Marketing Strategy of Pharmaceutical companies GlaxoSmithKline - Coursework Example

Marketing Table of Contents Executive Summary 3 Mission ment and Market Overview 4 Current market scenario 5 PESTLE Analysis 6 Market share andconsumers 8 SWOT Analyses 9 Segmenting, Targeting, Positioning 10 Objectives and Issues 12 Marketing Strategies 12 Marketing Programmes 13 Financial Plans 14 Metrics and Implementation Controls 14 References 16 Appendices 18 Executive Summary Pharmaceutical companies are making great contribution to the economy of United Kingdom (UK), higher than most other high-tech industries. The pharmaceutical industry has experienced huge profit for a long time and thus pharma companies have increased their market share rigorously by penetrating into new markets. One of such pharma company is GlaxoSmithKline plc (GSK) which is a British multinational pharmaceutical company headquartered in London, UK. GSK has a unique mission statement which explains their aim and (objective of) providing consumers with new products and with more improved projects. The following essay elaborates the marketing plan of the company by describing the current scenario of the industry and also GSK. SWOT analysis identifies the strength and weakness and also the opportunities and threats of GSK that are changing from time to time with the competitive market. The responsibilities that are taken by GSK towards the environment, consumers and the shareholders have been discussed in the study. To evaluate the position of the competitors of GSK, competitive analysis has been done. The Segmentation, targeting and positioning concept explains the target market of GSK and what they do to position their products among its consumers. Lastly a forecasted budget for the year 2013-2015 has been prepared. The income is expected to decrease, even though it can be assumed that the expenses can be controlled. This would possibly because of the unstable condition of the global economy. Mission Statement and Market Overview The mission of the company is to improve the quality of human life by giving them more products and make them feel better and live longer. The Research and Development units, the partners of the company and the workers of the company work in harmony to prevent and treat diseases and make the world a better place to live. The business is focussed towards the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve long term financial performances. These priorities are; 1) growth of a diversified global business, 2) delivery of more products which offer more value, 3) simplifying operating model. Grow diversified global business by creating a balanced business and product portfolio capable of delivering sustainable sales growth. The main business areas are pharmaceuticals, vaccines and consumer healthcare which provide the company significant competitive advantages and opportunity of synergy. Deliver products of value: The Company has re-engineered the research and development (R&D) division in the organisation to develop a whole bunch of products that offer improvement in treatment of patients and healthcare providers. The company has outsourced the research activities allowing access to new areas of science and share the risk of development of its partners. Simplify the operating model through global restructuring programmes designed to deliver significant savings to support investment in priority growth business and thus improve competitiveness further. Pharmaceutical companies are making great contribution to the economy of UK, higher than most other high-tech industries. The National Health Service (NHS) accounts for more than 98% of UK’s prescribed medicines market, which is the sixth largest pharmaceutical market in the world. Most of this market is driven by approximately 35,000 general practitioners (GPs) of UK. The Pharmaceutical industry of UK is an open market, where the leading foreign companies and brands have strong presence. While the growth rate of this market has been decelerating, it remains one of the fastest growing components in NHS expenditure. The NHS does not generate any kind of national reimbursement list, but the UK government has adopted several means to keep medicines expenditure under control. These include cash incentives and constraints for GPs, expenditure on medicines, individual quarterly updates on GP prescriptions, the publication of a list of medicines that cannot be prescribed by GPs, the switching of some prescription-only medicines to over-the-counter medicines, and a co-payment system. The pharmaceutical industry has generally performed relatively well in the UK market, managing to preserve incentives to innovation. Drug makers and governments has increasingly entered into the agreements that provide some form of risk- sharing or price protection for new drugs. Since most European governments, including the UK authorities, are focussing on cost containment in the healthcare sector, alternative pricing schemes