Critical analysis of

GlaxoSmithKlines Strategy
- Clifford Moon

Content
Introduction (GlaxoSmithKline)

Organisational Goals
Planning of the company
Competitive Advantage

Corporate Social Responsibility of company

Positioning of the company
Strategy Implementations

Recommendations
References

GlaxoSmithKline plc
Our organisation has rich history it starts from early 18th century.
GlaxoSmithKline was formed in 2000 after merging of Glaxo Wellcome plc
and SmithKline Beecham plc.
It is one of the worlds largest pharmaceutical company in terms of revenues.
It has delivered 1.4 billion doses of drugs in 179 countries in 2010.

Mission
To improve the quality of human life by enabling people to do more, feel
better and live longer.

Vision
To become the indisputable leader in the Pharmaceutical industry not only in
terms of size but also by to achieve their mission and improve the quality of
human life.

Organisational Goals
Every organisations have goals and to achieve this they need strategy. GSK
adopted various strategies to achieve growth, reduce risk and improve GSKs
long term financial performance.
Grow a diversified global business:
GSK is focusing mainly growth in emerging markets and also on its consumer
products operation then developed economies.
Deliver more products of value:
To be leader in the market companies need three elements like classic brands,
vaccines and innovative products.
Simplify GSKs operating model:
Business continues to change shape, it is essential to transform the operating
model to reduce complexities, improve efficiencies and reduce cost.
(GSK, 2011)

Planning

(GSK Annual Report 2010)

Grow a diversified global

business

Deliver more products of

value

Simplify GSKs operating

model

Drive growth in the

pharmaceutical business
in our core markets
Full the potential of
Emerging Markets
Expand our business in
Japan
Build our leadership in
dermatology
Grow the vaccines and
Consumer Healthcare
businesses

Focus on the best science

Diversify through
externalisation
Re-personalise R&D
Focus on return on
investment

Evolve our commercial

model
Re-shape manufacturing
Streamline our processes
Reduce working capital

GSKS Business Model

(Annual Report, 2010)

Group Sales (GSK Annual Report 2010)

Competitive advantage

(Chandon, 2003)

Top Pharmaceutical Companies

3 years Ranking Trend
2008

2009

2010
7

5
4

11
1

3
2

(Roth, 2008, 2009, 2010)

2
2
4

3
8

Corporate social responsibility of GSKs

Reduce the price of the medicine in the under-developed countries to 25% of
developed world prices.
Flexible pricing structure for middle-income countries.

Reinvest 20% of its profits from sales of medicines in developing countries

to support the strengthening of healthcare infrastructure.
Example

13,500 compound from GSKs library that have shown activity against the
malaria parasite have been made freely available online, a first for the
pharmaceutical industry.
(Barham, 2010)

Positioning

Strategic positioning is mainly concerned with the impact on strategy of the

external environment, internal resources and competences, and the
expectations and influence of stakeholders.
(Johnson and Scholes, 2005)

Positioning of GSK
Two and a half years ago, GSK has changed its business

strategy to provide cost effective , new and effective medicines

by restructuring and rigorous capital allocation.
Restructuring programme has allowed to diversify its sales

base from low growth markets to key growth areas such as

emerging economies.
During 2010 it has continued to improve its R&D pipeline,

environmental sustainability and commitment towards

neglected tropical diseases.
(GSK, 2011)

SWOT
Analysis of key environmental issues and the strategic capability could give the
Current strategic position of GSK. SWOT involves analysis of company's
internal environment in terms of its strengths, weaknesses and external
environment in terms of opportunities and threats.
Strengths:

Weakness :

Global presence and well

Patent infringement claims.

diversified.
Industry leader in R&D.
Strong sales and marketing.
Life cycle management strategies.
Strong financial position.
(Alacra.com, 2010)

Increasing generic competition.

Dependence on low growth

products.

Opportunities

Threats

Growth in emerging markets.

Competitive pressures.

Enhanced product offering.

Increasing presence of counterfeit

Drugs.
Movement into oncology and

biologics market.

Impact of generic products on

sales made by franchises.

Organic growth.
Further setbacks in R&D pipeline.

(Alacra.com, 2010)

Bowman's strategic clock

(Faulkner & Bowman, 1995)

Porters Five Forces Model for Developing Countries :

New Market Entrants :

Recognized Marketing Code

Barriers to Entry :
Government policy
Brand Recognition

Competitive Priority :
Highly Competitive
Low Fixed Costs & High
Working Capital
Differentiation Strategy

Power of Product and Technology

Development :
Reforming R & D
Entrants of New Vaccines by 2011 end.
Restructuring for Diversity and
Strengthening.

(Porter, 2008)

Buyers Powers :
Consumers do not have
bargaining power.
Price sensitivity is less.
Brand identity in the hands of
influencer.

