GSK Strategic Analysis. by KIRAN JAMEEL.

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.
By the desk of KIRAN JAMEEL
This page was created using BCL ALLPDF Converter trial software. To purchase, go to http://store.bcltechnologies.com/productcart/pc/instPrd.asp?idproduct=1
Page 1
IN THE NAME OF ALLAH, WHO IS VERY KIND AND THE MERCIFUL
STARTEGIC ANALYSIS OF GLAXOSMITH KLINE.PLC.
Good companies will meet needs; Great companies will create markets. Philip Kotler
SUBJECT: ADVANCE STRATEGIC MGT. SUBMITTED TO: DR. DILSHAD ZAFAR SUBMITTED BY: KIRAN JAMEEL
M.Phil 2013
UNIVERSITY OF KARACHI
"If you are planning for one year, grow rice. If you are planning for 20 years grow trees. If you are planning for centuries, grow men". Chinese Proverb
Page 2
TABLE OF CONTENT
S.No Description Page #
A 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Acknowledgement Introduction Mission, vision. GSKs history STRATEGIC ANALYSIS OF THE WORLDPHARMACEUTICAL INDUSTRY PESTEL ANALYSIS: SWOT analysis: Porters Five Forces: Top Stories Pharmaceutical fraud
I 01 02-03 04-05 05-10 11-13 14-15 15-17 17-28 29-30 31 I
Cases References.
Page 3
ACKNOWLEDGEMENT
In the name of Allah, The Most Gracious, The most Merciful. First of all I am thankful to Allah Almighty for giving me the Mind to think, Heart to feel the consequences of my idea, strength to complete and Ability to work successfully on my project. I express my greatest gratitude to my kindhearted teacher DR.DILSHAD ZAFAR who is the Person who made me able to write this report, her enthusiasm shows the way forward to me to achieve this success and who kept me in high spirit through her appreciation. My final thanks go to my family members who have always uplifted me through their moral, professional support.
Page 4
GLAXOSMITH KLINE PLC

Introduction:
In 2001, GlaxoSmithKline is a merger of Glaxo Wellcome and SmithKline Beecham and its mainly United Kingdom based multinational company that is considered as one of the giants pharmaceutical companies in the entire world. The advent of todays leading research based pharmaceutical company started with individual entrepreneurs of the 1800. The pioneering efforts laid the groundwork for growth in the different companies that over the years led todays Glaxosmith Glaxosmith Kline combats depression, mental disorder that affects 22% adults in Pakistan, by successfully launching the central nervous system franchise with the anti depressant. It supplies 71 million doses of vaccines , the largest shipment in the history of GSK biological to the Pakistan government for expanded program on immunization for eradication of polio.
Mission:
Our quest is to improve the quality of human life by enabling people to do more feel better and live longer. GlaxoSmithKline have a challenging and inspiring mission to improve the quality of human life by enabling people to do more, feel better and live longer. The key behaviors which distinguish their successful people are innovative thinking, engaging and developing others, leading people and achieving excellence. GSK carry out their business with the enthusiasm of entrepreneurs, excited by the constant search for innovation. They also have a strong culture of performance achieved with integrity. GSK is confident of attaining our set goals because our people work bring to the workplace an attitude of passion and positive energy.
Vision:
To become the indisputable leader in the pharmaceutical industry not only in term of size but also by to achieve their mission and improve quality of human life. The key to success is desire and passion to pursue Glaxosmith priorities expressed by business drivers.While new medicines and products may originate in our international laboratories, brining those medicines and products to patients require the combined efforts of everyone else in the company. All of the staff have a responsibility to engage in the quest and to successfully deliver our promise.
Page 5
Strategic Priorities:
By focusing on business strategies, four top priorities comes up which are following Grow a diversified global business Deliver more products of value Simplify the operating model Create a culture of individual empowerment Building trust of customers
Global Business Strategy:

Management engage and attract the best talent available in the market. To position GSK Pakistan as preferred employer in Pakistan, recruitment team visited 18 universities in 8 different cities and met over 1600 students.
Research and Development:

Glaxosmith has done 17 R&D trails which includes Phase ii and Phase iii. It also covered a wide range of therapy under clinical trials that has Oncology, Cardiology, Metabolic, and Respiratory & Hematology.
Page 6

Business Goal:
The ultimate goal of GlaxoSmithKline is to become the indisputable leader in the global pharmaceutical industry. There are three key challenges: Improving productivity in R&D Ensuring patients have access to new medicines Reaching consumers beyond the traditional healthcare professional.
Manufacturing and Distribution:

Glaxosmith sells its prescription medicines through distributors, primarily to pharmacist, hospitals, government entities and other institutions. These products are prescribed by doctors, and dispensed to patients by pharmacies or used in a hospital environment. Glaxosmith sales team provides value to the healthcare professionals. Well organized training is provided aimed at raising the standards of representatives knowledge. Value in health care can only be achieved with appropriate treatment being administered to maximum number of patients. Marketing initiatives aim to remain leader of new medicines from cost of treatment, proper diagnosis and knowledge about diseases and prospective options with effective and ethical marketing initiatives.
GSK HISTORY
Today, GSK is a leading research based pharmaceutical company in the WorldIn 2001, Glaxo Wellcome and SmithKline Beecham merged to form GlaxoSmithKline
Page 7
Page 8

