GlaxoSmithKline is traditionally regarded as one of Europe's leading pharmaceutical developers but like its peers, it has been 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 its Swiss rivals by overall revenues. Recently, the group has been tweaking its broadly diversified portfolio in order to specialise on a smaller number of key segments, primarily respiratory and HIV drugs, vaccines and consumer healthcare. Until recently, for example, GSK was, among other things, the UK's #3 soft drinks marketer behind Coca-Cola and Britvic. It agreed to sell this division to Suntory of Japan in order to focus on healthcare. The following year, the group transferred its non-core collection of oncology drugs to Swiss rival Novartis, in exchange for the latter's vaccines business and medium-sized OTC division. As a result, GSK becomes the global leader in OTC medicines ahead of Johnson & Johnson. None of these moves, though, have relieved the pressure from investors, some of whom are still calling for a full break-up of the business. See also AquaFresh/Sensodyne profile.
Which agencies handle advertising for GlaxoSmithKline? Find out more from the Account Assignments database
Who are the competitors of GlaxoSmithKline? See Pharmaceutical Sector
Subscribers only: Adbrands profile
Account assignments & selected contact information
Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. Subscribers may access the following website links:
Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 24th May 2018: Trade source Fierce Pharma has compiled an interesting table of the top drugs sold in the US over the past 25 years, using cumulative sales figures. It passed its peak several years ago now, but Pfizer's cholesterol drug Lipitor is still the clear leader with total sales to-date of almost $95bn. It could soon be toppled, though, by AbbVie's Humira, a treatment for auto-immune conditions. Sales are already almost $76bn, and Humira is expected to become the first drug ever to top $20bn in sales in a single year before its patent expires in 2023. In third place for now is Nexium, from AstraZeneca, for acid reflux and ulcers. It too is past its peak, but cumulative sales currently stand at over $72bn. GSK's Advair and Amgen's Enbrel rounded out the top five at $69bn and $68bn respectively. (See full feature here).
Adbrands Weekly Update 10th May 2018: Another week, another big media review. GlaxoSmithKline is the latest global giant to reconsider media buying and planning arrangements. It piles yet more pressure onto WPP, whose Mediacom has most of the global business except the US, where Omnicom's PHD is the incumbent. Worldwide billings are around $1.7bn. The pitch is wide open, with all six major marketing groups invited to compete for the business.
Adbrands Weekly Update 29th Mar 2018: Both of the main suitors for Pfizer's $20bn consumer healthcare division dropped out during the course of last week. Reckitt Benckiser - which had been considered the favourite to buy the business - withdrew mid-week, leaving rival GlaxoSmithKline with a clear path to conclude a deal. However, the British group also dropped its bid on Friday. Both companies indicated the high cost of the business as a factor. RB's CEO Rakesh Kapoor said that his priority at this point is organic growth and that he had been interested in only part of Pfizer's portfolio: "An acquisition for the whole Pfizer consumer health business did not fit our acquisition criteria and an acquisition of part of the business was not possible." GSK's CEO Emma Walmsley also issued a brief statement: "While we will continue to review opportunities that may accelerate our strategy, they must meet our criteria for returns and not compromise our priorities for capital allocation." As if to emphasise her diligence, she instead announced plans to use $13bn (or around £9.2bn) of the cash that might have been spent on Pfizer to buy out the minority stake Novartis has held in GSK Consumer Healthcare division since their two respective portfolios were combined. Full control will allow GSK to make other, probably smaller, consumer healthcare deals in the future without having to first seek Novartis's permission. To help fund the buyout, GSK said it was considering the sale of its malted milk drink Horlicks, one of the last remnants of what was once a sizeable nutrition division. Though only a niche product in the UK these days, Horlicks nonetheless has substantial sales in Asia, especially India. A sale could generate as much as £3.5bn. In the mean time, it's not clear whether other potential buyers remain for Pfizer's OTC division. The US company might consider an IPO or spin-off of the business to shareholders, or might simply hang onto it for the time being.
Adbrands Weekly Update 8th Feb 2018: According to media reports, there are only two bidders left in the $20bn auction of Pfizer's consumer healthcare division: GlaxoSmithKline and Reckitt Benckiser. Most observers expect RB to win the prize, since GSK would need the approval of its healthcare partner Novartis, which might not be forthcoming. Meanwhile, the simultaneous auction of Merck KGaA's OTC division has been thrown into doubt after favoured bidder Nestle walked away over the German group's over-ambitious price expectations, thought to exceed €4bn.