 Strategy can be weighed not only based on the positioning and

planning phases, but carry great weight when it is actually
being carried out Implementation.
Implementation should consider the time scale of the operation,
resources and available funds.

It also must monitor and control the operations.

Measures (GSK Annual Report 2010)

Grow a diversified global
business

Deliver more
products of value

Simplifying the
operating model

Performance of core
pharmaceuticals and
vaccines businesses
Diversication of sales
Contribution of
Emerging Markets to
our overall sales and
growth
Growth of Consumer
Healthcare business
Expansion of Japanese
business
Build biopharmaceutical
portfolio

Contribution to sales of Delivery of major

new products
restructuring
Number of reimbursable
programme
product approvals and
Reduce working capital
lings
Sustaining late-stage
pipeline
Enhanced R&D
productivity and
increased externalisation
for Drug Discovery

Implementation of Strategy in GSK

As there are different aspects to be considered in order to evaluate the GSK
strategy implementation, based on the time constraint I would like to discuss 4 of
the aspects:
Marketing

: Grow a diversified global business and deliver more

products of value.

Operations : Simplify GSKs operating model

Sustainability: Increase growth, reduce risk and improve long-term
financial performance
Technology : Research and Development R&D

Marketing
Marketing strategy changes

according to the region where the

group is providing its products.
Pharmaceutical products are
subjected to price controls by the
government institution or private
GSKs marketing strategy is

different they always innovate new

medicines as well as they enhance its
old products with mild alterations
and deliver it to the consumer
accordingly

Operations
Operations strategy deals with the

design and management of products,

processes, services and supply
chains.
GSK is removing avoidable

processes and structures. The new

simplified operating will release
more resources for investment and
higher returns for share holders.
Simplifying organisation to speedup

decision making and improve

alignment to business priorities
Striving to ensure simpler and

efficient cross business process and

structures.
(Weyzig, 2004)

Sustainability
As part of environment, health, safety
and sustainability policy (EHSS) and

to achieve global leadership and

excellence it works with various stake
holders to reduce its carbon foot print.
GSK has revised its sustainability
strategy in 2010 to reduce its annual
costs by 100 million by 2020.
It acts beyond the operations to reduce
carbon emissions resulting from
supply chain and sales to customers.

Its vision is to reduce co2 emissions

by 25% in coming ten years and make
its products carbon neutral by 2050.

Technology
Technology depends on a vibrant

and productive R&D function that

encourages creativity and facilitates
the accelerated discovery and
development of new medicines and
vaccines.
A refocus on the best science led us

to create an entrepreneurial
environment in discovery and
medicine development.
GSK have strongest development

pipelines of potential new medicines

and vaccines in the industry.
GSK build collaborations and links

with other research groups

(GSK, 2011)

Recommendations
In emerging markets it should adapt a strategy to

protect itself from counterfeiting of its drugs.

Create new modelling tools to update data and

influence strategic decision making.

References

Alacra.com (2010) GlaxoSmithKline plc (GSK) - Financial and Strategic Analysis Review [Online]
http://www.alacra.com/acm/2087_sample.pdf [Accessed 17th November 2011]
Barham, L. (2010) GSK's approach to corporate social responsibility [Online]
http://social.eyeforpharma.com/marketing/gsks-approach-corporate-social-responsibility [Accessed 15th
November 2011]
Chandon, P. (2003) Innovative marketing strategies after patent expiry: The case of GSKs antibiotic
Clamoxyl in France,. International Journal of Medical Marketing, Vol. 4 No. 1, pp. 65-73
Faulkner, D. & Bowman, C. (1995) The Essence of Competitive Strategy, 1st edition, Prentice Hall PTR
GlaxoSmithKline plc. (2011) Our Strategy [Online] http://www.gsk.com/about/our-strategy.htm [Accessed
10th November 2011]
GlaxoSmithKline plc. (2010) GlaxoSmithKline Annual Report 2010 [Online]
http://www.gsk.com/investors/reps10/GSK-Annual-Report-2010.pdf [Accessed 11th November 2011]
Johnson, G. and Scholes, K. (2005) Exploring corporate strategy: text and cases, 7th edition, Harlow:
Financial Times Prentice Hall
Porter, M.E. (2008) On Competition, Upd Exp edition, Harvard Business School Press
Roth, G.Y. (2008)(2009)(2010) Top 20 Pharmaceutical Companies Report [Online]
http://www.contractpharma.com/issues/2009-07/view_features/2009-top-20-pharmaceutical-companiesreport/ [Accessed 17th November 2011]
Weyzig, F. (2004) GlaxoSmithKline company profile [Online]
http://www.docstoc.com/docs/15102099/GlaxoSmithKline-company-profile [Accessed 19th November,
2011]