VALUES:
Values are Important and lasting beliefs or ideals shared by the members of a culture about what is good or bad and desirable or undesirable. Values have major influence on a person'sbehaviour and attitude and serve as broad guidelines in all situations and special emphasis is being put nowa-days in organization to deeply inculcate their values in their employees. GSK being the industry leader in the field of pharmaceuticals has its own set of unique values that distinguish it from the rest of the players. The key values at the GSK are summarized as follows: Respect for people: It is believed at GSK that respecting each other is the key to progress and growth for everyone that includes GSKs business, employees and customers. Therefore, the culture at GSK celebrates diversity and achieving goals with team work and cooperation. The workplace at GSK fosters an environment where people feel free to share their ideas and issues of concern which in turn leads to innovations in the product offerings for the customers. Patient focused: Customers are the main reason for a companys survival and being in the business. GSK was one of the pharmaceuticals to realize this important secret of success. This in turn ensures an unprecedented commitment from GSKs people to improving the lives of billions and also dictates that all companys efforts, be it research, manufacturing or distribution are geared towards continuous improvement. Transparency: Transparency is yet another key value that is hugely emphasized at GSK. This is reflected by GSKs commitment to building and streamlining existing systems to eliminate any possibility of unfair practices. Employees are encouraged to express their ideas and any unfair practice, if proven to be adapted by any employee is dealt with critical cushion. The culture at GSK inculcates the value of taking full personal responsibility for actions by its employees. Integrity: The values at GSK go beyond merely complying with legal and ethical regulations. Each member of the GSK family takes pride in making decisions which are not only profitable but are morally sound, with the sincere intent of benefiting the patients. This has helped the company to foster long-term relationships.
BEHAVIORS:
GSK fosters a dynamic learning culture, which thrives on innovation and flexibility. This is done to enable the company to provide the best customer-centric health solutions by adapting to the changing needs of the healthcare market.
By the desk of KIRAN JAMEEL Page 9

The work environment at GSK is characterized by the following six behaviors: Flexible thinking: Multiple options for problem-solving are explored at GSK. This flexibility enables the company to innovate to meet the ever changing needs of their patients. The flexible thinking mainly drives its inspiration from the respect for people and integrity values of the organization. Enable and drive change: Adaptability in context of todays dynamic and ever changing environment has become a prerequisite for the success of any business. Therefore the ideas at GSK are executed to realize benefit for customers and business growth thus creating a win-win situation for both the parties. Continuous improvement: Practices of Total Quality Management have gained popularity in the past few decades due to their effectiveness in achieving business objectives and at the same time being cost effective. Continuous Improvement is one important aspect of Total Quality Management Practices which is accomplished at GSK by not only excelling in what they do, but at the same time findinnovative improvements to current practices. Customer driven: Customer satisfaction lies at the core of GSKs business behaviors and the employees are encouraged to incorporate this core behavior into everything they do. Developing people: Employee training forms an important part of the employee development program. Various trainings, seminars are held to educate employees to dispense off their duties in the best possible manner. Empowered employees take initiatives and provide creative solutions to challenges. Building relationships: The main focus at GSK is on building the relationships through various PR and CSR activities. Companys values inculcate trust and openness in everything it does which helps the organization to foster long-lasting partnerships.
Key Achievements:
Our mission is to improve the quality of human life by enabling people to do more, feel better, live longer. Discover more about us below; We are researching the World Health Organization's three priority diseases - HIV/AIDS, tuberculosis and malaria. 4 billion invested in 2012 in our search to develop new medicines, vaccines and consumer products. Between 2008 and 2012, we have had 23 new medicines approved in the USA and Europe.Late-stage assets in our product pipeline (to the end of 2012)
Page 10

Manufacturing sites in 34 countries make our medicines, vaccines and consumer healthcare products. The year GSK was created through the merger of GlaxoWellcome and SmithKline Beecham. In 2009 we launched ViiV Healthcare with Pfizer to deliver advances in treatment and care for people living in HIV. Our vision is for our value chain to be carbon neutral by 2050. More than 12,500 people work in R&D in our search for new medicines, vaccines and consumer healthcare products. We employ more than 99,000 people in over 100 countries, with more than a third of these in emerging markets. Number of vaccine doses we supplied across 170 countries in 2012, 80% of which were to developing countries. We manufacture and distribute more than 4 billion packs of products to over 150 countries around the world every year.
STRATEGIC ANALYSIS OF THE WORLD PHARMACEUTICAL INDUSTRY:

The world pharmaceutical industry has been changing profoundly in the last decade. Intensive globalization, increased competitiveness and the fight for global market shares create new challenges for pharmaceutical companies. Fast globalization definitively reinforces the consolidation of the world pharmaceutical industry. Alliancing in forms of mergers and acquisitions prevail more and more as a strategic orientation for the world pharmaceutical companies. By alliancing, they tend to create strategic synergies in an endeavour to be successful, competitive and capable to continue with further development circles. The pharmaceutical industry in Eastern Europe has been, to a great majority, taken- over by their multi-national peer companies, thus creating completely new managerial challenges. One may forecast that intensive alliancing processes in the world pharmaceutical industry are to continue to form even bigger pharmaceutical concerns and speed up the oligopolization of the global pharmaceutical industry. It can be concluded that strategic management with a dedicated market focus is to play an even more important and especially the highest top priority function in future globalization and consolidation processes of the world pharmaceutical industry. The world pharmaceutical market has undergone fast, unprecedented, tremendous and complex changes in the last several years. The pharmaceutical industry is today still one of the most inventive, innovative and lucrative of the so-called high-tech industries; however, we may say that the pharmaceutical industry has been adapting itself more and more to strategic market trends and market demands. Further strategic development of the world pharmaceutical industry shows clearly its consolidation, concentration and strong market orientation. The

pharmaceutical industry today, with no doubt, unites one of the biggest potentials of all mankind. Development of a brand new drug is estimated to need an investment of more than $1.2 billion and takes more than 12 years to bring it as a finished, legally registered and approved product to the market place (Pharma Strategy Group, 2005). This is, at the same time, a very complex, comprehensive and highly risky job with no final guarantee that the potential new product might succeed on the market and bring back revenues. If a pharmaceutical company wants to achieve market success with a brand new product, it needs to invest strongly into marketing and sales activities. Thus, by no surprise, we may conclude that basic research and development (R&D), together with marketing and sales activities are two of the most important operative and even more strategic priorities of the world pharmaceutical industry. Here, the biggest investments of the pharmaceutical industry are put by all means. Having analyzed these figures, we have found that the biggest, inventive world pharmaceutical companies invest, on average, approximately 16% of their sales into R&D and even more, about 26% or more into marketing and sales activities However, these ratios, especially the one of R&D investment, are even higher with the specialists, like biotechnology and pharmacogenomic companies, and much lower with the generic pharmaceutical companies.
Global Industry overview:

The pharmaceutical industry is characterized by high level of concentration with more than ten giant multinational companies.
Revenue of pharmaceutical segment, mln USD Pfizer NY, U.S. 46,133 GlaxoSmithKline UK 31,434 Johnson & Johnson NJ, U.S. 22,190 Merck NJ, U.S. 21,494 AstraZeneca UK 21,426 Novartis Switzerland 18,497 Sanofi-Aventis France 17,861 Roche Switzerland 17,460 Bristol-Myers Squibb NY, U.S. 15,482 Wyeth NJ, U.S. 13,964 Abbott IL, U.S. 13,600 Eli Lilly IN, U.S. 13,059 Takeda Japan 8,648 Schering-Plough NJ, U.S. 6,417 Bayer Germany 5,458 Source: 2011 Annual Reports of the companies Company HQ location Total sales, mln USD 52,516 37,324 47,348 22,939 21,426 28,247 18,711 25,168 19,380 17,358 19,680 13,858 10,046 8,272 37,013 Share of pharmaceutical segment, % 87.85% 84.22% 46.87% 93.70% 100.00% 65.48% 95.46% 69.37% 79.89% 80.45% 69.11% 94.23% 86.09% 77.57% 14.75%
From the table above, most of the revenue is generated by pharma products and rarely any company is of diversification nature. Johnson and Johnson although has a large revenue through consumable items.Due to the rapid growth and high sales, these giants reinvestment is very high
Page 12

and cash utilization is mainly in mergers. For instances Sanofi and Aventis, GlaxosWellcome and SmithKline.
Page 13

Company Profile:
This section aims to contribute to the better understanding of the rational functioning and effectiveness of this company .The company profile is to analyse GSK large Pharmaceutical Corporation and its involvement into the generic drugs markets. GlaxoSmithKline (GSK) is a world leading research-based pharmaceutical company with a powerful combination of skills and resources that provides a platform for delivering strong growth in today's rapidly changing healthcare environment. GSK also has leadership in four major therapeutic areas - anti-infective, central nervous system (CNS), respiratory and gastrointestinal/metabolic. In addition, it is a leader in the important area of vaccines and has a growing portfolio of oncology products. The company manufactures and supply system of GSK operates as a single global network. The company has more than 1 87 manufacturing sites and employ around 140.000employees in production. It has 2 types of manufacturing sites: there is a primary manufacturing site located in the UK, Ireland, the USA, Singapore and Australia. The secondary manufacturing sites convert the active compounds into finished products, there are 15 of these sites in Europe, 6 of them in north America , 5 in Latin America,5 in the middle east Africa, 15 in the Asia ,pacific ,Australia region,4 in china and 2 in Japan. Vaccine manufacturing is primarily located at two sites in Belgium. GSK has various co-marketing and co- promotion agreement with other pharmaceutical companies and specially the generics drug companies. In 2003 GSK held the second position in pharmaceutical market ,with a world market share of 9.6% .This is after Plizer, which had a share of 10.3% .GSK is a leader in the four therapeutic areas in vaccines. Worldwide it had a market share of over 20% for respiratory treatments, share systems approximately 13%for antiinfective and close to 10% of the central nervous systems drugs. GSK generic drugs manufacturing are seeking to bring generic version of manufacturing and most important products of the company to the market before patent expire .Generic market of GSK competing with Paxil and Augmentin company, launched in 2002 and 2003 and had considerable adverse impact on its sales and profits.
The company has two divisions:
Business profile of GSK: GSK is one of the worlds largest research based pharmaceutical company that discover, develop, manufacturing and market human health products. It is an innovative company that produces branded and generic drugs in the world, which it has developed itself.
Page 14

GSK Policies: GSK policies in the markets is to improve the quality of human life by enabling people to do more and feel better and live longer , its key values are performance with integrity, entrepreneurial spiral focus on innovation in the sense of urgency and the passion for achievement. GSK policies markets are divided in many steps such as: Employee practices: GSK will treat employees fairly, encourage world force divert and offer save and healthy working conditions. Leadership and vacancy: GSK will establish its own standards in the generic drugs markets and will seek to influence the others. Access to the medicine: GSK will continue to create medicines for developing countries, find suitable ways to provide access to medicines and seek partnerships to support it. Communitys investment: GSK will invest in health and education program in partnerships for health in deeper in Europe and developing countries. Research and innovation: GSK will ensure that its products are well evaluated and tested on safety, effectiveness and quality.
Major factors of Growth:

Although at this moment industry is showing a high increases in sales this performance will increase further in next few following years. Following factors could affect the growth of sale: It is assumed that pharma industry is likely to be inelastic because death toll and child birth rarely decreases or it is increasing day by day. If we talk about Asia or any under developed country, these are major contributors in industry sales. Natural disasters are increasing; Tsunami, Katrina, Volcanic actions, earthquakes in Malaysia Indonesia. At the time of disaster sales can be increased by more than 100% and recovery of victims or patients gives a promising positive result to pharma industry. Child birth and their illness under age of 4 to 5years is something that cannot be denied, likewise old age patients, cholesterol, sugar, heart patients in old ages is a fact which pushes the sale. According to survey, all diseases are increasing day by day. In euro peon countries and countries that are under developed, AIDS is one of the most increasing illness and its vaccination or treatment requires large amount of drugs to be used. Pharma industry is someway inelastic or growing industry, due to above factors and it shows rapid growth in next few decades.
Page 15