Adbrands Weekly Update 7th Dec 2017: Having already scored a victory over Reckitt Benckiser for misleading customers with different versions of its Nurofen analgesic, Australia's consumer trading standards regulator turned its attention to GlaxoSmithKline and Novartis. The Australian Competition & Consumer Commission began proceedings against their GSK Consumer Healthcare joint venture over Voltaren pain relief products. GSK markets Voltaren Osteo Gel as a specialised product, priced at around a third more than standard Voltaren Emulgel. "In fact, the product has an identical formulation to Emulgel," said ACCC chairman Rod Sims, "and both products are equally effective in treating not only osteoarthritis, but also a range of other pain conditions. We allege GSK and Novartis engaged in a deliberate commercial strategy to differentiate the products in a way that was likely to mislead consumers."
Adbrands Weekly Update 27th Jul 2017: GlaxoSmithKline's new CEO Emma Walmsley announced plans for a major overhaul of the group's prescription drug portfolio. She said GSK will scrap or sell around 30 current drug development programmes in order to prioritise the company's four strongest areas of respiratory medicines, HIV, oncology and immuno-inflammation. Drugs in other segments will be divested, with the aim of reducing the overall portfolio by more than a fifth.
See full profile
See full profile
See full profile
Free for all users | see full profile for current activities: GlaxoSmithKline was formed in 2000 by the merger of two already substantial pharmaceutical groups, Glaxo Wellcome and SmithKline Beecham. The Glaxo side of the business can trace its family tree back as far as 1715, the year Silvanus Bevan opened an apothecary's shop in London. This family business eventually ended up in the hands of William Allen in 1792. A Quaker, he married into the wealthy Hanbury family in 1806. The business changed its name to Allen & Hanbury's in 1810, and expanded its product range to include cod liver oil, malt extracts, throat pastilles and milk-based food for infants.
Meanwhile, the real core of what was to become Glaxo was founded on the other side of the world, when Joseph Nathan established his general trading company in 1873. Nathan was an Englishman who had followed other members of his family out to New Zealand twenty years earlier. The family had already established a successful dairy farm in their new home, and Joseph Nathan set up in Wellington to begin exporting first butter and then skimmed milk back to Britain. Nestle had pioneered the production of powdered milk in 1867, and from 1904 Nathan began to use the same process to make powdered milk which was shipped back under the brand name Defiance Dried Milk. Two years later, the family registered a new name for their powdered milk. They wanted Lacto, but this was already trademarked, so they changed the letters around to form the name Glaxo.
In London, another strand of the business had been constructed by two American pharmacists, Henry Wellcome and Silas Burroughs. Having studied in Philadelphia, they set up their company in England in 1880 to introduce American-style medicines into what was then the comparatively undeveloped British market. Wellcome had worked in the sales division of US drug company McKesson & Robbins, and brought a distinctly American marketing flair to the new company. In 1884 Burroughs Wellcome & Company introduced the Tabloid, a form of compressed pill, that could be adapted to different medicinal compounds. The company's Tabloid chests, effectively medicine cases containing a variety of treatments, were widely publicised.
Rare diseases were a particular interest of Wellcome's, and after the death of Burroughs in 1895, he established several research laboratories to pioneer treatments for yellow fever, diphtheria and other hitherto fatal illnesses. The most significant such institution was The Wellcome Tropical Research Laboratories, founded in 1902. Four years later a US subsidiary was established to market the company's drugs in Wellcome's home country. Finally in 1924, all of Henry Wellcome's various business and research activities were grouped under the parent company The Wellcome Foundation. When Sir Henry Wellcome died in 1936, he left sole ownership of his now substantial business to the Wellcome Trust, a medical research charity.
By the mid-1920s Allen & Hanburys and Joseph Nathan & Co had also grown and developed. In 1923, both companies were separately granted licences to produce insulin for the treatment of diabetes. Also that year Joseph Nathan, now controlled by the founder's sons, obtained rights to a process of extracting vitamin D from fish-liver oil. The company's first pharmaceutical product, Ostelin Liquid, was introduced a year later. A string of new products were developed over the years that followed, and Glaxo Laboratories was established in 1935 as the main research and pharmaceutical arm of Joseph Nathan. During World War II, the company became the UK's leading manufacturer of penicillin.
In 1945, the last of Joseph Nathan's sons retired from the business. In 1947, Glaxo Laboratories effectively absorbed Joseph Nathan & Company, and went public as Glaxo Group. The company pioneered a number of important new treatments in the years that followed, including the isolation of vitamin B-12, the introduction of Streptomycin, and later pioneering research into rheumatoid arthritis and dermatological and allergic respiratory conditions. In 1958, Glaxo acquired Allen & Hanbury's. Wellcome also expanded its business, acquiring animal health business Cooper, McDougall & Robertson in 1958, and introducing Actifed antihistamine products. However, Glaxo's reputation was badly dented in the 1960s when a new morning sickness remedy, Thalidomide, caused terrible deformities in developing babies. The drug was quickly withdrawn. Less controversial were treatments such as Betnovate for steroid skin diseases and Ventolin for asthma.
