GSK 2010 Q3 results

Some pretty interesting things in the Q3 results: Sales are down 8% in the US and 9% in Europe. This is accounted for by a descrease in Avandia and Valtrex sales. While Avandia is their best known drug, it seems to only account for about 2% of their overall sales, largely because so much of what they sell internationally is of the immunization type. Three of their newest oncology used medicines counted for 2 million pounds (about $3,135,000). This company has some fantastic cash cows!!

Operations Overseas

Glaxo Smith Kline is one of the most globally diversified companies on the globe! They have operations in 93 countries and have webpages tailored to each country. Their marketing and research are across each of these locations with different areas of focus with each country.

Vertical Integration and Outsourcing

One fine example of strategy we can see at Glaxo Smith Kline is their "Pool for Open Innvoation against neglected tropical diseases" which is a collaboration they started in 2009. Though they are only in the fine print on the Pool's website, they are in a great position to reap rewards from this group. Essentially they are allowing other researchers to use their research to help come up with new drug formulas, and are hoping that resulting medications that will be collaborative efforts will then be patented to the Pool. By taking in these other researchers through information sharing, they are outsourcing to an extent as well as vertically integrating!

Competitive Strategies

Fortunately for Glaxo Smith Kline, all drug companies very successfully use the broad differentiation strategy. By patenting their formulas, drug makers can prevent others from even having a similar medication for several years. By holding this exclusivity, GSK and other drug manufacturers can set their own pricing, and often, due to the very differentiated uses of these (often life-saving) drugs can set them as high as they want.

This strategy is made very apparent by drugs like Avandia, for which there is no similar drug or generic. (Which, in this case, may be fortunate, as this drug was rushed to production without thorough enough testing and is now being pulled from many locations.)

Strengths and Weaknesses of GSK

The primary strength of GSK has to be their marketing department! They are quick to start patient recovery as soon as bad news comes out and always send out press releases that don't try to hide the topics.
I think a major weakness is that they could have a more user-friendly feel to their website.

Today's stock

Also, we are holding at $41.50 after several days. The Avandia dilemma seems to have not had any short-term effects on stock price!

Intestinal Worms?

So yesterday Glaxo Smith Klein announced that they were going to help kids by researching worms. Yeah. WORMS.
Gross, I know, but pretty cool really. They are looking at improving access to albenzadole, which treats intestinal worms in children. Since worms are apparently a leading cause of absenteeism and poor child health, the extra 400 million doses they plan to make over the next 5 years will really help the WHO (World Health Organization.)
From a marketing perspective this is a great opportunity. It is hard to say anything negative about a company that is helping that many children!

Stock pricing

Today's stock market is $41.19. Going up nicely despite the bad news about avandia.

A new company

GSK announced on Monday that they have a minority stake (18%) in Convergence Pharmaceuticals. This new company will be researching some GSK compounds in a search for better analgesics.

Chugging Along!

Despite some pretty devastating news about their "golden drug" Avandia earlier this week, GSK is doing really well on other fronts. Their stock is holding steady at just under $40 a share (39.72) and they had a press release this morning that is really exciting for them.
They received word today that the European Commission has approved one of their drugs, Arixtra, for use in a new therapeutic indication. This drug is an anti coagulant that is now the only drug of its type approved for use in "the treatment of adults with acute symptomatic spontaneous superficial-vein thrombosis ofthe lower limbs without concomitant deep-vein thrombosis." It is the only drug approved for this treatment in its class. This approval is great news for GSK.

Bad News for GSK!

On Thursday the EMA (European Medicines Agency) and the FDA both released reports regarding the use of Avandia (the key product of Glaxo - it treats diabetes). The findings of these studies were bad news for GSK stockholders. Marketing of this medicine has been suspended in the European Union and the FDA is requiring some pretty strict new labeling standards in the US. Sales of this drug were already down 23% in the US in the last quarter and are anticipated to drop again. That having been said, immediate stock prices are holding at $40.29.
The GSK website has quite a bit of information as well as a video message from Dr. Ellen Strahlman, the Chief Medical Officer, regarding these studies.

