The British pharma company, GlaxoSmithKline (GSK), is
changing its focus towards developing countries for manufacturing and
business. This promises not only a steady revenue but also growth.
It was with this intention that GlaxoSmithKline unveiled a new factory
in Nashik in Maharashtra to manufacture Albendazole tablet for the
World Health Organization, to eliminate lymphatic filariasis (LF)-a
painful parasitic infection spread by mosquitoes that causes grotesque
swelling of the limbs, breasts and genitals.
Andrew Witty, CEO of GSK, inaugurated the facility built at a cost of
Rs 1.5 crore. The factory can make 30 crore tablets, when
fully-operational later this year.
The new plant will produces about one-eighth of GSK's medicines across
the world. And will be an important facility in GSK's agenda to
eliminate LF by 2020. The company has been working towards the common
goal of eliminating LF with partners in the global alliance for over a
GSK has been present in India for a very long time. It is also one of
those few foreign-owned pharma firms that are listed on Indian stock
exchanges. It has an annual turnover of Rs 1,859 crore and a market
share of 5.3 percent, ahead of even the now integrated Pfizer India
(3.5 percent). It is probably the leading MNC for vaccines in the
prevention of hepatitis A, hepatitis B, influenzae, chickenpox,
diphtheria, pertussis, tetanus, rotavirus and cervical cancer. It is
perhaps the first company to go into branded generics with a portfolio
of prescription medicines ranging across therapeutic areas such as
anti-infectives, dermatology, gynaecology, diabetes, oncology,
cardiovascular disease and respiratory diseases.
Witty has also chalked out ambitious plans for Least Developed
Countries (LDCs). First of which is the establishment of a patent pool
to encourage R&D of drugs for neglected tropical diseases. Malaria
would be one such disease that will be the center of focus.
The GSK team has also given shape to a strategy of differential pricing
wherein there will be a price slash of almost 75 percent and
reinvestment of around 20 percent of their profits on infrastructure
development in the LDCs.
In an exclusive interview with BioSpectrum Andrew Witty shares more
about GSK's plans for India.
What will be India's role in GSK's
overall strategy especially in areas like research?
The industry is going through a change and there are many changes
underway for us to adjust the business and research model, which was
essentially designed in the 1970s and built in the 1980s. India itself
is a key priority for GSK. This is one of the greatest emerging
economies of the world and will be a great economic story in the next
50 years. I personally believe that GSK is as Indian as any other
Indian company is. Our priority in India is to see that all our
businesses in India are well established and in tune with the current
business trend in the country. This is a huge manufacturing environment
for GSK. The Nashik facility itself manufactures around one-eighth of
the global volume of GSK's medicines. Over a period of time, you will
see that GSK will have more manufacturing facilities in India. And of
course, I would also like to see the increase in activity in areas such
as vaccines and a few more research projects.
In my view, the center of gravity of GSK is moving towards the east –
towards India, China and emerging nations of the world and that is
going to have implications in our other businesses too. India will be
an important manufacturing and growth point. It is a market that has
demonstrated success in a variety of strategies.
Q GSK sells a lot of off-patent drugs in
India, are you comfortable with
this business model?
In India, we have just one granted patent product. So, by definition
all that we sell in India is off-patent. I am comfortable with that
approach. The GSK business subsidiary in India is one of the largest
international subsidiaries and GSK can now compete neck and neck with
the biggest of the pure Indian businesses. In terms of our broad
agenda, I believe we are fortunate to live in a remarkable era of
change. GSK tries to provide quality medicines that make a difference
to a wider population. For that we have to create a bigger portfolio of
medicines at different prices so that all people can get the same
benefit of quality medicines. We have achieved that through
acquisitions. For example, last year, we acquired Stiefel Laboratories
that has made GSK the world's largest dermatology company. In India, we
have partnerships with Strides Arcolab and Dr Reddy's Laboratories.
Those partnerships supply a broad portfolio of products outside India,
which allow us to have a bigger presence in those markets.
Will vaccines have
contribution in GSK's growth story?
Vaccines contribute to our growth in regions like India where there is
a demand for cost-effective healthcare. We have done that in the former
Soviet Union. It is our intention that we have the state-of-the-art
vaccines available to India. Our facility in India is involved in two
most modern vaccines and we are also trying to extend our capacity for
other vaccines in India. Those are the subject of many conversations
that are going on at the moment and by next year we will make progress
How favorable is
the IP regime in
India for GSK India?
We will see a robust IP framework being enforced in India. I am very
positive about the direction that the Indian government has chosen,
but, I fully-anticipate that it will take a long time. India, will be a
relatively lower priced market, because, it is emerging as a nation. It
will not be realistic to say that just because there is a patent hence
all the prices will go up. I will not let the issue of patents be a
problem. Patents are a long-term opportunity to add value to your
research. Later, Indian discoverers can be incentivized to come up with
innovative medicines and they can also get returns of their
investments. As the government adopts an IP framework what it needs to
do over time is to adopt enforcement because there is no point in
adopting a framework if you do not enforce it.