In 1972, Glaxo Group was targeted by rival Beecham Laboratories, which mounted a hostile takeover bid. Glaxo defended itself by announcing it would merge instead with medical retailer and developer Boots. But in the end both deals were vetoed by the UK government on competition grounds. Instead Glaxo set out to expand its virtually non-existent US business, acquiring local research group Meyer Laboratories in 1978. In 1981, the company introduced Zantac, an anti-ulcerant which went on to become the world's top-selling medicine by the end of the decade, generating over a third the company's turnover for several years. Meanwhile Wellcome introduced the herpes and cold sore treatment Zovirax.
Increasingly Glaxo and Wellcome found themselves joint rivals to the fast developing Beecham Group. In 1989, Beecham merged with US giant SmithKline Beckman to form SmithKline Beecham, overtaking both Glaxo and Wellcome. The deal initiated a wave of consolidation within the industry. Glaxo and Wellcome responded in 1995, merging as Glaxo Wellcome. In 1998, SmithKline Beecham threatened to take a step ahead by merging with American Home Products. Instead Glaxo Wellcome stepped in with a better offer, and later that year the two Anglo-US rivals declared that they would merge.
However it was not to be. Not yet, anyway. Within weeks, that deal was off after disagreements between the respective boards of Glaxo Wellcome and SmithKline Beecham over who would be the directors of the new group. These difficult negotiations culminated in friction between SB's high profile CEO, the former Danish tennis star Jan Lechsly, and his opposite number at Glaxo, Sir Richard Sykes. Institutional investors were irate over the collapse in talks and began pressuring the two companies to return to the table. It took almost two years for further negotiations to reopen, triggered by Lechsly's announcement that he would retire in 2000. With press speculation growing ever more frenzied, Glaxo and SB finally confirmed they were back in talks in January 2000, and only days later confirmed they would merge to create the world's largest pharmaceutical company by market share.
Yet the sheer size and complexity of the combined business resulted in numerous regulatory issues, especially in the US. The merger was referred to competition and regulatory authorities who finally approved the deal in late 2000, subject to the sale of a number of drugs. GlaxoSmithKline finally began trading in December of that year. Sykes and Lechsly both stepped down from the CEO role in favour of the group's scientific chief, JP Garnier. Also in 2000 the group acquired US oral care company Block Drug, for $1.24bn. The purchase greatly increased the strength of its oral care portfolio, with brands including Sensodyne and Poli-Grip.
In response to pressure from third-world governments and charities, GSK finally agreed in 2001 to supply several of its HIV/AIDS drugs at cost to developing nations, including South Africa. Several HIV drugs were already being produced by local generic manufacturers in infringement of GSK's patents; the drug company finally agreed to abandon attempts to fight the case legally. The group also put a huge marketing spend behind the launch of new asthma drug Advair/Seretide, which combined its existing treatments Serevent and Flovent in one substance.
In 2003, GSK became the most high profile target to-date of increasing shareholder activism, when the group's stockholders voted down a board-approved remuneration plan which awarded lavish benefits to CEO JP Garnier, irrespective of the company's performance. In another blow, the group was hit at the start of 2004 with a huge $5.2bn tax bill from the IRS, which claimed the company had used internal pricing procedures to avoid paying full taxes in the US between 1989 and 1996. GSK had anticipated some form of charge and had already made a reserve of around $2.5bn to cover it; the actual demand from the IRS is for $2.7bn, with a further $2.5bn in interest. GSK appealed against the bill. The IRS raised the sum it was seeking to $7.8bn in early 2005 to cover tax on profits of sales of Zantac between 1997 and 2000 which it claims should have been paid in the US. GSK eventually agreed a deal to settle the dispute in 2006 with a payment of $3.4bn.
There was more trouble with the US government in May 2004 when the New York Attorney General brought a $1.9bn lawsuit against GSK for allegedly suppressing evidence linking its antidepressant Paxil with suicidal behaviour in teenagers. Drug regulators later ordered the company to withdraw advertising for the product, and GSK eventually settled out of court with the Attorney General's office for $2.5bn, while also denying the allegations. Andrew Witty replaced JP Garnier as CEO of GlaxoSmithKline in May 2008. See full profile for current activities
All rights reserved © Mind Advertising Ltd 1998-2018