Business straegies,development and management of Glaxo-Smithcline - Essay Example

Glaxo started as a small firm in 1970s with dried milk business and added antibiotics, nutritional supplements and respiratory drugs. Glaxo Inc was born as a result of acquisition of Meyer Laboratories in the US (Heller, 2006). It started investing in R&D during the 1980s which gave the company a phenomenal growth. By 1994 Glaxo had 3.6 percent share of the world market and had a strong presence in Europe and US (Bátiz-Lazo, 2003). Its position as the leader was established in 1994 when the industry as a whole faced increased drug discovery costs.

Wellcome Foundation (WF), the largest non-profit drug medical institution in the UK, had an ‘academic’ approach to pharmaceuticals – with strong science but weak in marketing. WF had a 40% stake in Galxo’s Zantac which contributed to 43 percent of Glaxo’s revenues. To a large extent the growth of Glaxo was based on the success of Zantac. Glaxo strategically engineered a takeover of Wellcome as Zantac’s patent was due to expire in 1997 and Wellcome had the capability to dissipate risk and ensure that resources would be able for research.

The merger further consolidated Glaxo’s position as the third largest company by market capitalization in London and the world’s largest research firm with 54,000 employees. Organizational culture differences erupted trouble in the merger. While WF had a laid back management style and focused on science, Glaxo had a commercial and control-driven culture. The drugs pipeline was unimpressive and new products failed to live up to expectations. This paved the way for the merger of Glaxo Wellcome with SmithKline Beecham at the turn of the century.

Glaxo SmithKline (GSK) was formed in December 2000 by the merger of Glaxo Wellcome plc and SmithKline Beecham plc. In 2005, it became the world’s second largest research-based pharmaceutical company in the industry (RedOrbit, 2006). The demand of the market was very high and integration of new people