Challenges:
One of the most potential challenge to any company lies within or without. Any blind can see three layers of competitions. Big Pharma competes with each other. Every company is spending a huge amount on research and development; an essential component of this industry. First, obviously, Big Pharma companies compete among themselves. Although not all leading pharmaceutical companies cover all segments of pharmaceutical market, almost all of them are active in R&D and production of drugs in the segments with the highest potential such as treatment of infectious, cardiovascular, psychiatric or oncology diseases. Secondly, Big Pharma companies experience significant profit losses due to competition from the generic drug manufacturers. Opposite to the research-oriented pharmaceutical companies, which invest significant financial resources and time to develop new medicines, generic drug manufacturers spend minimum resources on R&D, and start manufacturing already developed by other companies drugs after their patent expiration. Because generic drug manufacturers do not have to recoup high R&D costs, prices of their products are usually much lower than those of major pharmaceutical companies; as the result, after patent expiration, generic drugs manufacturers capture significant market share, dramatically decreasing revenues of the Big Pharma companies. -
Price Control:
Its another important factor that could lead companies to go RED. Price regulations are different everywhere, it changes from countries to countries. Japan has very strict rules about price legislation and Pakistan has frozen its prices from last decade while European countries are supporting downfall in prices. The majority of European countries control drug prices, and this downward pressure on prices has been increasing during last years. Japan has even stricter price controls than European countries; all prices are controlled by the government, and they are subject to a periodic price review. So same product price may vary from place to place.
Patent Timeliness:
This requires an efficient management of research and development. It takes years to complete a product research and sometimes it may be 15 years, so current patent expiration should be kept in mind and new product should be launched at expiration time of current product. In other case, company may face a loss due to unavailability of gap filling product. Patent protection is another aspect where its illegal to use by local drug dealers which can cause harmful effects on companys reputation. Misuse of any drug by generic dealers can directly impact on company sales.Due to expiry of patent enormously generic dealers have got advantage and a noticeable increase in generic sale can be observed. It is expected that their total revenue will reach worth $129 bn in 2014. The main reason is low price, generic drugs are 70% cheaper than equivalents, so potential markets like developing countries will support more and it will hinder the sale of
Page 16

giants.In today market, people are seeking for differentiation, end users of product criteria has changed to health outcome with affordability.
PESTEL ANALYSIS:
Now lets analyze global pharmaceutical industry through PEST.
1. Political:
Growing political pressure is across the world which is enforcing government to put some more strict regulatory for saving prices of drugs.
2. Economical:
Global recession has a major contribution in downfall of world economics. Oil prices have reached at their highest level. Although pharmaceutical is effected by recession but big pharma are diversifying to Biotech pipelines where oil has a direct impact on it. Profitability is threatened here by increase in prices and frozen legislation.
3. Social:
Earlier public had no knowledge about pharma products but internet has changed all the images where every single person has access to information. So awareness compelled somehow to question or asks the reason of any product consumption. Patients ask doctors why to use it or to get some product with cheap prices.
4. Technological:
It has a vigorous impact on every industry. It has enabled two components in this industry: Advance products Customer Care or Direct Marketing Through direct marketing companies are getting closer to consumers. Demand without any high cost in no time, like healthcare products.
5. Environmental:
Pharma companies need to link their plans and strategies with environmental issues. Here each company has special opportunity to build high customer reputation through standard corporate social responsibility. People are getting more and more aware about their surroundings and environmental issues.
6. Legislation:
Almost every country is more concerned about their pharma products, government are providing thoughtful provisions to public through fixed prices or even affordable. Japan and Pakistan has one of the toughest regulations where government involvement is dominating. Prices are almost
Page 17

SWOT Analysis: Strength:
Global Manufacturing and Network. Focused Research and Development Capabilities. Strong Financial Performance. Diversified Product Portfolio. Good infrastructure. Highly skilled workforce. GSK has Strong Sales. Their balance sheet and financial statements is good and comprehensive. Good marketing infrastructure. GSK has an effective implementation and execution of strategic priorities, life cycle management strategies and business fundamentals. It also has the ability to reduce on costs.
Weakness:
GSK, has no clear, widely shared goals for the system. Lack of sustainable training and management skills. It faces difficulties with continuity of care (leading to frequent cases of patients lost in system). Raising cost sharing- this is as an expression of inability to cope with cost increases. The inter-sectorial linkages between health care, public health and social care are poor. The possibility of Co-marketing agreements limiting GSK's global presence. It also has an unsustainable revenue base. The company is geographically and diversely located. GSK has a low ability to retain the professionals. The ratio of different competences is unfavorable.
Opportunities: GSK possesses a strong cash and assets position. It is an opportunity for GSK to entry into antibodies and biologics segment of market.
GSK has the potential to deliver strong growth by R&D team. The effect of generic products sales on sales of the company. It also has the potential to expand business in emerging markets. Positive change in governmental and federal laws that may concerns with the healthcare.
Page 18

Threat:
The threat of demographic change and ageing The threat of counterfeit drugs being sold in competition with legitimate products. Higher expectations of people to health system. The increasing cost of drug trials and ever higher standards imposed by national drug approvals bodies. An increase in the number of safety issues surrounding products. The threat of competition from products similar to GSK's in R&D that reaches the market close to or before GSK's products. The ecological and public health threats. The new potential of emergent China, India and competition in diverse regional markets. Patent expiry on drugs that generates strong income could be a threat.
BCG Matrix: Cash cows: are units with high market shares in a slowgrowing industry. As a leader in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate. Meaning, they generate more cash than they consume. These units are milked by extracting the profits and investing as little as possible.
Dogs: have a low market share and a low growth rate. It does not generate or consume large
amount of cash but it is a cash trap due to the cash locked up in the less potential business.
Question marks: it is characterized by rapid growth and therefore consumes high amount of
cash. However, they have low market shares and do not generate much money, but it has the potential to gain higher market shares and become a star and finally a cash cow when they market grow slow.
Page 19

