Issues Faced by GlaxoSmithKline

Back Ground

GlaxoSmithKline is one of the few pharmaceutical companies of the world that is researching on both medicines and vaccines at a time. GSK is working on three priority diseases for the World Health Organization’s. These priority diseases are HIV/AIDS, tuberculosis and malaria. GSK is very proud to have developed some of the leading global medicines in these fields.

The head quarter of GSK is in UK and its operation to be based in the US. GSK is one of the industry leaders of the world and have an estimated sale of seven per cent of the world’s pharmaceutical market.

Current or Past Issues Faced by GlaxoSmithKline:

In the past few months GlaxoSmithKline faces the following issues:

GSK Stop enlistment for Post marketing of Avandia Trial as FDA Reviews Safety

GlaxoSmithKline (GSK) confirmed that at FDA’s request we are suspending enlistment of new patients into the Avandia post marketing trial known as Tide (thiazolidinedione intervention with vitamin D evaluation). GlaxoSmithKline says that this move will give FDA more time to review suggestions given by its Endocrinologic and Metabolic Drugs Advisory Committee and Drug Safety and Risk Management Advisory Committee.

The joint panel of Endocrinologic and Metabolic Drugs Advisory Committee and Drug Saftey and Risk Management Advisory Committee had recently voted in favor of giving permission for the Tide study continue if Avandia remains on the market. The trial, which is being carried out under FDA orders, is consisting of cardiovascular safety of Avandia and Actos in type 2 diabetic patients. The patients that already participating in the study will be allowed to continue.

The decision to stop new enlistment in Tide Study had come after a week when both FDA committees voted in favor of allowing Avandia to remain on the market. Their mid-July meeting resulted in a 20-12 vote in favor of Avandia, though with additions in the current labeling of drug’s relating to cardiovascular risk factors.

The stop in enlistment of new patient in Tide study will give more time to clinical trial investigators and patients to learn about the data presented to the FDA advisory committee and the committee’s suggestions.

The comments given by Ellen Strahlman the M.D of GSK’s CMO. “We are committed to work with the FDA in the best interest of diabetic patients.”

GlaxoSmithKline: A Swine Flu Windfall?

British drug maker GlaxoSmithKline has gain orders from 16 countries for its swine flu vaccine and is in decisions with 50 more countries. GlaxoSmithKline (GSK) who is the British Pharmaceutical giant knows that the fear of the swine flu virus grows. GSK has earned orders from16 countries for 195 million doses of the vaccine against the H1N1 virus. This virus has killed more than 740 people worldwide.

Another England based drug maker i.e. Brentford began production of its new flu vaccine in June and starts shipping the first doses in September. Andrew Witty, CEO of GSK announces the company’s second-quarter results on July 22 briefing. In this briefing he confirms that the number of orders of vaccine is expected to be significantly more because the company is currently is in talks with 50 countries. According to Witty, only Britain has ordered 60 million doses of the vaccine, the U.S. has paid GSK $250 million to deliver it with “epidemic products” such as the individual ingredients used in the vaccine. These ingredients include the antigen so that an individual’s immune response and GSK’s adjuvent technology. This is sort of booster that used to increase the vaccine’s yield and strength.GSK also announced that it expectations in the increase of annual production of its inhalable anti-viral flu treatment Relenza, to 190 million doses, by this yearend. Relenza recorded the sale of $ 99 million for the quarter ended on June 30. There is only increase of just $5 million in the second quarter of 2008. GSK has invested $ 2.6 billion for new technology and capacity extension in order to meet the demand in the beginning of 2006. For this Witty says “Short of putting beds in the labs, we are throwing just about every resource we have into this”

