GSK announces new emerging markets focus

By Kirsty Barnes

- Last updated on GMT

Related tags United states Pharmacology

GlaxoSmithKline (GSK) has announced company-wide reorganisation
plans that will see it place a new focus on emerging markets in a
bid to capitalise on the growing potential they offer.

The UK company is setting up a new emerging markets division, to be headed by Abbas Hussain, who joins the firm from Eli Lilly to assume to role of president, Emerging Markets, on 2 June.

In addition, GSK will create a new Asia Pacific region that will include Japan and Australia.

This will be lead by the former president of the company's Japan pharmaceuticals unit, Marc Dunoyer.

Furthermore, new operational areas have also been set up in Europe so that the firm can boost growth in this region.

At the same time, the drug giant is consolidating its operations in North America, whereby the company's US, Canadian and Puerto Rican businesses will now be combined under the one umbrella.

Current president of the US division, Chris Viehbacher, will head the group.

Presently GSK's company is structured around key regions and its international division is responsible for dealing with the countries outside of this realm, however, Andrew Witty, who will replace retiring CEO Jean-Pierre Garnier on 22 May, said that it is now " essential that we have an operating structure that is dynamic and responsive to the opportunities in these (emerging) markets ."

" It is clear that our industry is facing a rapidly changing environment…we are presented with increasing challenges, such as cost containment, regulatory pressures and generic competition ," he said.

Emerging markets, such as Brazil, Russia, India, China and the Middle East, already contribute almost a quarter of today's pharmaceutical market growth, and are still accelerating.

" Growth rates in once-neglected markets could someday triple that of Western nations ," said Witty.

As such, these emerging markets are " significant growth drivers of the future ."

In particular, Witty said that Asia Pacific countries " represent significant and immediate opportunities " for launching new and future drug products.

Indeed, a recent IMS Health report has confirmed that during 2007 it was the emerging markets' time to shine in terms of prescription drug market growth, while the western markets, whose pharma industry's have typically boasted robust growth, showed signs of stagnation.

GSK is one of a number of global pharma firms making sweeping moves to take advantage of the emerging market situation.

During 2007, the Asia-Pacific markets (excluding Japan) grew collectively by 13.3 per cent and now represent 11 per cent of the total global market, which during the same period grew 6.4 per cent to reach $712bn.

Latin America was the next most dominant emerging location in terms of pharma market elevation, with the $42.4bn region also demonstrating a "rapid expansion" of 11.6 per cent.

Similarly, the third major emerging pharma region, Central and Eastern Europe, witnessed a 10.9 per cent market expansion last year, and now totals $81.6bn.

Overall, North America still dwarfs every other region in terms of its prescription drug market, accounting for 45.9 per cent of the global total, however, its growth rate " fell dramatically " during 2007, resulting in its market contribution to global growth declining to its " lowest point ever ", at 25.5 per cent, said IMS. During the year, pharmaceutical sales in North America only grew by 4.2 per cent to $304.5bn, down from the 8.3 per cent rise witnessed the previous year.

Meanwhile, Japan - the world´s second largest pharma market - did not fare so well either, with its revenue only elevating slightly - 3.6 per cent - to $65.2bn in 2007 over the year prior, although IMS did point out that this is actually higher than the compound annual growth rate (CAGR) of the prior five years.

Moreover, across the five major European markets - France, Germany, UK, Italy and Spain - there is a similar picture of stagnation, with aggregate growth only reaching 4.8 per cent and the total market expanding to $140bn.

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