What made GSK
develop the model of
differential pricing of its products for different regions of the
I have spent most of my career in markets like Africa, and Asia Pacific
including India. During that time, I realized that we cannot miss the
opportunity to be engaged in the evolution of these markets. Today,
most countries recognize that for different products, prices will be
different in a market with high GDP than a market with low GDP. I would
not think it would be fair to say that just because you cannot afford
medicines at the American price nobody gets it. So, I will have to find
a middle way and that is the process we are going through now. It is
thus reasonable to recognize that the prices in Manila will be
different from that of Malaysia and the prices in Malaysia, be lower
Last year, in April 2008, we reduced the prices of all our patented
medicines in LDCs by 75 percent. In the middle income countries we are
engaged in bilateral dialogues with those countries and zeroed in on a
price that is appropriate for that country. In middle income countries,
you need to be more customized in your approach whereas for the LDCs
the level of poverty is low and it makes sense to have a more common
approach. The problem is-all these years we have tried to sell same
solutions to different problems. It is not likely to work. Somewhere
down the line you need to incentivize research and the investments made
into it and that cannot happen if there are no returns. So, I believe
we need to open up access to the broader population, not to destroy
incentivizing research and to be critical.
GSK has come with
the idea of a patent
pool for neglected diseases for LDCs. Can you throw light on this
GSK is particularly looking at the 15-16 tropical diseases identified
by the US FDA and the poorest countries in the world. In that we create
a patent pool where we will put in all the patents of our molecules in
these diseases and most importantly, our intellectual know-how and
knowledge. We will make these patents available free to any
collaborator, discoverer, researcher who wants to work with us or
simply take that data to work on their own. We did that because for the
neglected tropical diseases there is no marketplace unlike CVS, cancer
or diseases that dominate the West. The marketplace essentially
stimulates research. In the case of neglected tropical diseases,
although they are hugely common in the LDCs there is no marketplace
because the people who suffer there have no money. So, to rely on the
market place to stimulate the discovery process is never going to
happen. In this case, we can invite governments or NGOs to create
stimulation and I believe we can make it more attractive for other
researchers to do their own research.
The whole idea of a patent pool is that we look at a situation where
there is no market, try and make it easier for academic research
collaborations, and bring out good ideas. We have extended that in the
last few months by looking at malaria as a particular disease and we
have published all the possible chemical structures that GSK has which
has activity against malaria and we took 20 lakh chemicals screened
them against malaria and we have found 13,000 chemical structures that
have activity against malaria. We make that publicly available and put
in on the web where any scientist can use those molecules and try and
develop a drug. We are trying to develop alternative methods to
stimulate research in the areas where there have been no breakthrough
in years. Albendazoleple, for example, has originated in animal health
research, but, we should not rely on animal research to save 60 percent
of the world's population. We need to find creative ways to engage
companies, NGOs to challenge our intellect to find breakthroughs.
Are there any
reasons for GSK's late
entry into UNITAID's patent pool?
So far, there is no approval given to us to join in but there is a
dialogue involved. We involved our HIV subsidiary's CEO for a meeting
with the UNITAID to workout details. Secondly, we ourselves have a
patent pool where access to all of our molecules, patents and HIV drugs
are available to generic manufacturers. And, unlike the proposed
UNITAID bill, we do not charge a royalty.
What is your
opinion on the hybrid
model adopted by big pharma companies, will GSK go for that model?
I am not interested in pure generics. So, while I am here you will
never see GSK go up against a DRL or Ranbaxy in the US. I am not
interested in that area.
Does it make sense
to invest in
lymphatic filariasis (LF) disease area, over, say oncology?
LF has a large population and around 120 crore people today suffer from
LF. It is one of the top 15 neglected diseases in terms of presence
along with others like malaria. GSK had been producing albendazole and
it also applies to LF. It is all about applying your skills to the
challenge that exists. So, the question of whether this is a
competitive area when compared to other diseases we can work upon, the
answer in this context is that it is not about 'Albendazole' and HIV is
another area we are looking at for instance. So, here we put in all our
patents in HIV at the disposal of generic manufacturers including
Indian companies to supply tablets to LDCs to increase volumes.
In LDCs, GSK is
planning to reinvest
20 percent of its profits in infrastructure building. Is there a
similar model for emerging nations?
In the LDCs, we will reinvest 20 percent of our profits on
infrastructure because in those countries that is often one of the main
challenges. That is a piece of the puzzle that is not fixed and we have
not made such a commitment in emerging markets. It would be wrong for
us to make such a commitment across all nations. This is on the basis
that we want to engage in a bilateral task with government in those
What plans does GSK
have for India as
far as acquisitions and alliances are concerned?
I would be dishonest if I say I am not looking at any acquisitions in
India. Clearly we are looking at an acquisition. We are a cash-rich
company both in India and globally. But, we are cautious and continue
to look out and India is a great target. Frankly, there are companies
here that do not know the actual worth of their assets and come up with
unrealistic valuations. The reason I like alliances is that you do have
to put a huge capital to have a competitive advantage. There are plenty
of opportunities for alliances both with Indian companies and
non-Indian companies. We are very thoughtful of the current deal
structure that we use.
Nayantara Som in Mumbai