Producing And Marketing Of Pharmaceutical Drugs

RUNNING HEAD: BUSINESS ANALYSIS
Title: Analysis of Glaxo Smith Kline
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1BUSINESS ANALYSIS
Executive Summary:
The responsibility of discovering, developing, producing and marketing of
pharmaceutical drugs rests on the pharmaceutical industry. Since these drugs are essential for the
medication purpose to be given to the patients for curing them, or producing vaccination or to
reduce the symptom, the pharmaceutical industry holds a strong importance globally and thus,
the maintenance of standard of various companies is highly essential. The companies generally
deal with the brand and/or the generic medication as well as medical devices. The companies
must have a strong base for governing the intellectual property, safety, patenting, efficacy and
the marketing of the medical drugs. GlaxoSmith Kline is one such leading pharmaceutical
company, which has it,’s headquarter in Brentford, London and has several subsidiary all over
the world. The current report deals with the analysis of the GSK Company and their various
strategies in assessing the risk of product development keeping in mind their ability to enhance
the shareholder value. The existing research on the finance and the shareholder values upholds
the fact that there is a high impact on the increasing demand of the stock market for the returns
on the behaviour of the corporate. The Glaxo Smith Kline Company has set the strategy of using
high prices in the innovations and the profits are being used in creating the short term returns to
the investors. The current report will analyse the various risks that the company faces in their
sustenance and will take into account the effective measures taken by GSK in ruling out those
risks. As the evidences of the success or failure rate in managing the risks, the report will also
provide hard data on the various sales aspect of the company.

2BUSINESS ANALYSIS
The Pharmaceutical Industry:
Fig 1. The position of GSK and other pharma company; source International Business Analysis
S.A.Reheman 2018
The pharmaceutical Industry generally spends a large amount on the research and
development process, as they believe that this essentially is the most beneficial investment in the
business. The expenditure in the will eventually lead to the recycling of profits that would in turn
sustain innovation and improved customer satisfaction. Any company would yield a high margin
of profit from the ethical drugs and also has the scope of procuring a strong year on year growth
as they has the chance of charging premium prices for those drugs that help to recoup the cost

3BUSINESS ANALYSIS
spent on the research and development. The shareholder value in any business refers to the value
that is delivered to the equity owners of the business that can be made possible due to the ability
of the management to enhance earnings and sales. However, the companies face several
challenges in creating the shareholder value, as there is always a compulsion of the regulation of
prices for the drugs. Moreover, it is a risk for the pharmaceutical industry to increase the prices
as that would lead to the loss of loyal customers.
The Blockbuster Model:
The Block Buster model is referred to the method by which a company spends much of
the amounts in the research and development of the products. This is done with the aim of
creating a blockbuster that would help in accelerating the annual sales. In the case of Glaxo
Smith Kline the most successful blockbuster that was launched was Zantac, in 1983. The
medicine was successful in capturing the anti ulcerant segment till 1997 and contributed for over
fifty percent of the overall revenue for the sales. The medicine helped in the year to year organic
growth to the company with unexpectedly high return. The increase in the market value of the
company was noted to reach by 59% and there was the maximum return of sales till 28% in
1988.
The blockbuster product can never happen incidentally or without any preparation. This
has to be created by means of a proper scientific as well as marketing effort. With the innovation
of Zantac by GSK more experts were employed in the research and development of the product.
The stock market focuses in the forthcoming of future similar prospective products that will be
able to produce another blockbuster.