GlaxoSmithkline Analysis_en
FINANCIAL STATEMENT ANALYISIS
GlaxoSmithKline
PREPARED BY: ALAA AL-SHANTI AND AYA AYAD
SUPERVISED BY: LECTURER: EMAD ABUSHAABAN
Executive Summary
GlaxoSmithKline (GSK) is one of the world’s leading pharmaceutical and
Healthcare companies, based in the UK. GlaxoSmithKline was formed in 2000 as a result of the merger of GlaxoWellcome and SmithKline Beecham. It employs over 100,000 people in 116 countries with over 16,000 involved in research. GSK has a broad portfolio, with products and R&D projects in the fields of respiratory, central nervous system, anti-infective, metabolic disorders, oncology, cardiovascular and urogenital. In addition, GSK has an extensive vaccines portfolio.
According to GSK, it supplied one quarter of the world's vaccines by the end of 2007 and had a further 20 in clinical development.
According to GSK, the key drivers of its business performance are growth of existing products and the launch of new products. The group had 12 products with over £500 million in annual global sales in 2007, falling to 9 in 2008. GSK can expect significant generic competition for the majority of its current key products and thus will need to rapidly overhaul the product portfolio to try and ensure growth into the medium- and long-term.
As GSK braces itself for intensifying generic drug competition, it faces further disappointing sales from its pivotal diabetes treatment, Avandia. In addition, GSK lost out to Merck & Co in the race to launch its cervical cancer vaccine, Cervarix. Merck has already won contracts across much of the EU for Gardasil, which it markets in Europe through a joint venture with sanofi-aventis.
It has been approved in over 85 countries, including the US. GSK however, only received European regulatory approval for Cervarix in September 2007 and, contrary to the anticipated US approval, in December 2007 the FDA issued a request for further information. GSK may be convinced of the merits of Cervarix and has funded a head-to-head trial comparing the two vaccines, but the accumulating delay in approval has given Merck a head start which may be difficult to counter.
In response to these problems, GSK is implementing a restructuring which is designed to cut costs by £700 million annually from 2010. This will include the closure of a number of factories and several thousand job cuts from the worldwide workforce. The company also intends to reduce the number of sales representatives. Sales and other administrative expenses are expected to decline to less than 30 per cent.
Furthermore, in order accelerate product development; GSK has pursued an aggressive acquisition strategy, with an outlay of over £5 billion spent on the takeover of UCB's businesses in emerging markets, Stiefal Laboratories (which adds a large selection of dermatology products to GSK's arsenal) and Genelabs.
We believe there will be a noticeable slowdown in growth within our forecast period to 2013, due to both generic and branded competition, however, with an extensive pipeline, particularly in the early stages, and the decision to maintain spending on R&D and acquisition activities, GSK should be able to resume growth in the longer term.
GSK is the world's second largest pharmaceutical company and a research-based company with a wide portfolio of pharmaceutical products covering anti-infective, central nervous system, respiratory, gastro-intestinal/metabolic, oncology, and vaccines products. It also has a Consumer healthcare operation comprising leading oral healthcare products, nutritional drinks, and over the counter medicines. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
GSK was formed in 2000 by the merger of GlaxoWellcome (formed from the mergers of Burroughs Wellcome & Company and Glaxo Laboratories), and SmithKline Beecham (from Beecham, and SmithKline.
GlaxoWellcome
In 1880, Burroughs Welcome & Company was founded in London by American pharmacists Henry Welcome and Silas Burroughs. The Wellcome Tropical Research Laboratories opened in 1902.
In 1959 the Wellcome Company bought McDougall & Robertson Inc. to become more active in animal health. The Wellcome Company production centre was moved from New York to North Carolina in 1970 and the following year another research centre was built.
SmithKline Beecham
In 1843, Thomas Beecham launched his Beecham's Pills laxative in England giving birth to the Beecham Group.
Beechams opened its first factory in St Helens, Lancashire, England for rapid production of medicines in 1859. By the 1960s it was extensively involved in pharmaceuticals.
Key Dates:
1830: John K. Smith opens his first drugstore in Philadelphia through a 1847: Thomas Beecham begins hawking his own brand of pills in and around the town of Wigan.
1873: Joseph Nathan establishes Nathan & Company in New Zealand.
1875: Smith's company is renamed Smith, Kline & Company, ten years after Mahlon Kline joined the company, first serving as bookkeeper then moving into management.
1891: Smith, Kline acquires French, Richards & Company and changes its name to Smith, Kline & French (SK&F).
