GlaxoSmithKline - SWOT analysis

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Q7 GlaxoSmithKline is the world's second largest pharmaceutical company. It was founded in 2000 as the result of a merger between two large companies GlaxoWellcome and SmithKlineBeecham. It has sales of £22.7bn and employs 110,000 people worldwide. Its headquarters is in Brentford, England and it sells such well known brands as Ribena (drink), Panadol (pain relief), Zantac (anti-ulcer), Zovirax (anti-viral) and Augmentin (antibiotic).

GlaxoSmithKline: Annual Report (2008)

a) Undertake a SWOT analysis of the company

World's second largest pharmaceutical company, after Pfizer, is GlaxoSmithKline (GSK), which was emerged from two big companies GlaxoWellcome and SmithKlineBeecham in 2000. It has 110 000 employees all over the world and sales of £22.7bn. It is leading research-based pharmaceutical and healthcare company, committed to improve the quality of human life by enabling people to do more, feel better and live longer. (gsk 2009) GSK is highly ranked in top 100 graduate employers, because as they say it is a place where ideas come to life. Concentrated in the UK, but also operating in USA and over 100 countries worldwide, GSK makes almost 4 billion packs of medicine and healthcare products every year. (Top100GraduateEmployers 2009).

Let us now turn to a SWOT analysis of GlaxoSmithKline company:

Strengths

· Excellent Brand

· Excellent turnover

· Top word's product

· Top R&D company

· Works with WHO

Weaknesses

· Expire of patent

· Loss in revenue

· Needs of new drugs

· Needs of new markets

Opportunities

· Aging population in UK

· Expand into BRIC countries

· Possible partnerships & mergers

· New drugs invention

· New diseases

Threats

* Competition from competitors

* End of patents

* Genetics industry

* Expensive research

* Useless research

Let us know analyse these SWOT findings

Strengths

One of the biggest GSK strengths is that it has earned a high quality worldwide brand, on which people trust and place a lot of money in. But for this to happen the GSK put a lot of effort by a lot of investment in research and development (R&D). GSK's most sold products are based on nervous system therapies, respiratory drugs, antiviral therapies and vaccines. It has an excellent range of drugs such as epilepsy treatment Lamictal, antidepressant Paxil, herpes treatment Valtrex, migraine therapy Imitrex, asthma medication Advair, and antibiotic Augmentin. Also company has products for dental care Aquafresh and Sensodyne, and smoking-cessation products NicoDerm and Nicorette. (Hoovers 2009) I think we all have heard more than once such brands as Aquafresh, Sensodyne or Nicorette, because all these products were based on high quality advertising. GSK is very involved in R&D for such concerned diseases as AIDS, HIV, TB, Malaria. GSK is already doing a lot to help those with HIV in developing countries, including funding research into drugs for children.(Guardian 2009) GSK announced plans to invest $97 million over 10 years "to improve research, development and access to AIDS drugs in Africa". (The Medical News 2009)

Weaknesses

As any other company in the world, no matter how big and powerful it is, GSK as well has a weakness side. One of the biggest weaknesses is that most of the dugs patents are running out and it will expire sooner or later, it means that then other companies will be able to take the patients and sell drugs cheaper, which would lead to another weakness - a huge loss in revenue. And it is clear that a shortage in revenue will affect harmfully the R&D, which is the most important thing for this company's future success and leadership in the world. Already there are 12 patents that are expired and during next 5 years there will be 10 more. (GSK Annual Report 2008) Therefore occurs a demand for new drugs. Finding new drugs is one more weakness, since it requires a lot of investment and research which not always lead to success and mostly to wastage.

Opportunities

There are several opportunities for GSK that could really increase its profit. In this changing and with full of increasing illnesses world there is always opportunity to find new drugs that have not been yet discovered by other pharmaceutical companies. Another promising opportunity is to expand into BRIC countries. Since these countries are the most stable in the world's economy (practically not affected by the credit crunch) it would be very beneficial according to high demand, cheap labour and exclusive local illnesses in BRIC countries. But I have to notice that as well as a lot of promising opportunities in BRIC countries there are negative side because of high corruption and political problems in these countries, besides in such big countries are always big and dominant monopoly industry in any sphere.

Since England has an ageing population it leads us to one more opportunity for GSK, publishing new drugs for old people diseases would lead to remarkable demand.

Furthermore a possible partnerships and mergers with other pharmaceutical companies would achieve better results in drugs development and would reduce competition. ”GSK announced that it has launched a unique partnership with Brazil's Oswaldo Cruz Foundation (Fiocruz) to develop and manufacture vaccines for pressing public health priorities in Brazil. The agreement will establish a new research and development collaboration programme at Fiocruz to develop a vaccine for dengue fever, a mosquito-borne disease that globally places 2.5 billion people at risk of infection.” (GSK 2009)

Threats

One of the biggest threats for GSK is huge competition from other pharmaceutical companies such as Pfizer, Astra Zeneca, Novartis, AstraZeneca, Bristol-Myers Squibb. Since the patent validity will not last forever, therefore competition is even more intimidating. Another serious threat is increasing desire for genetic drugs, especially lately because of the difficult economy situation in the world, concerning cheaper prices. But it always depends on the consumer - whether they want to receive higher quality or cheaper price from their drugs. GSK has some future plans like: Cut its prices for all drugs in the 50 least developed countries to no more than 25% of the levels in the UK and US - and less if possible - and make drugs more affordable in middle-­income countries such as Brazil and India, reinvest 20% of any profits it makes in the least developed countries in hospitals, clinics and staff. (Humanitarian News and Reviews 2009)

These plans could be taken as a threat because they will reduce companies revenue, but meanwhile they will make a indescribable effort for the human health improvement.

As we analysed the GSK SWOT analysis it is obvious that this company will continue to be one the leading pharmaceutical company in the world. Despite the fact that there are some threats and weaknesses GSK still has a lot of opportunities which are going to be improved in the near future and strengths - gained by long and high quality experience are the ones who could hardly be outrival.

Bibliography of Q7 :

Griffiths A, Wall S, 2008. Economics for Business and Management. 2nd ed. London: Person Education gsk, 2009. About GSK. Available at: http://www.gsk.co.uk [Accessed 26 Nov 2009].

Guardian, 2009. GlaxoSmithKline urged to pool its patents on HIV drugs. Available at: http://www.guardian.co.uk/business [Accessed 27 Nov 2009].

Hoovers, 2009. GlaxoSmithKline plc. Available at: http://www.hoovers.com/company/GlaxoSmithKline [Accessed 26 Nov 2009].

Humanitarian News and Reviews, 2009. Guardian - Drug giant GlaxoSmithKline pledges cheap medicine for world's poor. Available at: http://aidworkerdaily.com [Accessed 27 Nov 2009].

The Medical news, 2009. GlaxoSmithKline investment in AIDS drugs for Africa. Available at: http://www.news-medical.net/news [Accessed 27 Nov 2009].

Times Online, 2009. Tempus: GSK broadens its horizons. Available at: http://business.timesonline.co.uk/tol/business [Accessed 27 Nov 2009].

Top100GraduateEmployers, 2009. GlaxoSmithKline. Available at: http://www.top100graduateemployers.com/employers [Accessed 26 Nov 2009].

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