for medicines allow for budget control, as well as providing patients with access to highly innovative treatments. Current market scenario To throw light on the external environment of the company PESTEL analysis has been done. PESTLE Analysis Political Recently the European Union have developed proposals to remove control over the pharmaceutical industry since 2008. Its main aim is to focus on medicine safety inspections, improve health of the civilian, acquiring trustful medical information and eventually strengthening EU laws which guard the consumers from counterfeit drugs. The pharma products are sold under the price control of the government and the government when necessary would manipulate the prices of the products with the help of NHS in UK. GSK is affected by the price control policy of the government since they face difficulty in pricing the products according to their production cost. Economical UK attracts many multinational companies which are closely linked with the government. The NHS is shrinking budget and cutting down the funds since world is facing recession. Many pharmaceutical companies have downsized, with the aim of reducing their cost. This has affected many UK-based staffs as well. GSK has downsized so as to minimise the cost which have affected the staffs of GSK who lost their earning. Social Price being a dominant factor influences the choice of the consumer among the healthcare and the medicines. The issue that is concerned is the safety of drugs (which is one the most important area that should be looked upon by the pharmaceutical industries). The patients often demonstrates unsatisfied attitude towards access to medicines. They are often unsatisfied with the availability of full scale of newly developed drugs. So they are gradually losing confidence on the prescribed process of medicine supply. Technological The technology used in manufacturing of polythene sheets are becoming expensive as a result the price of the medicines are increasing. GSK is applying the same technology and taking the same path of increasing the price of the medicines. Environmental The companies have been using animals to test new molecules and their reactions before introducing them into clinical trials for humans. The pressure for the animal right rights activists have increased. Animal studies remain a small but vital part of GSK’s research team. But GSK has voluntarily decided to end the use of great apes (i.e. chimpanzees) in research. They do not carry out animal testing for products whose primary use is to improve the appearance of individuals (i.e. aesthetic or beautifying purposes). They only test non-medicinal products on animals where there are specific legal or regulatory requirement to make a health benefit claim (GlaxoSmithKline, 2013b). Legal There are stringent government regulations that govern the entry to pharmaceutical industry. The licensing requirement, clinical trial regulations, product efficacy and safety regulations have contributed to strengthen the entry barriers of new entrants in research based industry. GSK has been following the government regulations and have strengthened their position in the pharmaceutical market (GlaxoSmithKline, 2013a). Market share and consumers Pharmaceutical companies has been facing a time of unprecedented challenge due to huge cost in R&D, commercial marketing and increased pressures from regulatory authorities and healthcare providers. The competition among the pharmaceutical industry is stiffer than ever before as every pharma companies want to be the best hence GSK is facing a tough competition but it owns a dominant position in the global pharmaceutical industry with the market share of 9% in UK. The consumers of GSK in UK consist of the diabetic patients, patients suffering from asthma and patients suffering from cervical cancer (Tungate, 2008). Competitor analysis The pharmaceutical industry is highly competitive. GSK’s main competitors range from small to large pharmaceutical companies. GSK believes that the competitors are dependent on the discovery and development of new products along with good marketing strategy (Zeithaml, Bitner and Gremler, 2009). The following are the competitors: Table 1 : GSK and the Competitors Name of the product by GSK Name of the Competitor Name of the product of the competitor Respiratory Seretide Merck Singulair Central Nervous System disorders Paxil Pfizer Zoloft Antivirals Ziagen, Lexiva Novartis Famvir Metabolic Fosamax Merck Bonviva Vaccines Infanrix Sanofi Pasteur Cardiovascular Avodart Merck Proscar Source: (GlaxoSmithKline, 2013) The main competitors of GSK are Pfizer, Novartis and Sanofi and Merck which have given GSK a tough competition in UK market as well as in other parts of the world where the companies are working (Pharmaceutical competition, 2013). SWOT Analyses Strength GSK is operating in a competitive market with operating income of about £7.392 billion in 2012. The diversified product range has reduced the