Stars: are units with a high market share in a fast growing industry, with the hope that the stars
will eventually become cash cows if it is maintain in the category of leadership. GSK has high relative market share and high market growth rate along with good cash flow. This puts GSK under star category in BCG matrix.
GSK has a product portfolio with a significant cash flow position this in turn has spurred on a meaningful gearing by GSK management. This puts the company firmly in a star consolidation of $23.5bn USD over three years, the growth, with mid-digit growth in 2012 impacted by generic competition. performing position. With asset company is likely to attain double-digit earnings
Porters Five Forces: Threat of new entrants:

Due to the high costs required to enter the pharmaceutical and healthcare industry, the threat of new entrants is quite low. The economies of scale for production may not be very significant but there are other barriers to entry. It is very timely and costly process to develop new products that require extensive research and development. The government and federal laws and Food and Drug Administration impose strict rules and standards on the companies that can act as a barrier to entry. Patent expiries is a huge barrier for the new entrants in this industry, as the patents last about 20 years and thus the products are protected by their respective companies. The new firms trying to enter the market could find this very discouraging. The already established firms like GSK have constructed strong brand names and loyalty with its customers thus making it difficult for new firms to build up a competitive brand name.
Threat of substitutes:
GSK faces a huge threat from generic brand medication- often seen as the main substitute of the products produced by pharmaceutical companies. Complementary Alternative Medicines (CAM) is another substitute of GSK products. The generics, CAM and brand names are the same product delivered to the customers, the only difference being name and price.
Page 20

Bargaining power of buyers:
Buyers do not pose significant threat on GSK, as the company spends most of its R&D to develop new patent products. The major consumers of products are doctors, pharmacists, patients, hospitals and other healthcare facilities. Considering the number of buyers in the market, the power of buyers is relatively small.
Bargaining power of suppliers:

The main suppliers for GSK are labour, raw material providers, patients in clinical trials, study staff, investigators and other ranging from production, marketing to distribution. The suppliers hold immense power and can impose a considerable threat to the company by withholding supplies or reducing the quality of supplies and thus can have a major effect on GSK.
Rivalry among competitors:

Pharmaceutical industry is very aggressive and dynamic. There is the constant struggle for market share within the dynamics of the industry based on innovation and new patent products. The rivalry is such in this environment where only the strongest would survive.25 GSK has.
Page 21
STRATEGIC ANALYSIS OF GLAXOSMITH KLINE. Top Stories

Charitable Programmes: GSK's commitment to give free albendazole tablets to the WHO for, and until, the elimination of lymphatic filariasis worldwide. In 2006, Novartis committed USD 755 million in corporate citizenship initiatives around the world, particularly focusing on improved access to medicines in the developing world through its Access to Medicine projects, including donations of medicines to patients affected by leprosy, tuberculosis, and malaria; Glivec patient assistance programmes; and relief to support major humanitarian organisations with emergency medical needs. However, some NGOs such as Mdecins Sans Frontires do not routinely accept corporate donations of medicines. More precisely, they do not become reliant on such supplies of medicines because the supply is dependent upon the fluid, profit-driven charities of said pharmaceutical companies, and thus may dry up during a critical or otherwise important time. The book An Imperfect Offering: Humanitarian Action for the 21st Century by ex-MSF president James Orbinski describes this in detail.
Our planet:
Find out all about our approach to caring for the planet.
On the water front...

Find out how we plan to reduce our water use by 20% by 2020. How we approach saving and recycling water differs across our business and by locality. Thats because unlike the impact of carbon emissions impact on water supplies tend to be localized. Aspects like the weather and season, water quality and other users of the water system are complex, and create a unique requirement for each area. This means that often the most effective ideas for reducing our impact on water supplies will arise out of local knowledge. Our medicine purification plant in Port Fairy, Australia is a case in point.
Water recycling at Port Fairy:

Australia has been under constant threat of drought in recent years. As a result, the local community is aware of the need to conserve water and it has become a passionate issue within society. Up until just a few years ago, our Port Fairy site used approximately 300,000 litres of water per day. Following a suggestion from an employee, we initiated a project to reduce the water requirements of the plant by about 20%.

Previously, fresh water was required for three stages of the medicine purification process. Now, instead of pulling fresh water from the local supply for each stage, the same water is recycled and used throughout. This amounts to around 30 million litres of saved water every year. The amount of waste water has also been significantly reduced.
Water savings at Ulverston:

A different approach has been developed by staff at our antibiotics manufacturing plant at Ulverston in Cumbria. The site opened in 1948 and has played a key role in recent years in our fight against infectious diseases. However with such a long history, parts of the plant had inevitably become redundant over time as manufacturing processes and products changed. Staff at Ulverston realised that adapting the old plant to accommodate new processes was wasting both energy and water. So over the past two years they have moved the entire solvent recovery facilities to a new, purpose-built section of the plant. This has enabled them to turn off the old plant at source, resulting in significant water savings. They have also had some success with ultrasonic leak testing a standard practice for identifying underground leaks. One example was the discovery of a water line supplying the nearby town which was leaking full bore. Projects such as these have seen Ulverston achieve a 37% reduction in water use since 2009 the equivalent of nearly 200 Olympic-sized swimming pools. Steps like those taken at Ulverston and Port Fairy are being carried out right across our global sites, as we strive to meet our ambitious target of a 20% reduction in water consumption by 2020.
Green chemistry:
Our scientists are on a mission: to discover new medicines while reducing the environmental impact of their manufacture, supply and use. This is part of our overall environmental sustainability goal across our business, to bring in greener practices and reduce our carbon impact. Our long-term goal is for our entire value chain which includes supply, product distribution to customer, customer use of product and then product end of life - to be carbon neutral by 2050.
It's not easy being green

No simple set of measures will enable us to achieve these targets and many diverse approaches are needed. Our green chemistry initiative is one of these. A specialist chemistry unit, created in 2012, is on call to help our R&D research scientists come up with ways to make our medicines using greener processes. For example, choosing solvents (used in the chemical processes) that can be recovered and recycled in an energy efficient way rather than disposed of by incineration - means fewer supplies are needed, less goes to waste and there is less impact on the environment.

