Understanding the Business and Economic Environment of the Pharmaceutical Industry: A Case Study of GlaxoSmithKline (GSK)

This study delves into the economic environment of the pharmaceutical industry, with a focus on the UK manufacturing sector and GSK. It explains the structure of the industry and GSK's organisational structure, as well as the nature of GSK's business segments and its manufacturing and distribution systems. The study also utilises STEEPLE analysis to examine the external factors affecting GSK's operations, including social, technological, environmental, economic, political, legal, and ethical factors. Finally, the study examines the challenges and problems faced by GSK due to external factors, particularly during the COVID-19 pandemic.

Understanding of the
Business and
Economic
Environment

Table of Contents
INTRODUCTION.........................................................................................................................3
The elucidation of the structure of the manufacturing industry..................................................3
The explication of the nature of GSK in regards to the industry.................................................4
The utilisation of STEEPLE for the external business analysis of GSK.....................................5
Examination of the challenges and the problems in respect to the external factors on the
relative parties of GSK................................................................................................................6
CONCLUSION..............................................................................................................................7
REFERENCES..............................................................................................................................8

INTRODUCTION
The terminology "economic environment" alludes to all the outside economic factors that
influence how individuals and companies place orders and, as a result, how well a company
succeeds. These factors, which might be small-scale (micro) or large-scale (macro), are
frequently outside a company's control (micro). The economy is important because it reflects
how secure people feel in their surroundings. A strong economy helps firms expand, people find
more employment opportunities, and customers spend more money (Chowdhury and et. al.,
2022). According to the UK Standard Industrial Classification, the objective of this study is to
explain the structure, nature, and key significance of the selected industry (SIC 2007). The UK
manufacturing sector with reference to the pharmaceutical industry has been chosen for
clarification. GlaxoSmithKilne PLC, usually known as GSK, is a multinational pharmaceutical
and biotechnology business with its headquarters in London, England. It was founded in 2000 as
a result of the amalgamation of Glaxo Wellcome and SmithKline Beecham.
MAIN BODY
The elucidation of the structure of the manufacturing industry.
A company's organisational structure describes the connections between its resources.
Although it begins with people, it also consists of objects like tools, money, and information.
Manufacturing companies often organise their resources using traditional systems. Businesses in
this field typically always employ departmentalization so that related tasks can be grouped
together. The organisation of tasks and responsibilities within a company is described by its
organisational structure for manufacturing (Di Maria, De Marchi and Galeazzo, 2022). The
structure will differ depending on the size, scope, and nature of the company's products. They
expand production in the pharmaceutical industry and work with brokers to distribute the drug
through a variety of channels (direct-to-consumer or concluded with the supply channels such as
dispensaries and infirmaries). Thus, an illustrated description of GSK's organisational structure is
possible.

Figure 1 GSK Organisational Structure
The explication of the nature of GSK in regards to the industry.
Pharmaceuticals and consumer healthcare are GSK's two primary business segments.
85% of GSK's sales come from the pharmaceuticals segment, which is the focus of this profile.
Seretide/Advair for asthma and Chronic Obstructive Pulmonary Disease (COPD), Paxil/Seroxat
and Wellbutrin, both used to treat depression, Avandia/Avadamet for type 2 diabetes, and
Augmentin, an antibiotic, are the top five GSK medications by sales. Additionally, GSK is
committed to pursuing R&D projects for which it does not anticipate a commercial return and
has a sizable R&D portfolio for diseases that are pertinent to developing nations. GSK has a
thorough and advanced policy for access to medications as compared to other pharmaceutical
corporations (Hu and Kee, 2022). The company's top priorities are advancing the development of
new molecular entities, extending our immunology and rare disease expertise, pursuing novel
scientific approaches, increasing R&D productivity, interacting with business and society with a
focus on inclusion, continuous learning, improving access to healthcare, safeguarding the
environment, ethics, and transparency, and putting our Ambition Zero Carbon strategy into
action. Additionally, GSK's manufacturing and distribution systems function together as a single

worldwide network. The company has 87 manufacturing sites and employs around 32,000
employees in production. It has two different kinds of production facilities. The active
substances utilised in medication production are made at primary manufacturing facilities. There
are twelve of these locations, and they are spread across the USA, Singapore, Australia, the UK,
and Ireland. The completed goods are produced at secondary manufacturing facilities using the
active ingredients. These locations may be found in 15 different countries across the world. Two
of the sites in Belgium are the main locations for the production of vaccines.
The utilisation of STEEPLE for the external business analysis of GSK.
A modest strategic management method called STEEPLE analysis looks at outside
factors that could have an impact on a company's or organization's decisions. Even while it is
based on the STEEP study, it takes a closer look at a number of other factors that the STEEP
analysis did not. The letters L and E stand for legal and ethical analysis, respectively. The
corporation has no control over any of these factors. This particular analysis can be used to give
a detailed description of the outside business factors that might affect the way GSK operates
(Méndez‐León, Reyes‐Carrillo and Díaz‐Pichardo, 2022).
 Social – Management and IT consultants are now acutely aware of the need for further
profit-oriented procedures to GSK's planning and operations due to the challenges in
achieving corporate success through improved performance, effectiveness, and
competitive edge, along with interesting applications of modern technology. The factors
associated with the varied demographics, ethnicity and social groups must be taken into
consideration by the company.
 Technological factors – Due to the difficulties in obtaining corporate success through
improved performance, potency, and competitive edge, along with innovative uses of
modern technology, both technology and management consultants are now acutely aware
of the requirement for more profit-oriented procedures to GSK's planning and operations.
 Environmental factors – Drugs may risk ending up in the environment as a result of
patient’s medication intake and excretion, improper disposal of unused and old
medications, and industrial discharges from manufacturing plants. If GSK wants to
compete in the market with power and respect, it needs to take this into serious
consideration.

