This from a Forbes interview with GSK's CEO Andrew Witty discussing the Company's plans to grow sales in the wake of its ssuess with patent expirations and its pipeline and Avandia problems. Says Witty, "Drug companies became complacent in the 1990s. They were slow to react when insurers rebelled against me-too drugs and regulators became more worried about side effects."
He's decided that GSK will shun megamergers and shift its resources toward emerging markets that are eager to get access to Western drugs, and to stable markets like vaccines and consumer products. Only 23% of GSK's $44 billion in annual sales now come from selling drugs in big Western markets, down from 40% in 2007, and 24% come from emerging markets.
Through such a strategy, Witty hopes to stabilize GSK's revenues until its R&D can come through with new breakthrough medicines. He needs the R&D breakthrough too as GSK's shares have declined 20% since late 2005, and its sales are stagnant.
GSK cleared the me-too drugs out of its pipeline. Glaxo now has projects on everything from stem cells to gene therapy for rare immune diseases to an emerging area called epigenetics, which looks at how genes are modified. Almost all of the 18 new drugs in late-stage trials are totally new classes of medicines -- including the first treatment to delay the progression of Type 1 diabetes, a vaccine to prevent lung cancer from recurring, and the first drug in a new class to prevent heart attacks by stabilizing plaque in arteries. The latter could hit $10 billion in sales if it works.
Glaxo's first big success may come early next year, if its new lupus drug, Benlysta, is approved by regulators. It would be the first new drug for the autoimmune disease in 50 years. While GSK's partner Human Genome Sciences invented the drug, Glaxo invested in HGS' gene-hunting technology back in 1993 and stayed the course even after murky early results. With little competition, it could reap $5 billion in sales despite its modest effectiveness. Based on this, some analysts predict Glaxo's sales will grow at a 7% clip over the next five years, versus 3% or 4% for the rest the industry.
One naysayer, Harvard Business School professor Gary Pisano, doubts the R&D reorganization will make a big difference. The core problem afflicting drug firms isn't bureaucracy but a "lack of deep understanding of disease biology. How you organize it isn't going to solve that," he says. "Unless a company can develop world-class science, these units will have the same poor track record as biotech [in developing drugs]."
Posted by Bruce Lehr Jan 4th 2011