The team, which spans sites in the UK and the US, is looking to introduce a wide range of advances, from eliminating potentially harmful waste products, to using greener solvents and reagents (substances or compounds that bring about a chemical reaction). Theyve already developed guides to help teams to make environmentally sustainable choices and are influencing solvent and reagent choices across all of our labs. And its not just our specialist chemistry unit that is looking to make medicines greener. Another team, looking at the chemical synthesis and manufacture of one of our experimental medicines, has recently seen successes such as: using greener methods of chemistry: materials that are less toxic, easier to dispose of or recyclable Working with processes that need less material and produce less waste Developing ways to recycle the solvents used in chemical processes Implementing a new waste water treatment system using fewer products and packaging As a result, we have been able to cut by 80 per cent the volume of water and zinc we were sending to waste, and 21.5 million fewer tablets and 850,000 fewer plastic bottles have been produced for use in clinical trials. Over the product lifecycle, the team will have saved an estimated 600,000 tonnes of CO2 emissions, the equivalent of over 3,200 trips to the moon - and back - in a family car.
Green chemistry academic partnerships:

We are also looking to the future and forming partnerships with leading universities to support more research in Green Chemistry. Our pioneering partnership with Nottingham University - announced in 2010 - will see the construction of a new facility at the University which will focus on the development of green chemistry. Work on the facility is underway and is scheduled for completion in January 2015. The facility will support academic teaching and research in the field of green chemistry, to develop cleaner and safer chemical processes that produce products of equal quality in more efficient ways. More recently, we have formed a new collaboration with the So Paulo Research Foundation (FAPESP) to create a new Centre of Excellence for Sustainable Chemistry in So Paulo, Brazil. The Centre of Excellence will focus on sustainable chemistries most relevant to the discovery and development of medicines. Once the new centre in So Paulo is established, it will work with The University of Nottingham to facilitate the sharing of knowledge and expertise between Brazilian and UK researchers.
Page 24

According to Helen Sneddon, Head of the Green Chemistry Performance Unit at GSK, This is a wonderful opportunity to work with the best of Brazilian talent to explore opportunities for more sustainable solvents, reagents and feedstocks, including those from renewable resources.
Sustainable manufacturing of amoxicillin:

One of the most widely prescribed antibiotics in the world has not traditionally had a very green footprint. Amoxicillin, which has been around for 40 years, is usually synthesised using chemical processes that need very low temperatures, and large volumes of organic solvents. This process results in high levels of waste and energy consumption, as large quantities of liquid nitrogen are needed to create the low temperatures, while the organic solvents need to be recovered and disposed of at the end of the synthesisation process. As part of our commitment to reduce our carbon footprint by 25% across the business by 2020, we recognised the need to find a greener process for making amoxicillin. To this end, a green chemistry collaborative team was formed at our amoxicillin manufacturing plant in Singapore, to explore the possibilities of reducing the antibiotics footprint. The team suggested a newer, more environmentally-friendly method of production, using enzymes. Enzymes are proteins produced by living organisms to act as catalysts for specific chemical reactions. The enzyme we use is cultivated in a fermentation process using bacteria, yeast, and fungi. In the presence of water, it couples two starting compounds together to form amoxicillin.
Strategy and opportunities:

Emerging markets countries outside the USA, Western Europe, Canada, Japan, Australia and New Zealand - accounted for 3.7 billion of GSKs 27.4 billion turnover in 2011, and have previously been identified as major areas for development. The company has already opened a manufacturing base in Iraq and is also planning further expansion into India, one of the worlds fastest growing drug markets. This expansion forms the first of the three strategic priorities identified in GSKs 2011 annual report:
Grow a diversified global business Delivery more products of value Simplify the operating model
In another move into new territory, GSK has recently begun work with the Formula One manufacturers the McLaren Group to focus on improving efficiency and business processes.
Page 25

Our Communities:
Finding tomorrow's scientists How we are stirring students' interest in science as a career Countering the counterfeiters Tackling counterfeit medicines using mobile technology
Related stories...
Easing the burden of migration in China Helping Chinese economic migrants integrate into society
Health for the Roma Helping to provide healthcare for Roma communities 'Loving Life' Providing art therapy to cancer patients in Lithuania Children's Health Fund partnership Helping low-income families in the USA get the care they need
Get to know GSK's business structure and strategy

GlaxoSmithKline was the official laboratory services provider for the 2012 Olympics.
Pharmaceutical company GlaxoSmithKline (GSK) is probably best known for its development of drugs and vaccines. However, it also owns some major health-related household brands such as Horlicks and Aquafresh.

GlaxoSmithKline was the official laboratory services provider for the 2012 Olympics.
Pharmaceutical company GlaxoSmithKline (GSK) is probably best known for its development of drugs and vaccines. However, it also owns some major health-related household brands such as Horlicks and Aquafresh.