The CEO of GSK targets that if the demand for Swine Flu drug and vaccine will continue than the company sales will increase in the second half of this year. GSK is in the race of several companies, like Novartis, Sanofi-Aventis, and Baxter International which are developing a swine flu vaccine. CEO is still confident that he will meet its commitments; the company’s total production capacity is still unknown. That’s because the current strain of the swine flu virus is yielding less of the active ingredient or antigen needed to produce the vaccine than expected. (Because each flu virus varies, different strains produce varying levels of antigens). Novartis also accepted that its production of swine flu vaccine is lower than its expected yield. Witty the CEO of GSK is still confident that he can be able to meets its commitments which he made by the governments around the world by using its current production level by early 2010.With countries stepping up efforts to combat the pandemic, GSK’s bottom line is likely to get a boost. The profit margins on both Relenza and the new vaccine are likely to be unpretentious. GSK has totally a separate pricing structure for the new vaccine. Such as wealthier countries like U.S. and Britain will pay under $10 per dose as the same price for the seasonal flu vaccine. Developing countries will pay a lower price. GSK will donate 50 million doses of the vaccine to the World Health Organization for distribution to the world’s poorest countries.

The increase in the sale of GSK’s flu vaccine is not enough to disturb the sale of generic medicines due to the competition for generic drugs. The sale of GSK is increased by 15% i.e. $ 11 billion and on the other side pound sterling weakens against US dollar. Overall GSK sales fell by 2% due to performance of US GSK’s pharmaceutical business and by 15% i.e. 3.8 billion because the previous top seller named epilepsy treatment Lamictal faced generic competition. The overall net profit rush by 12% i.e. $ 2.5 billion. By these results Witty agreed that there is a need of lot work to be done but also state that company was making progress in the right direction.

Changes Brought by GlaxoSmithKline

GlaxoSmithKline the World Giant Guarantee Cheap Medicine for World’s Poor

GSK the world’s second largest pharmaceutical company surprises the pharmaceutical industry by shifting its attitude towards the provision of cheap drugs to millions of people in developing countries. As per the new strategy made by head of GSK, Andrew Witty that, he will fall the prices of all medicines in poor countries and the most revolutionary of all will that he will share information of potential drugs with them that are currently protected patents. Witty says that it is the responsibility of the drug companies that every poor will get treatment. By doing this he challenges the other pharmaceutical giants to go ahead.

The pharmaceutical industry is already faces pressure over the past decade that is generated by Aids Pressure on the industry has been growing over the past decade, trigger by the Aids catastrophe. Drug companies have already been criticized because they ate not droop their prices for HIV drugs while millions died in Africa and Asia. Since then, campaigners have attacked the patents, which keep their prices high. The publication and film of John le Carre’s book named The Constant Gardener further damaging the reputation of the industry by portrayed that drug companies are heartless and dishonest.

But speaking to the Guardian, Witty guaranteed major changes to the system that the drug giant does business in the developing world.

He said that GSK will:

Reduce the prices of all drugs in at least 50 developed to not more than 25% of the level in UK and US and even more if it possible and also make the drugs more affordable in middle income countries like India and Brazil.

Share the information of potential drugs that are protected by the patents.

It will reinvest 20% of the profit that it earns in least developed countries in hospitals, clinics and staff.

Invite scientists from other countries, companies or NGO’s so that they join the hunt to discover the tropical disease treatments at its devoted institute at Tres Cantos, Spain.

The change to provide the cheapest drug to poor countries by GSK is shocked the campaigners who usually criticized the drugs companies who provide high price medicines. Campaigners privately say that this move is extraordinary even they are worried that it may challenge the generic industry which is currently supplies the cheapest drugs in poor countries. Witty also accept that due to his stance, the other drugs companies may against them. Despite of this he is inviting them to join for the attempt to make the people healthier in poor countries. Witty says that we work like crazy to produce the next generation medicine by knowing that this next generation medicine is remarkable for developed countries. We also want to do something for developing countries. The shift on intellectual property which is regarded as holy cow of the pharmaceutical industry is the most essential of his proposal. His proposal is that he has to start talking with the people. We collect our patents and tried to facilitate in the areas where much progress has not been made by their innovations. We want to work for TB. Campaigners has gave a careful welcome to GSK’s strategy. But Oxfam and Medicines Sans Frontieres said that company should go further and also include HIV drugs in the patent group. They also caution that the generics companies due to their low production cost are able to provide the low price medicines than big pharmaceutical companies. Rohit Malpani who runs the Oxfam access to medicine campaign authorize the concept of patent group. He is come out with an idea but no company has done anything about it. It is a big step forward. He is welcome that he is also inviting other companies to take this idea and have to run a race to become the top instead of race to the bottom.”

