letter within te n business days by providing the requested
information or by advising us when you will provide the requested response.  Where a comment requests you to revise disclosu re, the information you provide s hould show us what the revised
disclosure will look like and identify the filing in which you intend to first include it.  If you do
not believe a comment applies to your facts a nd circumstances, please tell us why in your
response.  Please furnish us a letter on EDGAR under the form type label CORRESP that keys
your responses to our comments.
 After reviewing the information provided, we may raise additional comments and/or
request that you amend your filing.  Products, intellectual property and competition

Patents, page 12
 1. You disclose the near-term expiration  of patents protecting le ading products in your
Pharmaceutical Division, particularly the USA expirations in 2010 for Seretide/Advair,
which produced turnover of £5 billion in 2009.  For several drug products, such as Valtrex, patents have already e xpired.  You also assert that “following loss of patent
protection, generic products rapidl y capture a large shar e of the market, particularly in the
USA.”  Please revise your disclosure in your “financial review” s ection to discuss in
quantitative and qualitative terms, the impact that expirations of materially important
patents have had on your results of operations and liquidity in the periods presented and
the reasonably likely impact expected  to occur in future periods.

Mr. Julian Heslop
GlaxoSmithKline plc
August 13, 2010 Page 2   Research and development, page 15

2. Disclose your criteria for deeming a late st age project listed on page 18 as “key.” For
each of these projects and those on pages 189 to 192 that you deem significant, disclose
the following information.

• The costs incurred by you during each period presented and to date on the project,
including costs reimbursements to  your collaboration partners;
• The nature, timing and estimated costs to be incurred by you necessary to complete
the project, particularly fo r those projects designated as “Filed” and “Phase 3;”
• The period in which material net cash inflow s from significant pr ojects are expected
to commence, particularly for those pr ojects designated as “Approved”; and
• The risks and uncertainties associated with completing development on schedule and the consequences to your operations, financia l position and liquidit y, if the project is
not completed on a timely basis.

Include a description of your cr iteria for deeming a project to be significant. For those
pipeline projects that you do not consider significant, summ arize the amounts charged to
expense for each period by therapeutic category.  Also, provide a general estimate of the
nature, timing and costs necessary to  complete these projects.

3. On page 3, you projected an 11% rate of return for R&D investments made in your late
stage pipeline and a 14% expected long-term rate  of return for R&D.  Please explain to us
how you computed the rate of return for R&D investments.  Revise your disclosure to
explain the relationship between the assump tions underlying this fi nancial measure and
the expected commercialization of your drug development pipeline.

4. On page 77, you describe a bonus measure for R&D employees that “fairly reflects R&D
productivity and performance as well as pe rformance against profit targets.”  Please
explain to us how you computed this bonus measure for R&D employees.  Revise your
disclosure to explain the relationship be tween the assumptions underlying this bonus
measure and the expected commercializati on of your drug development pipeline.

5. On page 7, you indicate that you externalized  30% of your discovery  research with 47
third party partners.  Please quantify the magn itude of this external discovery research
that is included in your research and deve lopment expenses for each period presented.
Explain and quantify how you expect these programs to impact your future revenues for
each therapeutic area.  In addition, disc lose the following information for your
arrangements with each third party partner that are significant.  Include a description of your criteria for deeming an arra ngement to be significant.

Mr. Julian Heslop
GlaxoSmithKline plc
August 13, 2010 Page 3
• Disclose the contractual terms underl ying each arrangement, including your
obligations to make upfront license fee, milestone, cost reimbursements and other
payments and the corresponding obligations of your partners.
• Quantify payments made and received under these contractual arrangements for each
period presented.
• Quantify the development costs capital ized for each period presented.
• Describe your accounting treatm ent for these arrangements.
• For contractual arrangements with multiple deliverables, disclose your basis for
concluding that the specific contractual pa yments reflect the fair value of the
associated deliverables.
• Disclose how you determine whether an upfront or milestone payment to a third party relates to research, development or both activ ities.  In particular, explain the factors
determining when third party research activities stop and development activities
commence and the resulting impact on your accounting for these activities.
• Disclose the degree of discovery research risk transfer to your 47 partners and the
existence of buy-back options held by e ither party to the arrangement, if any.

For the remainder of the arrangements with  your third party partners that you do not
consider significant, summari ze the number of arrangements and the amounts charged to
expense for each period by therapeutic category.  Also, provide a general estimate of the
nature, timing and costs necessa ry to complete these discovery research programs.
  6. You disclose £12.3 billion of commitments to  make milestone payments under licenses
and alliances at December 31, 2009 in Note 39.  Please disclose the relationship between these commitments and your programs to externalize discovery research.
 Notes to the financial statements

Note 2: Accounting principles and policies
Revenue, page 101
 7. Your policy disclosure indicates that revenue may be recognized for product when it is made available to external customers agai nst orders received.  Although you mention the
impact of the CDC’s withdrawal of hepatitis vaccines for its stockpi le on page four of
your July 21, 2010 press release announcing your  operating results for the second quarter
of 2010, it is unclear whether you maintain that stockpile for the CDC.  Please explain to
us your revenue recognition policy for produc t ordered by customers but not shipped to
them and reference for us the authoritat ive literature you rely  upon to support your
accounting.  In your response, please differentiate between  governmental stockpile
transactions and any other cust omer transactions and, at a minimum, please provide the
following information:
• Please explain to us the material terms of  these arrangements, including when product
is shipped to the customer;

Mr. Julian Heslop
GlaxoSmithKline plc
August 13, 2010 Page 4
• Please provide us your understanding of  your customers’ business purpose for
accepting title to product that remains in your possession;
• Please explain to us how you transferre d the significant risks and rewards of
ownership of the goods and how you reta in neither continuing managerial
involvement to the degree usually associat ed with ownership nor  effective control
over the goods sold as required by para graphs 14(a) and 14(b) of IAS 18;
• Please explain how you meet the criteria for ‘b ill and hold’ transact ions identified in
paragraph 1 of the Appendix to IAS 18; and
• To the extent you participate in government stockpile arrangements, please explain to
us whether you undertake any ob ligation to rotate stock into the stockpile to maintain
currently dated product.  If so, please: o Explain whether you receive compensation for the service of rotating the stock
and, if so, how you account for that compensation;
o Explain whether you receive payment for the new inventory rotated into the
stockpile and, if so, how you account for that payment;
o Explain whether you can sell the inventory rotated out of the stockpile and your
accounting for that inventory;
o Considering the contingent nature of government stockpiles and that the government may never tap the stockpile, explain how you can assert that it is
probable that delivery will be made as stipulated in paragraph 1(a) of the
Appendix to IAS 18.
 Note 14: Taxation, page 116

8. You disclose that unremitted profits at December 31, 2009 were £29 billion and that the
estimated incremental liability from the re patriation of these profits was £500 million.
Please revise your disclosure to clarify why th e apparent effective incremental tax rate on
these unremitted profits is only approximately 1.7%.  In this regard, please clarify
whether you would be entitled to a credit for income taxes paid in foreign jurisdictions.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure in
the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
  In responding to our comments, please provi de a written statement from the company
acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
• staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federa l securities laws of  the United States.

Mr. Julian Heslop
GlaxoSmithKline plc August 13, 2010 Page 5
You may contact Frank Wyman, Staff Accountant at (202) 551-3660, or Mark Brunhofer,
Accounting Reviewer, at (202) 551-3638 if you have questions regarding these comments.  In this regard, do not hesitate to contact me, at (202) 551-3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief
Accountant