GlaxoSmithKline is one of Europe's biggest pharmaceutical companies. However, like other manufacturers, it is wrestling with the triple threats of generic competition, ever more rigorous regulatory scrutiny, and the challenge of keeping its drug development pipeline filled. GSK's problems have, arguably, been more serious than some of its rivals, resulting in its demotion from the coveted position as global #2 several years ago. It now lags behind even its Swiss rivals by overall revenues. Could another large acquisition be on the cards? AstraZeneca - also struggling - has often been mentioned by observers as a possible partner. In addition to its pharmaceutical brands, GSK has an extensive presence in OTC medicines and personal care products, as well as nutritional and energy drinks. In fact, perhaps surprisingly, GSK is not only one of the world's biggest drug companies, but has also been for many years the UK's #3 soft drinks marketer behind Coca-Cola and Britvic. However it agreed to sell its Lucozade and Ribena brands in 2013 to Suntory of Japan in order to focus on healthcare. See also AquaFresh/Sensodyne profile.
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Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 5th Dec 2013: GlaxoSmithKline was strongly criticised by marketing industry bodies in the UK for a new policy which requires agencies pitching for its digital business to offer percentage discounts on higher volumes of work as well as an upfront "sign-on" bonus to join the roster. A GSK spokesman said "We hugely value the relationships we have with our key partners and suppliers, many of which have been in place for years. As part of a long-running programme, we are reducing complexity in these relationships by increasing the levels of business we place with key suppliers, while securing discounts on volumes of services." However the IPA and Marketing Agencies Association both attacked the new system. This follows a similar move earlier this year by Premier Foods, which prompted Starcom MediaVest to resign the manufacturer's media account. MAA managing director Scott Knox said "After the summer battle with Premier Foods, I was surprised to be faced with an escalation in the action by GSK, not only up front roster payments but by rebate for work already done. This is a scandalous and lazy approach to professional procurement. Put more simply it's bullying by a corporation. Agencies must stand united against this sort of activity."
Adbrands Weekly Update 12th Sep 2013: There's a new player in the UK soft drinks market. Japanese company Suntory agreed to acquire the iconic Lucozade and Ribena brands from GlaxoSmithKline for a handsome £1.35bn, a little under three times annual revenues. As a result, it will become the local #3 behind Coca-Cola and Britvic. GSK, which has owned the drinks since the 1960s, had announced plans to put the products up for auction in order to concentrate its attention on healthcare. Suntory seized an opportunity to forestall the auction, where it would have faced competition from rival buyers such as Britvic or AG Barr as well as private equity. Suntory already owns the Orangina Schweppes soft drinks business in Europe, but its UK presence was limited - AG Barr already has long-term exclusive rights to the Orangina brand. That has prompted speculation that Suntory may consider a bid for Barr as well, currently the local #4.
Adbrands Weekly Update 5th Sep 2013: GlaxoSmithKline finalised its global media review, consolidating almost all business outside North America with WPP's GroupM agencies. MediaCom, Mindshare and Maxus already hold the business in some markets. On the losing side are Starcom MediaVest and Carat, who shared responsibility in continental Europe. In the US, the account stays with PHD, which also adds responsibility for Canada and also West Africa.
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