Marketing Strategies of GlaxoSmithKline Grow

Sales

As per the sale strategy GSK is proud of their products and believe in selling them with honesty and reliability. The sale representative of GSK demonstrates the benefits and suitable use of their medicines to doctors, pharmacists and other professionals in healthcare department.

We will train our representative by giving good science training which will help our representative to succeed. As per the leading survey of physicians they are ranked in the top five worldwide representatives because they devoted for continue learning and development.

Marketing

As per the marketing strategy the function of pharmaceutical business is focused on several major beneficial areas which include central nervous system disorders, respiratory and metabolic systems, and infectious diseases. GSK is also a medicine leader that treats with depression, diabetes, asthma, migraine, HIV, and cancer.

Planning for New Product

By offering viable input in research and development and review opportunities for licensing we will help to identify the new areas of diseases. We also establish teams to develop product and marketing strategies.

Managed Markets Division

This division is responsible for making and communicating strategies for all industry customers that may pressurize the flow of prescription medicines from manufacturer to the patient. These customers include large purchasers of prescription medicines, such as wholesalers, hospitals, pharmacies, national and regional HMOs, pharmacy benefit managers (PBMs), insurers and employers, plus state and federal governments.

MACS (Marketing Analysis and Commercial Support)

This division is responsible for delivering of information and making strategic analysis. It also provide operational support for a wide range of commercial activities along with training services for marketing and sales departments

Product Marketing Business Units

There are many marketing business units that help to support GSK products and therapeutic areas by providing communications, education about diseases, provide market research about new product, sales and new product launch support, and commercial strategy.

Support Functions

As per the name suggest these teams provide operational support and planed study at the back of scene

Board of Directors of GlaxoSmithKline

The Board of Directors of GSK is responsible for company’s corporate policies and responsible for activities, strategy and presentation.

Sir Christopher Gent is the Non-Executive Chairman of GSK. He is also providing the service of Chairman of the Nominations and Corporate Responsibility Committees.

Andrew Witty. He is Chief Executive Officer of GlaxoSmithKline. The board has appointed him in January 2008 and taken this charge on May 2008. The role of Chief Executive Officer is to control the overall running of the business and is supported by the Corporate Executive Team.

Professor Sir Roy Anderson is worked as Professor of Infectious Disease Epidemiology in the Faculty of Medicine at Imperial College, London.

Dr Stephanie Burns is Chairman, president and chief executive officer of Dow Corning.

Lawrence Culp is President and Chief Executive Officer of Danaher Corporation.

Sir Crispin Davis is an Independent Non-Executive Director.

Julian Heslop is Chief Financial Officer of GlaxoSmithKline.

Sir Deryck Maughan is worked as Independent Non-Executive Director and Managing Director of Kohlberg Kravis Roberts and Co. (KKR) and Chairman of KKR Asia.

James Murdoch is Chairman and Chief Executive of News Corporation, Europe and Asia.

Dr Daniel Podolsky is worked Independent Non-Executive Director and is Chief of Gastroenterology at Massachusetts General Hospital and Harvard Medical School

Moncef Slaoui is the Chairman of Research & Development of GlaxoSmithKline.

Major Competitors of GlaxoSmithKline

The following are the major competitors of GlaxoSmithKline. These competitors are differentiated by biotechnology companies, generic drug makers and only drug makers.

Biotechnology Companies Competitors:

Amgen Inc.

Genetech Inc.

Biogen Idec Inc.

Genzyme Corp.

Merck Serono S.A.

Gilead Sciences Inc.

MedImmune, L.L.C.

Life Technologies Corporation

Teva Pharmaceutical Industries Limited

Sandoz International GmbH

Generic Drug Makers Competitors:

Watson Pharmaceuticals Inc.

King Pharmaceuticals Inc

Ranbaxy Laboratories Limited

Mylan, Inc

Pfizer Inc.

