GlaxoSmithKline: The Shifting from Patented to Generic Drugs - Research Paper Example

GSK MARKETING PLAN Introduction The medical industry has attracted a lot of attention by many pharmaceutical companies and the GlaxoSmithKline Plc is among the global and well known players within the industry. Being a multinational the company specializes in research, development as well as the marketing of pharmaceutical products. It invests on vaccines, over-the-counter medicines and such other broad range of health-consumer related products. The company has a profile of operating in the various segments of consumer healthcare products and pharmaceuticals within the UK as well as other parts of the world. Other areas of specialization in which the company invests in are beverages, which are used worldwide. Besides the operations of the company within the UK market, the company has major markets within the US, Germany, Italy, Japan, Spain as well as in France. GlaxoSmithKline Plc as a trading company has a statement of mission, which is ‘provision and development of immunotherapeutic, as well as vaccines that are necessary for improvement of human health globally’. The company has made strategic milestones in the field over years and is credited for having great and contributions towards the global health as it is today. The company’s profile reveals that the formation of the company as it is today has involved merger efforts with many companies and thus would have a history from the early years of 20th century. The existence of the corporate identity of GlaxoSmithKline plc is not that old s it dates from the time of merger of SmithKline Beecham and Glaxo Wellcome in December 1999 (Addison & Lawson, 2012). GSK has special attention on such fundamental areas as realizing sustainable growth, improving long-term financial performances as well as reducing risks. It realizes these goals through embracing diversification, developing and delivering high-value products as well as adoption of simplified business models. The recent developments have seen the company adopt generic branded manufacturing to add to the previously existing patented strategies in order to command higher influence and relevance in the modern day market. Addison and Lawson through a recent discourse analysis study concerning the strategic development move of generic branding found out that this was necessary and very effective in lowering the associated performance risks as well as in increasing the range of products being traded on. The shift in production models into the incorporation of generic manufacturing has greatly revolutionized the industry through lowering the costs of production and in the process lowering the prices of the commodities on offer. The GSK Company therefore is able to manufacture cheap pharmaceutical products through lowered costs in research as well as in awareness creation. The move is strategic in that it enables the company to focus the competitive strategies in the manufacture of the trading products at higher efficiencies in order to continue in the lead in the world market amidst increased competition (Zou & Cavusgil 1995). In fact, it is through such a move that the company is acknowledged to diversify its performance and reach the poor developing economies through relatively cheaper medicine and the related services. Through intensified research studies and sharing of information with the other global players, GSK has been in a position to develop medical supplies strategically for the different market segments it supplies. The company has also formed various mergers over the years which are all seen to be very significant in overall performance of the company in the past years and which are projected to have a long lasting effect in the future. Basic to the mergers is the initial merger between SmithKline Beecham and Glaxo Wellcome to form the current GSK Company as it is. This merger has been effective in unifying and harmonizing the operations of these two companies. The other significant and strategic collusion happened in 2009 with the GSK colluding with a pharmaceutical company whose line of specialization was in manufacture of ARVs, the ViiV Healthcare (GlaxoSmithKline plc, 2012-2014). GSK and Pfizer merged to form a joint venture in which the GSK has greater dominance of about 85% of the shares. The strategy behind the formation of mergers as adopted by the GSK company over years have been in efforts to share the research findings and the market segments. Mergers empower such a company in manners of bargaining capacity, penetration to new markets as well as in acquiring generic power for production of these medical products. Great strides have been in research and development, which has seen the formation and discovery of new medicines, vaccines as well as other health products. Moreover, increased competition has made the company to improve on performance in order to overcome the challenges associated with competition as well as to remain relevant within the industry (Barton 1992). In the analysis of the GSK Company’s strategic macro, industrial as well as competitive environment, a special focus to the entire global industry of medicine and pharmaceuticals is involved (Johnson, Scholes & Whittington, 2008). In particular, we engage the SWOT analysis of the company from which we shall be in a position to project future performances of the company. Besides, a SWOT analysis would enable making of appropriate recommendations or the most appropriate and effective marketing mix to be adopted in introducing a new vaccine fro index diseases (“GlaxoSmithKline plc (GSK) - Financial and Strategic SWOT Analysis Review” 2013). In the analysis, we consider the internal as well as external factor endowments for the organization concerning the global industry at large. Strengths: GSK Company has well established marketing as well as sales infrastructure across the globe as shown by the worldwide distribution of its research plants and retail outlets. It commands a great influence in the industry due to its capacity to invest in large-scale research and development within the pharmaceutical industry. Higher production capacity of the company within the industry leads to economies of scale where the company is in a position to offer competitively low prices to target the poor segment within the developing economies while at the same time realizing a favorable margin of returns. The company’s high sales capacity strategically raises the portfolio of the company in the industry and this gives the company a competitive advantage against other small competitors. Moreover, it has in the recent past demonstrated high capacity to lower management costs through mergers as well as the adoption of generic production mechanisms. Weaknesses: The mature portfolios from marketed GSK products are increasingly exposed to the challenge of generic competition, which requires that the company devise ways to improve on mechanisms of competitive cover against such vices. The research and development pipeline often fail to deliver on the expected initial commercial gains. Such a weakness would be blamed on great losses in monetary as well as time resources that the company would suffer through mass investment into the research. Opportunities: There are postulations that with the adoption of CEDD-inspired research and development, the company has a high potential to realize high growth beyond 2014. Basing