GlaxoSmithKline Essay ⋆ Business Essay Examples ⋆ EssayEmpire

GlaxoSmithKline (GSK) is one of the world’s largest pharmaceutical companies. While it is based in London, in 2008 it employed around 100,000 people in over 100 countries. Close to 15 percent of its staff is assigned to research and development. Unlike some of its other pharmaceutical counterparts, GSK possesses a strong pharmaceutical pipeline and promising products, but it has also generated some controversy for some of its goods (such as its diabetes drug Avandia).

With strengths in therapeutic areas such as vaccines, oncology, cardiovascular and metabolic drugs, neurosciences and biological-based products, GSK is a key player in the pharmaceutical arena. GSK has also demonstrated increased interest in the consumer healthcare segment by commercializing products such as nutritional drinks and over-the-counter (OTC) medication.

GlaxoSmithKline is the result of the $30 billion 2001 merger of GlaxoWellcome (which itself is the result of the mergers of Burroughs Wellcome & Company and Glaxo Laboratories in 1995), and SmithKline Beecham (which is the result of the merger of Beecham Instruments, Allergan, and SmithKline in 1982).

The current company traces the bulk of its history to the 1800s in the United Kingdom and has a strong history of growth through mergers and acquisitions. It was the first company to dedicate a factory exclusively to manufacturing medicine in 1859, and has a long history of diversification in novel drugs, over-the-counter medicine, nutritional, and animal health products.

Pharmaceutical products include treatments for asthma, HIV/AIDS, malaria, depression, migraine, diabetes, heart failure, digestive conditions, and cancer. They also have an important division that manufactures and sells vaccines for diseases such as hepatitis A and B, diphtheria, tetanus, whooping cough, typhoid, and influenza. Most of the products have enjoyed modest growth in the last few years, except for Avandia, which has garnered some controversy.

The drug, which was used to treat diabetes, was a blockbuster drug (which means it generated over $1 billion in annual sales) until scientific literature demonstrated that it could lead to heart attacks. The FDA required label warnings, but did not demand the withdrawal of the product. Nonetheless, sales of Avandia fell almost 22 percent in 2007.

The company is different from other big pharmaceutical companies in that it has an important division dedicated to consumer healthcare, while the other big pharmaceuticals have divested their over-the-counter (OTC) divisions over the last few years. As such, GSK sells a wide array of consumer packaged goods through divisions such as consumer healthcare (with products such as NyQuil and Nicorette), dental products (with products like Aquafresh), and nutritional drinks (such as Boost). In 2007 the consumer healthcare division accounted for close to 15 percent of GSK’s total business, and grew an impressive 14 percent over 2006.

GSK develops many products that target diseases that afflict populations in poorer countries, as well as developing medication for “orphan” diseases. As such, the company has traditionally adapted its price structure to accommodate poorer economies. For example, in 2007, GSK cut the price of its HIV drugs for the world’s poorest countries for the fifth time since 1997, and sold those drugs at cost in 64 of the world’s poorest countries. It also dedicated ₤282 million in 2007 for educational and community programs around the world, and is currently dedicating resources to three “priority” diseases identified by the World Health Organization: HIV/AIDS, tuberculosis, and malaria.

Through its long history, GSK has been implicated in a number of scandals. In one case, it was accused of overcharging Medicaid, to which it pleaded guilty and paid a fine of $87.6 million.

Other scandals include tax fraud, patent fraud, and antitrust behavior. Also, like all major pharmaceuticals, GSK is the subject of lawsuits relating to secondary effects in some of its drugs (such as Paroxetine and SeroXat), as well as the controversy surrounding its drug Avandia.

Bibliography:

Jean-Pierre Garnier, “Rebuilding the R&D Engine in Big Pharma,” Harvard Business Review (v.86/5, 2008);
GlaxoSmithKline, “Answering the Questions that Matter,” GSK Annual Report 2007 (2007);
Mike Gordon, “International Business: EU Adviser Faults Glaxo Actions,” Wall Street Journal (April 2, 2008);
Edgar Jones, The Business of Medicine: The Extraordinary History of Glaxo, a Baby Food Producer (Profile, 2001);
Gerald Zaltman and Lindsay Zaltman, “The Sure Thing That Flopped,” Harvard Business Review (v.86/7–8, 2008).

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