Johnson & Johnson

Sanofi-Aventis

Novartis AG

Roche Holding AG

Drug Makers Competitors:

AstraZeneca PLC

Abbott Laboratories

Bristol-Myers Squibb Company

Stock Graphs of GlaxoSmithKline:Glaxosmithkline Historical Stock Chart

Glaxosmithkline Intraday stock chartGlaxosmithkline Monthly Stock Chart

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Analysis

Net Working Capital:

GSK is one top ten multinational companies of the world. Net Working Capital ratio is used to discover that what is remaining with the company if it lift all of its short term resources and used these resources to pay off its current liabilities. In 2009 the working capital of GSK is Rs.3,689,000,000. If the company net working capital is increases continuously it means company is in healthy position to pay its current liabilities when due.

Acid Test Ratio:

The acid test ratio or quick ratio of GSK is 1.11 in 2009 .The industry ratio bench mark is less than 1. This indicates that GSK is working efficiently as its ratio increases and more than 1 and it is due to inventory sold easily in the market and on cash.

Current Ratio:

The current ratio of the GSK is currently is 1.45. The current ratio for the industry is 1. This shows healthy sign for company.

Net Profit Ratio:

This ratio indicates earning left for preference and equity shareholders as percentage of net sales. The net profit ratio is 19.98%.Higher the ratio indicates greater utilization of its resources and better returns to its owners.

Gross Profit Ratio:

A GPM in 2009 of 370.22%.The increase of GPM can be attributed to the increase in cost of raw materials and direct cost with a significant increase in net sales.

Operating Profit Ratio:

Operating profit ratio represents profit earned against sales of each rupee. Operating profit margin of GSK in 2009 is 148.62%. If the operating profit increase each year because of increase in sale which shows that GSK efficiently meet its variable cost of production.

Debt to Asset Ratio:

The debt ratio is used to measure total assets proportion which is financed by creditors of the firm. High ratio indicates that large amount of company creditor’s money is used to earned profits. In 2009 the debt ratio was 0.662 which indicates that company uses its own resources to generate profit.

Debt to Equity Ratio:

This ratio is 2.990 in 2009.The lower this ratio indicates higher degree of protection by the creditors. The lower ratio is better for the shareholders of GSK, this is because a) A higher value would mean higher debt which implies increased interest payments resulting in lower returns and b) The investor would be the last person to receive any money in case the company is liquidated and the higher the debt the lower this amount would be.

Total Asset Turnover Ratio:

The total asset turnover measures that how much the firm efficient in using its own assets in order to increase sales. The higher asset turnover ratio indicates that firm efficiently used its assets. This measure is probably of greatest interest to management, because it indicates whether the firm’s operations have been financially efficient. The total asset turnover ratio in 2009 is 0.662.

Fixed Asset Turnover Ratio:

An ideal Fixed Asset Turnover Ratio for any company is 5:1. GSK has maintained this ratio well above the ideal value indicating that it generates Rs. 1.112 from every 1 Rs. of its fixed assets. It could be due to the depreciation charged on the gross block, due to which the net block is a lower value which in turn increases this ratio. This ratio shows an upward moving trend on analysis

Account Receivable Turnover in Days:

Since GSK has a lower ATR its Average Collection Period is higher i.e. it has increased the time for which credit sales is outstanding. This ratio gives a negative indication about the company revenue collections. ARP is 84 days in 2009.

Significant About GlaxoSmithKline: C:Documents and SettingsREKHAMy DocumentsMy Picturesgsk5.png

Mission of GSK: “To improve the quality of human life by enabling people to do more, feel better and live longer”

The mission of GSK support the idea of developing innovative medicines and products that will serve millions of people worldwide

GlaxoSmithKline is one of the few pharmaceutical companies of the world that is researching on both medicines and vaccines at a time. GSK is working on three priority diseases for the World Health Organization’s. These priority diseases are HIV/AIDS, tuberculosis and malaria. GSK is very proud to have developed some of the leading global medicines in these fields. The head quarter of GSK is in UK and its operation to be based in the US. GSK is one of the industry leaders of the world and have an estimated sale of seven per cent of the world’s pharmaceutical market. Being a leader of pharmaceutical market it is our responsibility to available at every place in order to improve the people health worldwide. It means that we must help the developing countries to provide the drugs at cheapest rate. This company has a foundation in science and they organized research and convert this research into powerful marketable drugs. We spend £300,000 (US$562,000) almost on every hour on research of new medicine. GSK produces medicines that cure major diseases like asthma, virus control, infections, mental health, diabetes and digestive system. GSK is also the leader in producing important vaccines and also developing new treatment for cancer.