Mission Statement

Wow. I am not sure that GSK has a simple mission. They have a credo that is on their links (improving health and quality of life - do more, feel better, live longer") but the mission and strategy page reveals that they unveiled a 3 part strategy for profitability:
1. Grow a diversified global business
2. deliver more products of value
3.simplify the operating model
Not really a unifying mission statement.
Interestingly, their credo sounds pretty familiar... the mission statement at Ferrell Hospital, my employer: Dedicated to improving the health and quality of life for the people and communities we serve.

Neat article!!

Here is a neat article - "Avandia: A PR mess for Glaxo, but not a financial one"
http://money.cnn.com/2010/09/15/news/companies/avandia_GSK_generics.fortune/
Seems that the bad press isn't as damning as GSK worried it might be at first!

Glaxo Smith Kline and Economic Conditions

All things considered, Glaxo Smith Kline is weathering the economic conditions really well. This could be largely due to the number of NEEDED items they produce (like chickenpox vaccines). Looking back at the stock performance (which I realize isn't a company's only indicator of success), they have been holding pretty steadily for a number of years. The five year high was in 2007 and was over $50. In early 2009, they had a decline to just under $30, but they have returned from that slump very quickly.
Interestingly enough, this company was in a slump - holding to under $10 a share until the late 1990s. Their "golden drug" Avandia, brought about this rapid increase after it was introduced to the market in 1999. Then in 2007 this drug's sales plummeted, just as GSK was showing their 5 year peak of stock success. This drop in sales was due to findings that the drug, while an effective treatment for diabetes blood sugar control, was possibly to blame for heart conditions in many of the patients in a trial. Interestingly, today they crossed that $40 mark I was wondering about yesterday!

Official Lab services provider

As I was perusing the Glaxo Smith Kline website earlier today, I saw that they were the official provider of laboratory services for the 2012 London Olympics. I was a little confused by why there would need to be an official lab for the Olympics but then I looked at the article and it made sense: drug screening!
I was previously in human resources where I work (we've had a structural change and I am in Administrative Services) so I have had some experience in writing contracts to be the lab services provider for drug screening for local coal mines and I imagine this is a much bigger contract than many realize!

Current Stock for GSK

Today is holding at 39.82. I wonder if they will ross the $40 hump this year?

Stock prices 9-8-10

GSK's stock pricing is $39.23 today. Still hovering around that $40 mark!

CFO Succession Plan Announced!!

GSK announced earlier today that their CFO, Julian Heslop, will be retiring in 2011. He will be replaced by Simon Dingemans. Mr. Heslop has only been with the company since 2005, but has been an accountant since the 1970s. It will be interesting to see if March 2011, the anticipated date for the changes, brings about any change for the accounting strategy of the company.

Glaxo Smith Kline Dealing with PR nightmare

http://www.gsk.com/media/pressreleases/2010/2010_pressrelease_10090.htm
This press release covers a Public Relations nightmare! The BBC program Panorama is running a special called "A Risk Worth Taking?" which outlines the reasons consumers should avoid the GSK med Avandia. This program also uses statements about the drug trial that was done outside of the GSK drug trial that make it seem like GSK is covering up evidence regarding Avandia's effects on heart disease!
This is a very well-written article and GSK is doing an excellent job of laying all of the facts out for consumers to make their own decisions in this case.

Stock

Today's stock is up 42 cents. This seems to be a pretty even trend, though they had a several cent drop this morning, they have been hovering right at $37.50 - only varying a few dollars above and below - for the last year.

New Blog!

I'm creating this blog for a class and it looks like it will lead to some very interesting reading.
I selected Glaxo Smith Kline as the company to blog about because there is a coporate office not too very far from here and I know someone who works there. Things in the healthcare world are rapidly changing, both due to evolution/research and to legislation that is making some pretty difficult changes for several pharmaceuticals.