Case Study Gsk

997 Words4 Pages
Summary business case GSK Glaxo Wellcome resulted from the merger of two leading UK pharmaceuticals in 1995. Glaxo was well known for its R&D efforts and blockbuster product ZANTAC. Wellcome was known for its academic approach to pharmaceuticals. At the start there where several start up management problems between the two companies. 1. Provide an explanation of why the merger took place between Glaxo Wellcome and SmithKline Beecham from an economic/shareholder, stakeholder and managerial perspective. Economic/ shareholder perspective * To reduce the R&D pipline * The new company then revealed plans to re-engineer it’s R&D and marketing operations. At the time, Garnier considerd that organising 15.000 scientist across several time zones, with an annual budget of billions of pounds, would require a radical new structure. * To reduce the R&D cost * The plan considerd breaking up discovery efforts trough a combination of centralisation and decentralisation. Investments to generate new chemical entities (NCE) would concentrate on traditional activities and genetics while aiming to develop economies of scale. * Patent expirations/generic competition * The emphasis on genetic research followed the new company inheriting substantial investments in the use of enomics in drug discovvery: at its formation, GSK had over 500 patent filings for genomics-based drugs. Actually, just as merger proceedings evolved, SmitheKline Beecham brought to clinical testing a genomic-based drug to treat obesity and one to treat hypertension. * Only 7 percent of Glaxo Wellcome’s sales depended on drugs whose US patents expired before 2006 as compared to SB’s 33 per cent. GSK was therefore born with assured income streams given patent protection and the fact that no single drug accounted for more than 12 per cent of sales. Thanks
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