GlaxoSmithKline Business Model - Assignment Example

GlaxoSmithKline (GSK) PLC Assessment 1. What is Glaxo’s business model? The GlaxoSmithKline (GSK) PLC’s business model is financialization. GSK PLC is a big enterprise. This shows the case for a conjunctural non-epochal account of financialized capitalism which works through separation of intermediary elites and saving masses. This tackles corporate governance and private equity. Emerging markets are estimated to explain for forty per cent (40%) of growth in the international pharmaceutical market by the year 2020. GSK is dynamically in quest to unchain the prospective of emerging markets and has by now recognized an innovative business model within the GSK PLC, and prioritised reserves in capability and regulatory proficiency to build up its existing strong geographical marks in the emerging market countries. The GSK PLC is adapting its business model to succeed in the current healthcare Environment. In the company, there are diversity and balance. The company function in a fast-changing market from a regulatory as well as customer perspective. Regulators are becoming increasingly risk-conscious and payers more cost conscious. It is of the essence that pharmaceutical firms, together with the GSK PLC, grow and modernise to illustrate these market transformations. As the company adapts to changing environment, it has positioned itself above their competitors. This company is a broad-based, geographically-diverse and well-balanced firm encompassing consumer healthcare, vaccines and pharmaceuticals. All the way through the intellectual property system, the firm has a comparatively short copyright exclusiveness for conventional small molecule chemical pharmaceuticals. On the other hand, consumer healthcare products, vaccines and biological medicines generally have a significantly longer product life cycle.The GSK PLC’s presence in all the mentioned sectors will continue to grow and enables the company to better balance risk and sustain growth. 2. What is the criticism of the industry in the 1990s and 2000s? The criticism of the industry in the 1990s and 2000s involves effects of GSK PLC’s medicines and tax controversies and entanglement at different countries. The GSK PLC recognizes the distinction between the GSK PLC and the Great Britain's revenue body over the GSK PLC’s tax accountability. The dispute is primarily about transfer pricing and controlled foreign companies. The company is also engaged in a dispute with Japan's tax authorities. GSK PLC is claiming a refund of Y39 billion equivalent to approximately $US335 billion. In 2007, there was a criticism on the GSK PLC over diabetes drug Avandia. Experts pointed to researches connecting it to graver heart attack danger. On the other hand, GSK PLC conducted study claiming that rosiglitazone is safe. This research was published online Tuesday by the New England Journal of Medicine showing preliminary results of the experiment that was conducted. The GSK PLC closed its plant in Cidra due to declining sales of drugs including the diabetes treatment Avandia. The company will transfer production of Avandia and the related drug Avandamet to other facilities The GSK PLC strategy changed after financialization under stock market pressure for shareholder value. Financialization and strategy provides a mixed methods. Case study of companies like the Glaxo Smith Kline (GSK) PLC, General Electric, Ford and other huge firms demonstrate the new importance of strategy for the capita market as corporate narratives and initiatives perform management purpose and achievement. This provides the basis for subsequent work on French and German giant firms NED elites and CEO pay. 3. Did Glaxo increase expenditure in R&D and flexibility in product development between 1980 and 2003? Justify your answer by using the relevant data provided by the authors of the case study. The GSK PLC increased expenditure in Research and Development (R&D) and flexibility in product development between 1980 and 2003. Through these years, cost remains a big matter for the GSK PLC’s clients since the demand for healthcare keeps on improving with the ageing populations and high expectations from modern medicines. The GSK has tackled the issue on the decline of GSK PLC’s R&D productivity by radically redesigning its R&D organization. Through the increased expenditure in R&D and flexibility in product development, the GSK PLC is continuously developing more high quality compounds than ever before. The GSK PLC is the only pharmaceutical firm conducting research into the prevention and treatment of the World Health Organization (WHO)‘s three (3) priority diseases of the developing world, such as Human Immunodeficiency Virus (HIV) / Acquired Immune Deficiency Syndrome (AIDS), tuberculosis (TB) and malaria. Through those, the GSK is able to demonstrate progress that it had made in building an exceptionally strong product pipeline providing the fuel for future growth. The key features of 2003 are as follows: 1. New products were accounted for 25% of the total pharmaceutical turnover. 2. The trading profit was 6.9 billion pounds on turnover of 21.4 billion pounds. 3. Ten (10) major GSK products recorded double-digit growth. 4. Ten (10) important new products and new indications got regulatory approval. The GSK PLC is cooperating hand in hand with the government in order to decrease the sum healthcare expenses and to decreasing the company’s spending in order to function more efficiently and profitably in a lower priced environment. This will enable the company to continue with its investment in R&D. Likewise, the company is taking on a extra imaginative and elastic approach to product pricing. The company is keen to opportunities to share risk with customers as a means of demonstrating that the company has great belief in its line up of medicines. As part of the GSK PLC’s strategy, the company is improving efficiency year-on-year. It is working to lower the cost of developing products and have already outsourced some areas of the business to lower-cost countries. The company continuously assess and captures other opportunities to reduce costs. The company’s pipeline has expanded and flowed more quickly. This is an important company change as a result of innovations made to the GSK PLC’s R&D hardware and software. The company drastically improved the R&D infrastructure, breaking down the conventional large bureaucratic pharma model. The company is evolving and adapting to culture, helping its own people to improve the quality of science and management. The company ensures to create different and innovative medicines aimed at unmet medical requirement and at the same time focuses on developing innovative medicines that will permit regulators to come up with a clear evaluation on the comparative benefits and risks. 4. Identify alternative organisational models as suggested by the four Consulting Companies, and specify which one, in your opinion, is the most promising. There are alternative organisational models suggested by the four Consulting Companies. One of the organizational models suggested is the organisational or translational model. This model better exploit the science and reduce the phase attrition rates. FSK have the capacity to adapt to an innovation trajectory. However, external pressures on strategic and organisational management will continue to determine the level and rate of success of this pharmaceutical company. On the other hand, the learning organisation model offers a positive image that facilitates the development of new people and organisational development policies and practices. In this model, the learning organization challenges previously held dominant beliefs about organisational behaviour and change. The learning organisation is a powerful metaphor and force that triggers the generation of new values and new ways of seeing the world in which the organisation operates. Another model, the Product Information Management (PIM), is effective for Life Sciences organisations. GSK PLC one company addressing the challenges of making PIM submissions using the Centralised Procedure (CP) in Europe. PIM offers the benefits of re-use. It also eliminates redundancy. In PIM, the GSK PLC obtains a single output with all content. As well as adapting to new circumstances organisations need to make the most of an existing situation. It is during this situation where the quality of alignment is critical. Alignment model refers to the exploitation of proprietary assets, rolling out existing business models quickly and stripping costs out of existing operations. The ability to do both is termed ambidexterity. In my opinion, among these four (4) models, the most promising is this. A company like the GSK experiments with new organisational models and develops new technologies in search of blockbuster drugs while, at the same time, leveraging the returns from its existing drug portfolio. That is focusing on the present and the future – ambidexterity. Unfortunately the combination of adaptability and alignment is a difficult one to maintain. The difficulty is getting the balance right. The consequences of not getting it right, however, are costly. Some companies pay too much attention to alignment at the expense of adaptability. The result is good short-term performance at the expense of long-term success. Reference: Froud, J., Johal, S. Leaver, A. and Williams, K. (2005) Financialization and Strategy. Narrative and Numbers, London, Routledge, pp. 149 – 210. Read More