“It’s important that we generate more growth with less risk. ” GSK needs to find new sources of growth at a time when governments around the world are reforming healthcare and cutting spending. It is also outsourcing more research to partners to reduce risk. Its long-running collaboration with the US company, Theravance which is responsible for one of GSK’s most promising new drugs, the asthma treatment Relovair, which is now in late-stage development. GSK recently upped its stake in Theravance to 19% and this is likely to be the pattern for other collaboration deals 1. GSK is currently pursuing strategies for growth and stability and shaping up the overall market position. To enable this market capturing, they are identifying and pursuing different strategies in different areas of business. In fact, GSK ‘s main strategy is to broaden and balance their portfolio, and move away from a reliance on ‘white pills/western markets’. Sales generated from these markets and products have decreased from 40% in 2007, to 25% in 2010. Over time this should help to reduce the adverse impact of patent expirations on the Group. 2. The most important area of focus is strengthening the core pharmaceutical business.
Supplementing that will be increased investment in growth areas such as emerging markets, vaccines, Japan, dermatology and Consumer Healthcare. Out of this, the Consumer Health care sector needs more change in terms of R&D on a comparative basis. 3. Resources for this strategy include infrastructure, finance, knowledge, R&D and sufficient efficient HR to support the strategy. ( Tables containing GSK’s R&D expenditure, Manpower count). Capabilities- GSK has had a reputed brand name and image. They have been the market leaders in the Pharmaceuticals sector for quite some time.
Health care sector may be regarded as a sector that might go on to serve as a complementary service for the pharmaceutical sector. Creating complementary services will only help GSK create a more stronger base and might give them an edge over its competitors in the pharmaceutical sector 4. One key focus of GSK – Japanese Market, is something distinctive of the organization. While the competitors have been concentrating on a broader market – a continent, or a particular segment, GSK has come up with the strategy of focusing on Japan and increasing its market share.
Also, focusing on all the emerging sectors will help the organization grow with comparatively lesser risks. 5. Focus varies according to the business segment and area of operation. In the pharmaceutical sector, the focus is on overall market position. However, in emerging sectors and in the Japanese market, strategies may be adopted to initially attract a niche segment and then with time and performance, move to have an overall market place. 6. In developing economies like Africa, in their core business area – Pharmaceuticals, low cost model can be identified to some extent.
But then, from an other angle, it can be identified that GSK is trying to adopt differentiated focus. With concentration on a particular economy (Japan) and emerging markets, they are trying to differentiate. Differentiation on the basis of operations of business segment and on the basis of R&D can also be observed. 7. Management has been devising policies to Deliver more?products of value. Transforming R&D will ensure not only quick delivery of the current?pipeline but are also able to?sustain the flow of products for?years to come.
The Management has decided to •Focus on the best science •Diversify through externalisation •Re-personalise R&D •Focus on return on investment 8. Three strategic priorities Since 2008, the company has focused their business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve their long-term financial performance: Strategic priorities • Grow a diversified global business – We are diversifying our business to create a more balanced product portfolio and move away from a reliance on traditional ‘white pill/ western markets’.
We are investing in key growth areas such as Emerging Markets, Japan, Vaccines and our Consumer Healthcare business. • Deliver more products of value – We aim to sustain an industry-leading pipeline of products, ensuring that they demonstrate value for healthcare providers. Our R&D strategy is built around focusing on the best science, diversifying through externalisation of research, and improving the returns on investment. • Simplify the operating model – GSK is a large and complex organisation. We are transforming our operating model to educe complexities, improve efficiency and reduce costs. Source: http://www. gsk. com/investors/reps09/GSK-Report-2009-full. pdf ^ http://www. gsk. com/mission-strategy/index. htm < In Detail about the strategic priorities. The management has also decided to •Evolve our commercial model •Re-shape manufacturing •Streamline our processes •Reduce working capital 9. Pricing Middle Income Countries pricing http://www. gsk. com/world-of-gsk-2010/world/pricing/middle_income/ Source: http://www. gsk. com/world-of-gsk-2010/world/pricing/developed_world/ Source: http://www. gsk. om/mission-strategy/simplify. htm 10. Value chain – It basically includes the phase development, which is common to all the pharmaceutical firms. (I have a case study, which talks about the different phases while producing the product). Apart from this, below mentioned is basically what GSK does and how exactly it is different in the process of developing a product. GSK R&D has built one of the strongest pipelines of potential new medicines in the industry. In 2009, Pharmaceutical R&D was actively managing over 150 projects in human clinical trials across the globe.