GlaxoSmithKline was the official laboratory services provider for the 2012 Olympics. Pharmaceutical company GlaxoSmithKline (GSK) is probably best known for its development of drugs and vaccines. However, it also owns some major health-related household brands such as Horlicks and Aquafresh. GSK is based in the UK. While it employs around 12,500 people in its research teams, it also employs over 27,000 people in its global manufacturing and supply arm.
Vital statistics
GSKs 24 research sites have developed medicines to treat six major health areas: asthma, diabetes, digestive conditions, infections, mental health issues and viral control. Its specifically focusing on the World Health Organizations three priority diseases: HIV/AIDS, malaria and tuberculosis. The company is also working on treatments for cancer, and creating vaccines: in 2011 it delivered 1.1 billion vaccine doses across 173 countries (80% of which were in developing countries). GSK was the official laboratory services provider for the 2012 Olympics, operating a World Anti-Doping Agency (WADA) accredited laboratory in partnership with Kings College London. It invested 4 billion in research and development in 2011 alone.
GSKs business structure

In terms of graduate careers, GSKs business can be divided into four main areas. Research and development includes drug discovery and medicine development, and consumer healthcare research and development (oral healthcare, over-the-counter medicines and nutritional products). Global manufacturing and supply this area is responsible for packing and supplying all of the companys products. Corporate includes HR, finance, legal, communications and IT work. Commercial (UK pharmaceuticals) which includes the following areas: Pharmaceutical provides medicines and vaccinations for the NHS. Consumer Healthcare manufactures and sells over-the-counter medicines and oral care products, including Beechams, Panadol, Piriton and Sensodyne. Nutritional healthcare develops consumer brands.
Page 27

Rankings and Awards
Ranked 3 in the Guardian UK 300 list of top graduate employers for 2012-13. Ranked number 18 in the Times Top 100 Graduate Employers for 201213. Shortlisted for the Most Popular Recruiter consumer goods manufacturing and marketing at the TARGETjobs National Graduate Recruitment Awards in 2011. Won the Most Popular Recruiter in the scientific research and development category at the TARGETjobs National Graduate Recruitment Awards in 2012 and 2013. Ranked 2 in Universums 2012 list of the UK's ideal natural sciences and healthcare employers Won the Outstanding Achievement in Chemical Engineering Award at the 2012 IChemE Awards for its work on a new process for manufacturing drugs. GlaxoSmithKline Unveils Strategy for Growth Company to Leverage Key New Products, Expand on Therapeutic Franchises, Enhance R&D Productivity, and Capture Merger Synergies to Deliver Strong Performance.
Highlights:
Despite the 6% adverse impact of product divestments - Kytril and Famvir - GSK forecasts 2001 earnings per share (EPS) growth of around 13%. 161 New Chemical Entities, vaccines and line extensions in development 117 of these in clinical studies Seretide/Advair (US launch planned for April) and Avandia identified as key drivers of growth. Key therapeutic franchises supported by a large number of line extensions, including: Augmentin ES approvable in the US; Augmentin SR filed; further development of Seroxat/Paxil in PMDD; Paxil/Seroxat to be launched for GAD and PTSD in 2001; Coreg to be submitted for severe heart failure; 908 Agenerase pro-drug to be filed in 2002. Record number of 9 in-licensed products during the last twelve months all in clinical development. Full pipeline of 23 innovative vaccines; 5 to be launched in 2001. New plans outlined to boost R&D productivity. Cost savings of at least 1.6 billion pounds sterling from merger and manufacturing plans confirmed.
GlaxoSmithKlines diversification strategy and market analysis

Earnings per share, excluding restructuring charges, were up 3pc at 26.3p but down 28pc at constant exchange rates. On the same basis, turnover fell 5pc at 6.77bn. Allowing for favourable fluctuations in currencies, group sales were ahead 19pc.
Page 28

Pre-tax profits fell from 1.87bn to 1.67bn, struck after 265m of restructuring costs.Various GSK drugs are coming off patent in America, allowing cheaper generic rivals to steal market share. Sales in the US the world's biggest drugs market fell 22pc to 2.3bn in the first quarter, and Andrew Witty, chief executive, said generic competition had reduce sales of drugs in its central nervous system portfolio by nearly 450m. Other markets were stronger, however, including Asia and Europe. The consumer division also reported solid growth, with turnover at constant exchange rates up 4pc at 1.15bn. Treatments include Alli, the over-the-counter weight loss drug that launched in Europe.
GSK TO IMPLEMENT NEW STARTEGIES IN PAKISTAN

Pakistans GDP and populations continuous growth trend attracts investors: Marson. GlaxoSmithKline Consumer Healthcare is set to increase its investment in high growth markets and Pakistan falls in this category, according to GlaxoSmithKline (GSK) Consumer Healthcare Middle East and Near East Head of Finance Paul Marson. GSK consumer healthcare has decided to invest at least Rs2 billion in Pakistan over the next five years, Marson said. In an interview with The Express Tribune on GSKs new investment strategy, Marson said that about 18 months ago GSK had decided to aggressively invest in businesses in countries like Turkey, Egypt and Pakistan. GSKs new strategy is to increase its investments in Pakistan, he said. Pakistan is one of the countries where we want to aggressively invest in the near future. According to Marson, Pakistan is a country where all economic indicators like GDP and population growth had shown a continuous growth trend that obviously attracts investors. We are mindful of this fact that going forward this market will be big market for us and for this region, he said referring to neighbouring India and China. Citing the example of Turkey, he said GSK sales had increased from 500 million to 2,500 million pounds sterling in three years, after the implementation of a new strategy. GSK had decided to reach new geographic expansions, other than the Middle East. This new strategy was implemented for both the pharmaceutical and consumer health care products of the company, he said, adding that the strategy was for high potential and high growth markets. The strategy is all about launching new products, bringing innovation and adopting new marketing strategy, he said. After the 2008 financial crisis, Marson said that a number of multinationals revisited their business strategies to cope with challenges and search for new opportunities, and this holds true for a number of multinationals who had shown interest in this region due to a high population and growth in the coming years, he added.
Page 29