1904: Nathan begins production of dried milk in New Zealand.
1906: Nathan adopts the name Glaxo for his dried milk.
1924: Glaxo develops its first pharmaceutical product, Ostelin.
1935: Glaxo's pharmaceutical department is organized into a separate subsidiary called Glaxo Laboratories Ltd.
1947: Glaxo's parent company, Joseph Nathan & Company, is dissolved and Glaxo becomes an independent public company
1957: Beecham researchers isolate the penicillin nucleus 6-APA, a discovery that opens the door to the manufacture of a multitude of new antibiotics.
1960: SK&F begins marketing Contac, the first all-day cold remedy.
1972: Beecham launches Amoxil, which becomes one of the most widely prescribed antibiotics.
1976:SK&F revolutionizes peptic ulcer treatment through the introduction of Tagamet.
1978: Glaxo acquires Meyer Laboratories Inc. and creates a U.S. subsidiary.
1981: Glaxo launches anti-ulcer treatment Zantac.
1989: Beecham merges with SmithKline.
1995: Glaxo and Wellcome plc merge to form Glaxo Wellcome plc.
2000: Merger between SmithKline and Glaxo Wellcome is finalized;
2001: GSK moves to its new UK headquarters in Brentford, West London. GSK House consists of four, five-storey buildings and a 16-storey tower block linked by an internal fully-glazed 'street'. The building was designed with input from employees.
2002: GSK donated the first 100 million albendazole tablets as part of its commitment to fight lymphatic filariasis.GSK marks the 15th anniversary of AZT, the first medicine used to treat HIV/AIDS. GSK’s Positive Action programme celebrates its tenth anniversary.
2003: On 27 July 2003, ten million people in Sri Lanka received free doses of GSK-donated albendazole to help prevent the transmission of lymphatic filariasis. GSK launches Wellbutrin XL, an anti-depressant medicine, in the US
2004: GSK ships 33 million tablets of preferentially-priced Combivir (HIV treatment) to Africa.
GSK launches its Clinical Trial Register, an Internet site containing clinical trial data that anyone can access. GSK is the first pharmaceutical company to offer this level of transparency for its clinical trial data.
2005: GSK is highlighted by Bill Gates of the Bill & Melinda Gates Foundation in recognition of the company's commitment to R&D on malaria and other neglected diseases.
GSK take steps to bolster it leadership position in pandemic flu preparedness by investing in flu vaccine production facilities, the acquisition of vaccines production facilities and the development of candidate pandemic flu vaccines.
2006: GSK produces over 10 million packs of its anti-flu treatment Relenza in one year.
To boost its consumer healthcare portfolio, GSK acquires CNS Inc., producers of the Breathe Right nasal dilator strips and FiberChoice
dietary fibre supplements.
By the end of 2006, 600 million treatments for lymphatic filariasis had been donated as part of the company's commitment to eradicate this disease.
GSK wins New Business Award for efforts to end lymphatic filariasis.
Rotarix, the first vaccine against rotavirus is made available in Europe.
2007: In a busy year for acquisitions, GSK acquires Domantis, a leader in developing antibody therapies, Praesis Pharmaceuticals, a biopharmaceuticals company and Reliant Pharmaceuticals, a producer of cardiovascular medicines.
GSK launches alli, over-the-counter orlistat, for first FDA-approved treatment for obesity in the US.
GSK gains US approval for Tykerb, a new treatment for advanced breast cancer.
Cervarix, GSK’s cervical cancer vaccine approved in Europe.
GSK announces submission of combination vaccine Globorix to the European Medicines Agency (EMEA) with the intention of providing the vaccine to Africa with no commercial reward.
Andrew Witty named CEO Designate to replace JP Garnier in May 2008
GSK obtains exclusive US OTC marketing rights to Mevacor (lovastatin) from Merck & Co., Inc.
New R&D centre opened in China.
2008: GSK marks the ten year anniversary of its commitment to eliminate lymphatic filariasis.
New allergic rhinitis treatment Avamys approved in Europe.
GSK reduces prices for anti-retrovirals in the world's poorest countries.
FDA approves Rotarix, a vaccination against rotavirus.
FDA approves Treximet for the treatment of migraine.
Andrew Witty succeeds JP Garnier as Chief Executive Officer.
GSK acquires Sirtris Pharmaceuticals Inc, a world leader in sirtuin research and development.
FDA approves Requip XL, an oral treatment for Parkinson’s disease.