on the strong past ID presence, the company could exploit enhanced vaccine offering besides exploiting the oncology market, which shows traits of commendable high growth. The company has also a potential of investing into biologics (antibodies, segment) which is postulated to have high capacity to have high returns. It has also not fully exploited the least developed economies markets, which are thought of holding high potential for good performance of the company. Moreover, the company has the potential of increasing cost elimination through exploiting the strong cash position it enjoys. Threats: the major threat that the company is currently facing is the threat of losing market returns through key product franchises because of the generic erosion. Furthermore, research and development by the company continues to experience setbacks with the increase in competition from emergent companies. Organizational objectives The main objectives driving the mission of GSK Company are together with investing in new products and vaccines especially targeting the developing economies. The company invests more in developing new products at lower costs in order to price the products appropriately and cheaply in targeting the low-income segments within the market. Marketing strategy and segmentation In the simplest definition, segmentation of market alludes to classification of market segments on lines of commonality, kinship as well as similarity among others. What this implies is that people sharing one segment having much shared attributes a fact, which assists in helping the marketing agents, concentrates common efforts. Through concerted efforts towards a single segment where people share common attributes gives a marketing agency competitive advantage against other competitors within the industry. For instance, the marketing of new products by organizations, which specialize in research and development of new products like medicine and vaccine, is more effective while efforts are concentrated within a specified segment of people. It enables the organizations identify the common attributes of all persons within the segment and designs on the most appropriate tools to employ in targeting the segment for competitive advantage. However, it is worth noting that there are different types of segmentation, which include such as geographic segmentation, distribution segmentation, media segmentation, lifestyle segmentation, demographic segmentation as well as time segmentation (Thomas, 2007). Marketers today respond to the customers’ behaviors through various mechanisms or ways. These ways are however dependent on customers’ behavioral response to the urge to have their needs and wants met. Among the major ways that have in the recent past characterized marketers’ responses to these behaviors is the market segmentation. This refers to the specialization of marketing approaches to focus to various market groups. This is by taking the consideration that the entire market frame is composed of different categories of people who could be potential customers. However, depending on certain group characteristic, the different groupings require different approaches in marketing in order to be effective in targeting them. For instance, marketing strategies adopted in target to the poor segments in a society may not be appropriate in targeting the rich. Besides, marketing in target to the elderly may not be effective through the digital advertisement and promotions but the technique would be most appropriate for the young generation segment. Marketers are continuously acknowledging the differences within the market groups that are stipulated on age difference. Certain marketing procedures will be more appealing to the young generation than they are to the elderly and vice versa. This therefore has necessitated the marketing groups adopt the mechanisms that are seen to be most effective in targeting the distribution in age and social economic demographics of persons. Understanding the behavioral characteristics of consumers at the different age segments is critical in adoption of favorable target strategies as well as in segmenting strategies. Through the natural segmentation by age, the marketers are therefore able to address the various segments effectively and accurately through adopting the most relevant tools such as advertising through various channels while targeting the different age cohorts. Marketing mix In the analysis of GSK new vaccine on the market mix, the company is shown to have effectively adopted useful measures especially in targeting the emerging economies such as within India and in African countries. However, the company has not been very effective in introducing the ‘new’ anti malaria vaccine for the infants especially within emerging economies. This paper therefore suggests a workable marketing mix, which would enable the company effectively, launch and deliver the vaccine to the economies. The company’s market entry strategy should be through use of mobile technology. This tool of marketing and promotion is excellent because it is strategic in targeting the young, who are trendy and on whom the effect of IT is much on. The vaccine is wholly targeted for the children below three years in age and the youth and young adults form the main segment, which is reproductive. Advancement in technology in research and IT is to be acknowledged for such a realistic and necessary invention through which, curbing of the spread of malaria to children and the associated high infant mortality rates can be contained in these economies. The strategies formulated in reaching the customers through promotions, distribution and storage as well as through timely innovations are successful features that confirm the focus that the invention has over meeting the needs of customers. It is also worth noting that the company has the added advantage on which to ride on which is the already existing market share. The company’s products have been consumed across merely all parts of globe and hence consumer loyalty over the company’s products would therefore be assumed to be in existence. Finally, the vaccine is quite cheap and this would enable majority of the governments in the emerging economies to offer it freely to the populations hence effectiveness in marketing other products from the company among these populations. References Thomas J. W., (2007). Market Segmentation. Retrieved from: < http://www.decisionanalyst.com/Downloads/MarketSegm.pdf> Addison A. and Lawson V. (2012). GlaxoSmithKline: the shifting from Patented to Generic Drugs. Retrieved from: < http://rudar.ruc.dk/bitstream/1800/9473/1/GlaxoSmithKline%20%26%20the%20shifting%20from%20Patented%20to%20Generic%20Drugs.pdf> Barton D. L. (1992). Core Capabilities and Core Rigidities: A Paradox in Managing New Product Development. Strategic Management Journal, 13, 111-125. “GlaxoSmithKline plc (GSK) - Financial and Strategic SWOT Analysis Review”, (2013). Retrieved from: < http://www.researchandmarkets.com/reports/1291554/glaxosmithkline_plc_gsk_financial_and> GlaxoSmithKline plc, (2012-2014). Our history. Retrieved from: < http://www.gsk.com/about-us/our-history.html> Johnson G., Scholes K. and Whittington R. (2008). Exploring corporate strategy: 8th edition. Prentice hall publishing. Zou S. and Cavusgil S. T. (1995). Global strategy: a review and an integrated conceptual framework. European Journal of Marketing, 30(1), 52-69. Read More