 Economic factors – GSK is impacted by many regional and global economic problems.
Whether the economy is in a boom, recession, or recovery, it will have an impact on
customer conduct and trust. Economic factors have an effect on both the short- and long-
term health of the domestic and foreign economies, as well as the purchasing power of
potential customers (Sehnem and et. al., 2022). As a result, the company must consider
factors like interest rates, budgetary constraints, inflation rates, economic growth, etc.
The economy is also impacted by the effect of interest rates on aggregate demand, which
falls as rates rise. Typically, a drop in interest rates causes asset values to rise, boosting
consumer wealth.
 Political factors – The pharmaceutical industry is governed by a unique regulatory
framework in each country. This includes laws governing medicines, laws governing
safety, and laws governing accreditation. Although these regulations are not as tight in
many nations, they are quite strict in less developed economies and hinder the growth of
the pharmaceutical industry. Therefore, these legal and governmental restrictions directly
affect how GSK conducts business.
 Legal factors – The current state of affairs is compelling all industries to adopt a new
paradigm. This is particularly true for the pharmaceutical sector, which has felt the
effects of a number of laws and regulations that were established. Market participants
point out that although judicial practises vary, emergent support measures would come
with dangers that would outweigh any possible rewards if relevant enactments were
adopted and carried out as intended. All of this has a detrimental effect on the national
investment climate. The representatives of GSK must adhere strictly to these legal
requirements in order to prevent any unforeseen repercussions.
 Ethical factors – The most frequently mentioned issues are drug security, operational
cost, information processing, distribution, and disclosure, clinical research methodology,
advertising restrictions, sales promotion, animal testing, the modern economy, emerging
economies, vaccine safety worries, the rise of falsified medicines, cost-effectiveness of
treatments, and pharmaceutical malfeasance over the past ten years. These elements
should be stated in the ethical statements that the corporate leaders establish in order to
prevent any potential for moral infraction.

Examination of the challenges and the problems in respect to the external factors on the relative
parties of GSK.
Due to the COVID-19 virus's imminent need for a remedy, researchers from all over the
world have been challenged to accelerate the large-scale global clinical investigation and
development of novel drugs and vaccines. When a GSK drug is ready for commercial
distribution, a centralised supply chain is already in place to help with supply (Wójcik, Obłój and
Buono, 2022). This is because the manufacture of GSK drugs frequently increases along with
their development through clinical testing. However, during the pandemic, a new approach was
required due to the urgent requirement for the rapid development of effective treatments and
immunizations. These issues resulted from governmental changes that neglected to address
supply chain issues.
CONCLUSION
Thus, it may be concluded that enterprises can evaluate their economic environment
before determining whether to enter a particular market or industry or use other strategies, even
though they typically have no control over it. The relative economic aspects described in this
study are essential since they directly affect the products, operations, and clients. Additionally,
they significantly affect the big business's ability to partner with businesses abroad and conduct
business domestically.

REFERENCES
Books and Journals
Chowdhury, S., and et. al., 2022. AI-employee collaboration and business performance:
Integrating knowledge-based view, socio-technical systems and organisational
socialisation framework. Journal of Business Research, 144, pp.31-49.
Di Maria, E., De Marchi, V. and Galeazzo, A., 2022. Industry 4.0 technologies and circular
economy: The mediating role of supply chain integration. Business Strategy and the
Environment, 31(2), pp.619-632.
Hu, M.K. and Kee, D.M.H., 2022. SMEs and business sustainability: Achieving sustainable
business growth in the new normal. In Research Anthology on Business Continuity and
Navigating Times of Crisis (pp. 1036-1056). IGI Global.
Méndez‐León, E., Reyes‐Carrillo, T. and Díaz‐Pichardo, R., 2022. Towards a holistic framework
for sustainable value analysis in business models: A tool for sustainable development.
Business Strategy and the Environment, 31(1), pp.15-31.
Sehnem, S., and et. al., 2022. Circular economy and innovation: A look from the perspective of
organizational capabilities. Business Strategy and the Environment, 31(1), pp.236-250.
Wójcik, P., Obłój, K. and Buono, A.F., 2022. Addressing social concern through business-
nonprofit collaboration: Microfoundations of a firm’s dynamic capability for social
responsibility. Journal of Business Research, 143, pp.119-139.