Glaxo Smith Kline
GlaxoSmithKline – Business Case Analysis
Case Issue Number 1: Abroad Purchase
GlaxoSmithKline is faced with lower sales revenues within the United States as the population prefers to purchase their drugs from abroad at lower prices.
Case Issue Number 2: Product Development
GlaxoSmithKline has been criticized for the side effects of some of their medicines, so they need to invest more in product research and development
Case Issue Number 3: International Expansion
However GlaxoSmithKline already operates in 150 countries around the globe, they desire to penetrate the markets of the developing and less developed countries in order to increase patients’ access to medicines.
Current Situation
GlaxoSmithKline is the world’s most renowned pharmaceutical company, with annually increasing turnovers, investments and profits. They play a significant role in both national and international healthcare industries.
A. Current Performance
GlaxoSmithKline’s profitability for 2006 is measured with the aid of five profitability ratios: gross margin, operating margin, pre-tax margin, net profit margin and effective tax rate (detailed at paragraph 4.C.2.)
The profit after taxes adherent for 2006 was of 5,498 million GDP, 14% higher than the profit for 2005. (GSK 2006 Annual Report)
The 7% turnover growth adherent to fiscal year 2006 in comparison to 2005 is explained by the sales increase of the company’s main products. As such:
The market share by value in the anti-asthma and COPD class registered percentages of 29 in European countries and 33 per cent in the United States
The market share for 2006 within Europe registered a 2 per cent increase as compared to fiscal year 2005, but within the United States, the market share was stagnant.
The lack of growth on the U.S. market is due to the lower prescriptions generated by “a label change in early 2006 that restricted GSK’s ability to promote the product, offset by favourable pricing changes.” (GSK Website, 2007)
During fiscal year 2006, the GlaxoSmithKline pharmaceutical company has registered a 29.66% return on investment, when the ROI for the entire industry was of 13.56%. (Reuters, 2007)
B. Strategic Posture
Mission
GSK’s mission is clearly stated on their website, banners, posters, annual reports and it is highly visible throughout their campaigns and actions. As such:
The company’s challenging and inspiring mission refers to improving the quality of human life by enabling people to do more, feel better and live longer. (GSK Website, 2007)
Directly connected with the mission is the manufacturer’s spirit. They describe themselves as enthusiastic entrepreneurs who are dedicated to innovation. They value integrity, high performances and fair employee treatment, all with the final goal of becoming a successful world class global leader. (GSK 2006 Annual Report)
Objectives
The company’s objectives are not clearly stated, but are simply suggested throughout actions, performances and statistics. From these information sources, the GlaxoSmithKline objectives could be structured as follows:
increase both national and international market share (CI
Product Development and International Expansion