What’s GlaxoSmithKline Business Model?
GlaxoSmithKline PLC operates as a research-based pharmaceutical company. The Company develops, manufactures, and markets vaccines, prescription, and over-the-counter medicines, as well as health-related consumer products. GlaxoSmithKline provides products for infections, depression, skin conditions, asthma, heart and circulatory disease, and cancer.
What GlaxoSmithKline is doing in more details?
GlaxoSmithKline (GSK) is a science-led global healthcare company. GSK’s bestsellers include respiratory, HIV, immune-inflammation, oncology, and anti-virals, as well as central nervous system, cardiovascular and urogenital, metabolic, anti-bacterials and dermatology products.
Its major products include Advair/Seretide, its stalwart asthma medication; Relvar/Breo Ellipta, a chronic obstructive pulmonary disease treatment; and two HIV medications, Triumeq and Tivicay.
In the consumer healthcare business, GSK racks up big sales from its Sensodyne toothpaste brand, joint-pain relief medicine Voltaren, and fever relief medicine Panadol. Based in the UK, GSK has customers across the globe. The US accounts for nearly 45% of the company’s turnover.
Where GlaxoSmithKline is Operating?
GSK operates through three primary segments: Pharmaceuticals, Consumer Healthcare, and Vaccines. Pharmaceuticals is the largest by far, pulling approximately half of revenue.
The Pharmaceuticals division has a broad portfolio of innovative and established medicines in respiratory, HIV, immuno-inflammation and oncology. Asthma medication Advair has been GSK’s primary money spinner for many years although it faces intensifying competition from biosimilars and generics.
HIV drugs Trimueq and Tivicay are GSK’s next biggest, while other respiratory drugs include Relvar/Breo Ellipta, Ventolin, and Flixotide. The division’s R&D activity focuses on immunology, human genetics and advanced technologies.
GSK’s Consumer Healthcare segment generates about 30% of sales and produces products in the oral health, wellness, nutrition, and skin health categories. Its major brands include Advil, Voltaren, Centrum, Caltrate and Otrivin.
The Vaccines segment develops, produces and distributes around 2 million vaccines daily on the market in more than 160 countries. Meningitis vaccines Bexsero and Menveo are its biggest earner, followed by flu vaccine Fluarix and Shingles vaccine Shingrix.
Sales of vaccines account for around 20% of GSK’s annual sales.
Where is the geographical reach of GlaxoSmithKline?
Headquartered in London, GSK’s Vaccines business has over 10 manufacturing sites, across nine countries. It has presence in more than 160 countries.
The US is GSK’s largest market at nearly 45% of sales. Europe generates about a quarter.
What is GlaxoSmithKline’s Sales and Marketing Strategy?
GSK sells its products through a small number of wholesalers in addition to hospitals, pharmacies, physicians and other groups. Sales to the three largest wholesalers amounted to nearly 80% of the sales of the US Pharmaceuticals and Vaccines business.
What is GlaxoSmithKline Financial Performance?
Note: Growth rates may differ after conversion to US dollars.
The company’s revenue for fiscal 2020 increased to £34.1 billion compared from the prior year with £33.8 billion.
Profit for fiscal 2020 increased to £6.4 billion compared from the prior year with £5.3 billion.
Cash held by the company at the end of fiscal 2020 increased to £5.3 billion. Cash provided by operations and investing activities were £8.4 billion and £2.2 billion, respectively. Cash used for financing activities was £10.1 billion, mainly for dividends paid to shareholders.
What is GlaxoSmithKline Future Strategy?
The company’s priorities of Innovation, Performance and Trust are underpinned by its ambition to build a more purpose and performance driven culture, aligned to its values ? patient focus, transparency, respect and integrity ? and expectations ? courage, accountability, development and teamwork.
Innovation is critical to how we improve health and create financial value. In 2020 Total R&D expenditure was £5.1 billion, which was 15.0% of turnover, and an increase of 12% (AER and CER) from the previous year.