Addressing the question of security problems in Pakistan, he said that they were not as bad as what the international media portrayed, though he agreed that Pakistan suffers from an image problem, which can be overcome with time as more investors visit the country frequently. When asked whether future investment affects the expected changes in tax structure in Pakistan, he said the company follows a local taxation system. We are flexible to the local markets and we make tailor-made business model in countries where we invest, he said. Marson said the local team consists of skilled employees in Pakistan who were capable of performing at par with global standards. We are confident that our new strategy will help us grow stronger with new investments, he added.
Published in The Express Tribune, May 22nd, 2011.
EXPENSION PLAN TO GLK.RS 2 bill. Company to directly market Sensodyne to consumers, rather than only dentists. GlaxoSmithKline (GSK) Consumer Healthcare is planning aggressive investments in developing healthcare products in Pakistan, with an initial injection of Rs2 billion in the next couple of years, said the companys Head of Finance for Middle East, Paul Marson. Speaking at the re-launch of Sensodyne, a toothpaste for sensitive teeth, on Monday, Marson said that his company was targeting Pakistan as part of the business plan to reach new geographical locations, other than the Middle East. We expect that 50 per cent of our revenue in coming years will be coming from the new geographical expansions, he said. Speaking about the companys new strategy, he said that he was confident that the strategy would help GSK reach targets. GSK Consumer Healthcare Business Pakistan General Manager Sohail Matin said that the company was altering its strategy and from now on, it would directly market Sensodyne to consumers, instead of marketing to dentists only. It is just the beginning. We will soon introduce new healthcare products in this market, he said. According to him, the quality of local GSK consumer healthcare products was comparable with any imported GSK products being imported into Pakistan. Matin added that GSK would like to conduct more awareness programmes on tooth sensitivity because one out of three people worldwide was suffering from it. GSK Consumer Healthcare Brand Manager for Oral Care Hafsa Farooqui said that dental care was uncommon in developing countries, and as a result, dental problems became serious among people in these areas.

Sensodyne was relaunched with a new packaging, without any change in ingredients, but the company would soon introduce new research products, added Farooqui.
Published in The Express Tribune, May 17th, 2011.
Pharmaceutical fraud:
Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the United States or equivalent state programs for financial gain to a pharmaceutical company. There are several different schemes[83] used to defraud the health care system which are particular to the pharmaceutical industry. These include: Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs. The Federal Bureau of Investigation (FBI) estimates that health care fraud costs American taxpayers $60 billion a year.[84] Of this amount $2.5 billion was recovered through False Claims Act cases in FY 2010. Examples of fraud cases include the GlaxoSmithKline $3 billion settlement, Pfizer $2.3 billion settlement and Merck & Co. $650 million settlement. Damages from fraud can be recovered by use of the False Claims Act, most commonly under the qui tam provisions which rewards an individual for being a "whistleblower", or relator (law). Antipsychotic drugs are now the top-selling class of pharmaceuticals in America, generating annual revenue of about $14.6 billion. Every major company selling the drugs Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson has either settled recent government cases, under the False Claims Act, for hundreds of millions of dollars or is currently under investigation for possible health care fraud. Following charges of illegal marketing, two of the settlements set records last year for the largest criminal fines ever imposed on corporations. One involved Eli Lillys antipsychotic Zyprexa, and the other involved Bextra. In the Bextra case, the government also charged Pfizer with illegally marketing another antipsychotic, Geodon; Pfizer settled that part of the claim for $301 million, without admitting any wrongdoing. On 2 July 2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a $3 billion settlement of the largest health-care fraud case in the U.S. and the largest payment by a drug company.[87] The settlement is related to the company's illegal promotion of prescription drugs, its failure to report safety data,[88] bribing doctors, and promoting medicines for uses for which they were not licensed. The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses. Those and the drugs Imitrex, Lotronex, Flovent, and Valtrex were involved in the kickback scheme. The following is a list of the four largest settlements reached with pharmaceutical companies from 1991 to 2012, rank ordered by the size of the total settlement. Legal claims against the pharmaceutical industry have varied widely over the past two decades, including Medicare and Medicaid fraud, off-label promotion, and inadequate manufacturing practices.
Page 31
Company
Settlement
Violation(s)
Year
Product(s)
Laws allegedly violated (if applicable) False Claims Act/FDCA False Claims Act/FDCA False Claims Act/FDCA False Claims Act/FDCA
GlaxoSmithKline
[94]
$3 billion
Off-label promotion/ failure to disclose safety data Off-label promotion/kickbacks
2012 Avandia/Wellbutrin/Paxil
Pfizer[95] Abbott Laboratories[96] Eli Lilly[97]
$2.3 billion
2009
Bextra/Geodon/ Zyvox/Lyrica
$1.5 billion Off-label promotion
2012 Depakote
$1.4 billion Off-label promotion
2009 Zyprexa
Page 32

REFERENCES:
1. Strategic Management concept and cases by FRED R DAVID 12th edition. 2. Crafting and executing strategy by Thomson. 15th edition. 3. www.GSKs.com.pk 4. www.gsk\web search\marketing-sales.aspx.htm5 5. www.google.com 7. www.wikipedia.com
Page 33

GSK Strategic Analysis. by KIRAN JAMEEL.

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

GSK Strategic Analysis. by KIRAN JAMEEL.

Uploaded by

Copyright:

Available Formats

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

IN THE NAME OF ALLAH, WHO IS VERY KIND AND THE MERCIFUL

STARTEGIC ANALYSIS OF GLAXOSMITH KLINE.PLC.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

I 01 02-03 04-05 05-10 11-13 14-15 15-17 17-28 29-30 31 I

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

GLAXOSMITH KLINE PLC

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Global Business Strategy:

Research and Development:

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Manufacturing and Distribution:

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

STRATEGIC ANALYSIS OF THE WORLD PHARMACEUTICAL INDUSTRY:

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Global Industry overview:

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Major factors of Growth:

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Porters Five Forces: Threat of new entrants:

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Bargaining power of suppliers:

Rivalry among competitors:

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE. Top Stories

On the water front...

Water recycling at Port Fairy:

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Water savings at Ulverston:

It's not easy being green

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Green chemistry academic partnerships:

By the desk of KIRAN JAMEEL

STRATEGIC ANALYSIS OF GLAXOSMITH KLINE.

Sustainable manufacturing of amoxicillin:

Strategy and opportunities:

By the desk of KIRAN JAMEEL