GEP LECTURE
“Sometimes, you just have to get on the stage, give a speech, and say, ‘get it done!’”
Samaritan Strategy of a Global CEO By Lishia Erza There are a few dilemmas in the pharmaceutical industry, one of the strongest is having the stigma of being a business entity that takes advantage of sick people (often in poor countries too), and being a force that generates greater social benefits out of their successful inventions. Andrew Wi tty, CEO of GlaxoSmithKline (GSK) shares his strategy.
regulations should be put in place, and the chain of decision making process goes on, involving more people beyond the individual patient. GlaxoSmithKline as a pharmaceutical and vaccine business player operates in a complex environment simply because nobody wants to be sick and spend money. How does one go about selling products that people avoid buying? The challenge does not stop there. The pharmaceutical and vaccine business is highly regulated. It is constantly under scrutiny with teams of auditors looming around their facilities. The length of time for investments to return and make profit is sometimes discouraging. The H1N1 vaccine for example, had been in research and development since 1992, but had only come to production in 2009. Most initiations fail, m o r e o v e r, t h e r e a r e a r o u n d 1 3 , 0 0 0 researchers to keep motivated and focused.
For a global company, important decisions concerning survival, growth and sustainability of the company lies in the hand of its CEO. But for a sick person, decisions are made by a lot of other people. The doctor decides what medicine a patient needs, the market tells the company what medicines to produce and sell, the researcher comes up with discoveries that tell the companies what products are ready for production, the government decides - among other things what research and clinical trials are allowed, At GSK’s scale, the company consists of the civil society decides what government a wide range of independent businesses with
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various strategies to be reconciled. From pharmaceutical and vaccine units to consumer products. The good news is that once resources are effectively mobilized and breakthroughs happen, the payoff transforms lives, makes money, and leaves a legacy. The H1N1 vaccine sales alone hit £1 billion in the fourth quarter of 2009. It takes great capacity and sound strategy to be able to operate in a highly dynamic environment. A company like GSK needs to maintain links with policy makers just as much as they need links with physicians. There is a massive demography worldwide that affects affordability. 80% of healthcare expenditure happen in life’s later years. In China for instance, in 20 years, there will be a huge number of old people to care for. Governments worldwide seek cost containment in both pricing and rationing, priorities are made on what diseases are important to put money into. It takes twenty years to develop a product, by the time it is ready for market, the company still needs to stay synchronized with market demands.
results. On the other hand, pharmaceutical companies attract civil society’s attention, good and bad. Keeping civil society in the loop ensures GSK’s license to operate, particularly for research and experimentations. One of the things that GSK does is publishing all clinical research reports -- successes and failures. On failures, it is quintessential for GSK to recover, develop and ultimately protect the trust of both the shareholder and civil society.
“Samaritan With Benefits”?
GSK is a fascinating business entity. Under Andrew Witty’s leadership, GSK established a solid foundation to stay as market and opinion leader in the pharmaceutical industry. The long history of pharmagiants making third world countries their waste-basket and experiment laboratories might come to an end if GSK could pull this off, maintaining their accountability to the society with their new approach.
Patent pools, 75% price cuts in less developed countries, developing infrastructure from profit, etc. The common strategic approach is to think ahead, get ahead, stay ahead. In this case, being the leading good With markets in Europe and USA maturing, GSK Samaritan is apparently Andrew Witty’s strategy to begins to shift its market focus to emerging economies. ensure GSK’s future success. Relocating physical business to Brazil, India, China, Middle East and Africa provides space for invention due to low government intervention. The new market is also in need of pharmaceutical breakthroughs, especially in Africa where 70% of the world’s healthcare problem exist yet they have only 1% of the world’s healthcare budget to spend. GSK is the only pharmaceutical company doing research and development of treatment for neglected diseases in developing worlds. One cold day, many moons ago, a new GlaxoSmithKline In order to speed the process, GSK introduces a salesman came into a doctor’s office. Upon saying hello, patent pool for medicine for neglected tropical he was greeted by the reception, “Are you from diseases. With that, GSK has pioneered the idea that GlaxoSmithKline? The doctor wants to see you.” there can be more than a unipolar approach. This pool Eye for the market, Eye for the future
“A company like GSK needs to maintain links with policy makers just as much as they need links with physicians. “
is open for groups to donate findings and to collaborate with pharmaceutical companies, patient groups, NGOs, and just about anybody else who can contribute to the cause. Therein lie the need to build and maintain trust with both the shareholders and the civil society. Trust inducing policies include transparency and engagement with the public. Shareholders need to have confidence in their investment. They have become more vocal in their need to understand the strategies takes by the CEO. Shareholders need to see
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A young GP usually acts crazy around pharmaceutical salesmen. His first day, the waiting room was packed with sick people, and doctor wanted to see him. Right! Out came the doctor, vigorously shook his hand and said, “Your drugs save people’s lives!” The patients in the room started asking him which company did he work for, what drugs did his company sell, and that, was the beginning of Andrew Witty’s path to becoming CEO.