GlaxoSmithKline (GSK) gives anxiety, asthma, and other ailments
the ax. One of the top five pharmaceutical firms in the world,
GSK's bestsellers include respiratory, neurological, cardiovascular
and dermatology drugs, as well as vaccines and antivirals. Its top
product is asthma medication Advair (aka Seretide), which combines
two of its other asthma products, Flovent and Serevent. Other
bestsellers include epilepsy treatment Lamictal, cholesterol
medicine Lovaza, and prostate enlargement treatment Avodart. GSK's
consumer products include Tums, dental care products Aquafresh and
Sensodyne, and smoking-cessation products NicoDerm and Nicorette.
In 2015 GSK bought Novartis' Vaccines and Consumer Health business,
and sold its cancer drugs business to the same company.
GSK operates through three primary segments - Pharmaceuticals,
Consumer Healthcare and Vaccines. Pharmaceuticals is the largest by
far, pulling in some 60% of revenue.
The Pharmaceuticals business develops and makes medicines that
treat a wide variety of acute and chronic diseases.
Respiratory drugs is its largest sales category,
primarily due to blockbuster Advair, which brings in around £4
billion annually. Other respiratory products include Ventolin,
Relvar, and Flixotide. GSK also has a strong presence in the HIV
market (through majority-owned ViiV Healthcare), as well as the
central nervous system treatment market alongside cardiovascular,
urogenital, dermatology (through its Stiefel division), virology,
infectious disease, and metabolism.
Consumer Healthcare products fall into the oral health,
wellness, nutrition, and skin health categories, with top sellers
including Sensodyne, Panadol, and Horlicks. The segment also makes
key brands Theraflu, Polident and Abreva. GSK sells these products
in more than 150 countries around the world, with around 40% of
sales in emerging markets. In 2015, GSK combined its consumer
health care operations with those of Novartis to create a global
leader in the consumer health market.
The Vaccines business is a global leader, with around 40
pediatric, adolescent, adult, and travel vaccines on the market.
Its Infanrix childhood vaccine for diptheria and tetanus leads the
pack, followed by products for the prevention of hepatitis,
pneumonia, rotavirus, and influenza, with brands including Cervarix
and Pediarix vaccines and antibiotic Augmentin. As part of the
Novartis acquisition GSK gained two meningitis vaccines, Menveo and
GSK has more than 80 manufacturing facilities in 36 countries.
The group's major R&D centers are located in the UK, the US,
Belgium, and China. It has a presence in more than 115
The US and Europe pull in around 61% of revenue, but the
company's biggest chunk of revenue come from international markets.
Japan is the largest international market and accounts for nearly
Sales and Marketing
The company markets its products directly to hospitals,
pharmacies, doctors, and other health care consumers; it also uses
wholesale distributors in some markets and serves customers in more
than 150 countries overall.
Note: Growth rates may differ after conversion to US
Sales grew 6% to £23.9 billion in 2015, reflecting the
contribution to sales of the acquired Vaccines and Consumer Health
businesses from Novartis. Acquired products that aided growth
include Voltaren and Otrivin in Consumer Health, as well as the
acquired Meningitis product portfolio. Pharmaceuticals, the biggest
segment by revenue at around 60% of total, was down on prior year
due to a decline in sales for big-selling Advair.
Growth rates in the US and Europe were affected by exchange rate
effects. In real terms the US grew 11% and Europe 3%, but at
constant exchange rates Europe grew more strongly at 11%.
Net income rose to £8.3 billion from £2.8 in 2014. This 300%
jump came from the net proceeds of the Novartis asset-swap.
Cash from operating activities fell to £2.5 billion from £5.2 in
2014 (which in turn was a fall from £7.2 in 2013). This fall was
due to payments of non-core restructuring and integration costs and
tax payments on the divested oncology business of £1 billion.
The company was also hit by a record fine of $490 million from
Chinese authorities after the company was found to have bribed
doctors to promote their products.
GSK undertook a restructuring program in 2014-15 that included
the divestment of the meningitis vaccine program and which brought
savings across the business of £1 billion, which exceeded
expectations by £200 million. Part of these savings are to be
funneled into R&D development across GSK's three business
In 2015 GSK completed a major asset swap with Novartis that
reshaped its operations. It paid Novartis $7.8 billion for that
company's vaccine business while collecting up to $16 billion for
handing over its oncology line. The two companies are also
combining their consumer products lines to create the world's top
provider of over-the-counter (OTC) medicines. Altogether, the
three-part deal is expected to add £1.3 billion to GSK's bottom
line and strengthen its core OTC and vaccine businesses.
The company divested its oncology division to focus on its core
operations, and the sale provides an immediate cash injection.
As sales in GSK's largest market, the US, account for about a
third of pharmaceutical sales, maintaining a rich portfolio of US
patent-protected products can make or break the company's future.
For example, cardiovascular drug Lovaza began facing generic
competition in 2014 and fell 54% that year. Other established
products that have experienced sales slumps due to patent losses
include best-selling herpes drug Valtrex and anti-depressant
Paroxetine (marketed as Seroxat and Paxil).
GSK is also working to pump potential new blockbusters into its
pipeline by acquiring promising research firms and forming
development agreements with other drug companies. The company is
working with pharmaceutical firms Pfizer and Shionogi on HIV
medications through ViiV Healthcare; many of the company's HIV and
vaccine development programs aim to provide affordable disease
preventions and treatments to developing countries.