Delivering this pipeline to patients safely and efficiently is the number one goal. Discovering potential medicines •Our early research identifies the biological targets interfering with a particular disease, and creates small molecules or biopharmaceuticals that interact with these disease targets. •A refocus on the best science led us to create an entrepreneurial environment in discovery, building on the success of the existing model of Centres of Excellence for Drug Discovery (CEDDs), groups focused around defined therapy areas. Taking the CEDD model ne step further we created a number of smaller Discovery Performance Units (DPUs) within each CEDD. These are small, integrated groups of 5-70 scientists, who focus on a particular disease or pathway. There are now 36 DPUs in GSK. The number of DPUs in each CEDD varies according to the science, and some standalone DPUs were created to explore new therapy areas (such as Ophthalmology), or new ways of working (such as the academic DPU which forms drug discovery collaborations with academia). •The CEDDs are now one year into their 3-year business plan defining overall budget and clear objectives.
The business plans have been reviewed at the end of year 1, and our discovery organisation is on track to deliver GSK’s objectives. •We continue to identify compounds from other companies that would enhance the portfolio and to create innovative collaborations to ensure that we are seen as a partner of choice for large and small companies. Our internal R&D expertise allows us to have a strong position in business development, and makes us able to complement our internal pipeline with acquisitions, in-licensing, co-marketing/ co-promotion deals, or future options collaborations. Delivering these medicines to patients Progression into late-stage development consists of optimising both the physical product properties of the medicine, i. e. the chemical steps and formulation required to manufacture and deliver it as well as the much larger scale studies in humans confirming efficacy and safety. The combination of the results of these two steps into a regulatory file for submission to regulatory agencies and approval for patient use is the responsibility of the regulatory team. •Medicines Development is organised by therapy areas in Medicine Development Centres (MDCs): Cardiovascular and Metabolic, Infectious Diseases, Neurosciences and Respiratory.
Each MDC has ultimate accountability for developing experimental drugs into regulatory-approved medicines for patients. The MDCs are responsible for creating value through the execution of full product development plans and ensuring strong partnerships with the rest of R&D and GSK, in particular the CEDDs, preclinical development, the regulatory and commercial groups, and manufacturing. •In 2009 emphasis was put on the simplification of the clinical development organisation, and on focusing investment on project spend versus infrastructure. This reflects the increased focus of R&D on eturn on investment. Adapting our structure to maximise our chance to succeed •R&D’s units in Oncology and Biopharmaceuticals are integrating the discovery and the late stage development group. This allows us to build critical mass in those two growth areas for GSK, and to focus on delivering a strong pipeline. Both integrated units are now fully set up, and have been very successful at progressing their pipeline in 2009 (see pipeline chart). •Our China Discovery team focused on neurodegeneration and neuroinflammation celebrated its second anniversary in 2009.
It has grown to approximately 280 employees in 2009, and has developed an impressive early stage portfolio. As products enter the clinic, the team is now establishing clinical capabilities. Governance Key projects reaching significant milestones are reviewed each month by a product management board, responsible for determining if a medicine has met criteria for passing into the next phase of development. GSK’s Chief Medical Officer, working with the Global Safety Board, is ultimately accountable for oversight of all major decisions regarding patient safety.
Our Global Safety Board is responsible internally for approving pivotal studies and investigating any issues related to patient safety arising during the development programme and post-launch. Information from GSK clinical trials is widely and easily available at the Clinical Study Register on GSK’s website. The oversight of strategic issues and budget management across R&D is owned by the R&D Executive team (RADEX). Source: http://www. gsk. com/investors/reps09/GSK-Report-2009-full. pdf