dependence on a particular product which has increased the sales of GSK. The vaccines acquired a good position in consumer healthcare market which has stabilized the income foundation of GSK (Baker and Hurt 2008). Weakness Products like Advair, Valtrex are confronting patent expiry. The medicine has not expired but the patent of this medicine have expired. It is uncertain that whether the new products can bring in sales to the expected sales decline of the expired products (Burk Wood, 2010). Opportunity The Vaccine market is growing consistently, which signifies that GSK would be also able to distribute vaccines swiftly throughout UK, for growth and development. Threat Both the segments Pharmaceutical and the consumer healthcare of GSK have faced severe competition from the established competitors who have been capturing the market very fast (GlaxoSmithKline, 2013). Segmenting, Targeting, Positioning Market segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers who have common needs and desires. The market segmentation allows the company to create product differentiation strategy to target them (Kotler, 2010). When the list of target markets is made, a company might want to start on deciding on a good marketing mix directly. But an important step before developing the marketing mix is deciding on how to create an identity or image of the product in the mind of the customer. Every segment is different from the others, so different customers with different ideas of what they expect from the product. In the process of positioning the company: It identifies the differential advantages in each segment And decides on a different positioning concept for each of these segments. GSK has specialized research and manufacturing of pharmaceutical and consumer health related products operating through two main business segments i.e. Pharmaceutical segment which includes prescription pharmaceuticals and vaccines. The other is the Consumer Healthcare segment which provides OTC medicines, oral care and nutritional medicines (Van Arum, 2013). The target markets are the group of customers that the business has decided to aim its marketing efforts. GSK’s main target customer segments are the diabetic patients, patients suffering from asthma and patients suffering from cervical cancer (Tungate, 2007). GSK has three strategic priorities for competitive positioning A drive to grow by strengthening the core pharmaceuticals business, supplement and diversify the market into new product areas with increased R&D investments in vaccines, biopharmaceuticals and consumer healthcare through a portfolio of powerful brands such as OTC medicines and also exploited the fast-growing emerging markets in UK. The genuine interest of GSK’s values needs a shift from traditional focused pharmaceutical manufacturer to more ethical company aiming to deliver more value adding products to the people worldwide. By improving productivity in R&D in areas where the people need better care and ensure patients GSK can have access to medicines even in the poorest parts of the world (Lindstrom, 2008). The change in old pharmaceutical business model especially in the internal working environment and management system, so that the work process is changed and there is removal of unnecessary processes and structures, which slows the production (GlaxoSmithKline, 2013d). Objectives and Issues Mission leads to a hierarchy of objectives i.e. business objectives and marketing objectives. GSK’s main objective is to provide life saving drugs and vaccines at reasonable price to the market (Moutinho, 2008). There have been few issues where GSK has faced problems. The license of some drugs was revoked in UK in September, 2010 because of the evidence that it can cause heart failure. There was even an issue whether the anti-nausea medicine Kytril is contaminated during the manufacturing process (GlaxoSmithKline, 2013f). Marketing Strategies It is a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. Marketing strategy includes all basic and long-term activities in the field of marketing that deals with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives. GSK promotes their products through advertisements in posters, flyers, newsletters, billboards. Also through public relations like CSR, partnership with similar charity organizations etc. Regulation is strict and plants in some local markets in UK would not meet the requirements. In the past it has been seen that GSK factory has been checked upon by the FDA [the US regulator], Saudi Arabian and Turkish regulators. Marketing strategies and programs must be developed to support marketing objectives. Thus, to achieve its objective GSK penetrate into new market with their products to expand their territory and increase their sales (Shimp, 2007). The reason which is helping GSK to continue making asthma drugs in Britain is a lack of competitors for the same line of products. Tablets and capsules are easily replicable once their patents run out (GlaxoSmithKline, 2013e). Marketing Programmes MyAsthma is a convenient and easy-to-use digital programme providing information that can help to better manage asthma triggers such as pollen, pollution and weather. It includes a simple 30-second test called the Asthma Control Test (ACT), validated by leading asthma experts, which gives asthma patients a reliable measure of their asthma control in an easy-to-understand score. For Sensodyne, the company has developed innovating marketing campaigns to educate as well as create awareness for consumers to understand Dental Hyper Sensitivity as a growing issue in the country New GSK representatives are trained by GSK on the medicines they promote which are designed to treat the diseases of the mass suffering. GSK abides by industry guidelines and codes established by national industry associations. Research programs are expensive but it can be balanced if the sales are high which in turn raises the market share of the company (GlaxoSmithKline plc adr, 2013). Financial Plans The objective of the section is to forecast the budget for GSK from 2013 to 2015. The net income will decrease from 2013 to 2015. The analysis show that the expenses as well as the income will decrease from 2013 to 2015. The interest expenses will decrease because the company is taking fewer loans as compared to the previous years. The predicted value of fair value of hedge will be decreasing due to the change in the fair value of recognised assets and liabilities. The predicted value of unwinding of discounts on provisions will be decreasing because the company is reducing the discounting on provisions through which they are earning profit (GlaxoSmithKline, 2012). Metrics and Implementation Controls The responsibilities of the organization are as follows: Through R&D and infrastructure and through collaboration with others the company has been innovating new ways to address currently unmet health needs. The company also looks forward to tap the untouched market with respect to different diseases which they have not yet made drugs for. The access to the product is improved irrespective of the people where they live and their ability to pay. The main objectives of the company is to provide sustainable improved long-term value and returns to shareholders and give consumers better and improved products to secure them from further health disturbances (GlaxoSmithKline, 2013c). References Baker, M. and Hart, S., 2008. Product strategy and management. New Jersey: FT Prentice Hall. Burk Wood , M., 2010. Essential guide to marketing planning. 2nd ed. New Jersey: FT Prentice Hall. GlaxoSmithKline plc adr, 2013. Corporate responsibility report. [online]Available at: < http://www.gsk.com/media/press-releases/2013/gsk-publishes-2012-corporate-responsibility-report.html> [Accessed 27 July 2013]. GlaxoSmithKline, 2012. Annual report 2012. [online] Available at: [Accessed 27 July 2013]. GlaxoSmithKline, 2013a. About Us. [online] Available at: < http://www.gsk.com> [Accessed 27 July 2013]. GlaxoSmithKline, 2013b. Global public policy issue. [online] Available at: [Accessed 27 July 2013]. GlaxoSmithKline, 2013c. Responsibility. [online] Available at: [Accessed 27 July 2013]. GlaxoSmithKline, 2013d. Products. [online] Available at: [Accessed 27 July 2013]. GlaxoSmithKline, 2013e. Research. [online] Available at: [Accessed 27 July 2013]. GlaxoSmithKline, 2013f. Explore. [online] Available at: [Accessed 27 July 2013]. Kotler, P., Wong, V. and Saunders J,. 2010. Principles of marketing. 5th ed. New Jersey: FT Prentice Hall Lindstrom, M., 2008. Buyology, how everything we believe about why we buy is wrong . Random House Tower: RH Business Books. Moutinho, L. and Chien, C., 2008. Problems in marketing, applying key concepts and techniques. California: Sage. Shimp, T., 2007. Integrated marketing communications in advertising and promotion. California: Thomson Southwestern. Tungate, M., 2007. Adland a global history of advertising. London: Kogan Page. Tungate, M., 2008. Fashion brands, branding style from Armani to Zara. London: Kogan Page. Van Arum, P., 2013. GlaxoSmithKline responds to 60 minutes segment on manufacturing issues. [online] Available at: [Accessed 27 July 2013]. Zeithaml, V., Bitner, M. J. and Gremler, D., 2009. Service marketing. United States: McGraw Hill International.] Appendices Forecasted Budget for the Year 2013-2015 taking 2012 as the base year Particulars 2012 (£ million) 2013 (£ million) 2014(£ million) 2015 (£ million) Net income 379 335 307 304 Income         Royal income 498 478 453 443 Interest income 119 101 98 89 Realised gains on liquid investments 7 4 4 3 Disposal of equity investments 31 30 12 25 Other income 44 40 34 24 Total Income 699 653 601 584 Expense         Interest expense 234 229 220 219 Fair value hedges 2 3 4 2 Reclassification of cash flow hedge from other comprehensive income 21 31 23 19 Unwinding of discounts on provisions 24 21 19 21 other expenses 39 34 28 19 Total expense 320 318 294 280 Read More