GSK also market other products. Many of these products are the market leaders. These are given below: C:Documents and SettingsREKHAMy DocumentsMy Picturesv-aquafresh-logo.jpg

Over-the-counter (OTC) medicines. It include alli, Gaviscon and Panadol

Dental products like Aquafresh tooth paste and Sensodyne

Nicorette/Niquitin to control the smoking

Nutritional healthcare drinks like Lucozade,Ribena and Horlicks

Skincare products marketed by Stiefel Laboratories

Sale Performance of GlaxoSmithKline

GlaxoSmithKline had made a significant performance during the year 2009

GSK generates sale of £19.1 billion. The sale grew by 5% in the year as compared to previous year. The sale of £19.1 billion excludes generic products like Avandia and

West Market sales fell by total 6% from 2008 to 2009.

Emerging Market pharmaceutical business sales increase by 20% which is nearly an amount of £3 billion. This 20% increase in sales represent the total 10% group turnover.

Sale of consumer healthcare increase by 7% i.e. £4.7 billion with growth in all categories: OTC sales increase by 8%; Oral healthcare sales increase by 7%; Nutritional healthcare sales increase by 3%.

Adoair and Relenza increased the sales by 22% i.e. £1.6 billion in 2009, up 22%. These products are launched in the last three years that contributed around £260 million sales in 2009.

CEO of GlaxoSmithKline:

I am agreeing with the CEO of GlaxoSmithKline because I saw that GSK return to its sales growth in 2009. The main concern of GSK is to expand and increase the growth in major investment areas like Emerging Markets, Consumer Healthcare and Vaccines. For the growth of the company GSK has developed many rooms. This expansion is helped to reduce risk through lower sales instability like in 2009 GSK absorbed the impact of losing more than £1 billion of sales of genericisation in the US market. This also includes the sale influenza products to government for H1N1 deadly disease. When World Health Organization declares that H1N1 is worldwide problem just after five months GSK is able to supply an approved vaccine around the world. GSK is working closely with them in order to respond to their needs. The main aim of GSK is to focus on enlargement and escalation of its product portfolio. In 2008 GSK has received product approval of 12 products and completed 11 new filings. GSK has gain more FDA approvals for new medicines and vaccines than any other company in the last three years. GSK has a potential to launch a number of brand new medicines and vaccines like Benlysta which will be the first ever treatment for systemic lupus over the 50 years in coming next eighteen months. This will help us to set a constant goal of maintaining around 30 assets in our late stage pipeline. GSK is making development against their planned main concern. I have seen good progress in our sales performance in 2009 i.e. GSK generates sale of £19.1 billion. The sale grew by 5% in the year as compared to previous year. The sale of £19.1 billion excludes generic products like Avandia and West Market sales fell by total 6% from 2008 to 2009.Emerging Market pharmaceutical business sales increase by 20% which is nearly an amount of £3 billion. This 20% increase in sales represent the total 10% group turnover. Sale of consumer healthcare increase by 7% i.e. £4.7 billion with growth in all categories: OTC sales increase by 8%; Oral healthcare sales increase by 7%; Nutritional healthcare sales increase by 3%. Adoair and Relenza increased the sales by 22% i.e. £1.6 billion in 2009, up 22%. These products are launched in the last three years that contributed around £260 million sales in 2009.

GSK’s main consideration is on cost reduction. GSK long term strategy is to deliver new medicines, vaccines and consumer healthcare products and to continue take new initiatives to build society’s trust. By achieving this GSK has recognize the massive contribution of their employees and its broad network of partners. As we know that GSK is operating in a challenging environment. On the other hand, with further successful implementation of GSK planning, I believe GSK’s long-term forecast is improving and that GSK will enhance its position as a leader in healthcare company. GSK returned to its sales growth in 2009. GSK is confident that its sale will further grow in 2010. GSK believes that it can attain a position where it can carry its goal of long-term sustainable financial performance.