On an Adjusted basis, R&D expenditure was £4.6 billion (13.5% of turnover), 6% higher at AER, 7% higher at CER, than in 2019. On a pro-forma basis, Adjusted R&D expenditure grew 6% CER compared with 2019.
In Pharmaceuticals and Vaccines, the company focus on science related to the immune system, human genetics and advanced technology. In Consumer Healthcare, GSK leverage its scientific expertise and deep consumer insights to create healthcare products that meet consumer demands.
As a research-based healthcare company the company rely on intellectual property protection to help ensure a reasonable return on its investments so the company can continue to research and develop new and innovative medicines.
What is GlaxoSmithKline’s History?
Englishman Joseph Nathan started an import-export business in New Zealand in 1873. He obtained the rights to a process for drying milk and began making powdered milk in New Zealand, selling it as baby food Glaxo.
Nathan’s son Alec, dispatched to London to oversee baby food sales in Britain, increased Glaxo’s name recognition by publishing the Glaxo Baby Book, a guide to child care. After WWI the company began distribution in India and South America.
In the 1920s Glaxo launched vitamin D-fortified formulations. It entered the pharmaceutical business with its 1927 introduction of Ostelin, a liquid vitamin D concentrate, and continued to grow globally in the 1930s, introducing Ostermilk (vitamin-fortified milk).
Glaxo began making penicillin and anesthetics during WWII; it went public in 1947. A steep drop in antibiotic prices in the mid-1950s led Glaxo to diversify; it bought veterinary, medical instrument, and drug distribution firms.
In the 1970s the British Monopolies Commission quashed both a hostile takeover attempt by Beecham and a proposed merger with retailer and drugmaker Boots. Glaxo launched US operations in 1978.
Glaxo shed nondrug operations in the 1980s to concentrate on pharmaceuticals. A 1981 marketing blitz launched antiulcer drug Zantac (to vie with SmithKline’s Tagamet) in the US, where Glaxo’s sales had been small.
The company boosted outreach by contracting to use Hoffmann-La Roche’s sales staff. The Zantac sales assault gave Glaxo leadership in US antiulcer drug sales.
Under CEO Sir Richard Sykes, Glaxo in 1995 made a surprise bid for UK rival Wellcome. Founded in 1880 by Americans Silas Burroughs and Henry Wellcome to sell McKesson-Robbins’ products outside the US, Burroughs Wellcome and Co. began making its own products two years later.
By the 1990s the company, which fostered Nobel Prize-winning researchers, led the world in antiviral medicines. Its primary drug products were Zovirax (launched 1981) and Retrovir (1987).
Though an earlier bid by Glaxo had been rejected, Sykes won the takeover with backing from Wellcome Trust, Wellcome’s largest shareholder.
In 1997 the company formed a new genetics division, buying Spectra Biomedical and its gene variation technology. That year the company pulled diabetes drug Romozin (Rezulin in the US) from the UK market over concerns that it caused liver damage.
Glaxo in 1998 ended its joint venture with Warner-Lambert (begun 1993), selling its former partner the Canadian and US marketing rights to acid blocker Zantac 75.
In 1999 Glaxo trimmed its product line, pulling hepatitis treatment Wellferon because of slow sales and selling the US rights to several anesthesia products. It also cut some 3,400 jobs (half from the UK).
Also that year Glaxo threatened to leave the UK after the National Health Service opted not to cover antiflu inhalant Relenza, claiming the drug is not cost-effective.
The FDA in 2000 approved Glaxo’s Lotronex for irritable bowel syndrome, but several hospitalizations linked to the drug prompted the FDA to ask the company to withdraw it from the US market.
Later that year Glaxo completed its merger with former UK rival SmithKline Beecham to create GlaxoSmithKline (GSK).
In 2015 GSK bought Novartis’ Vaccines and Consumer Health business, and sold its cancer drugs business to the same company.