Home / Articles / GSK's new boss moves to revive R&D 'rigour'

GSK's new boss moves to revive R&D 'rigour'


Emma Walmsley is not letting the grass grow under her feet.

Just three months after she became chief executive of GlaxoSmithKline, Ms Walmsley today unveiled her priorities for the UK’s premier drug-maker, at the centre of which a major shake-up whose consequences are likely to be long-lasting.
The headline is that GSK’s research & development arm, one of the biggest and most important of its kind in the world let alone the UK, is facing a dramatic cull in terms of its activities.
It is difficult to understate the significance of this change to a company like GSK. It annually spends getting on for $4.5bn on research & development (R&D), making it one of the global pharmaceuticals industry’s biggest such players.
:: GSK axes 320 UK jobs in shake-up
More than 30 development projects will be dumped, most notably GSK’s involvement in Sirukumab, a treatment for rheumatoid arthritis on which it has been working with US giant Johnson & Johnson.
Many of the projects being shelved are in drugs to treat rare diseases, an area that some of GSK’s rivals, such as Shire Pharmaceuticals, have made the centre of their business model.
Some will say this is due to cost-cutting and, indeed, the company is aiming to save an annual total of £1bn by 2020 as a result of efficiency measures announced on Wednesday – mainly from simplification of the company’s drugs portfolio, which will see the number of pharma brands owned by the company trimmed by 22%, some 130 brands in all.

Image: GlaxoSmithKline’s HQ is in west London
The crucial point though is that Ms Walmsley feels, despite its enormous R&D budget, GSK has been spreading itself too thinly and across too many projects.
Its average spend per project has been lower than elsewhere in the industry and big projects, in her view, have not been backed with enough money.
Pointing out that GSK’s R&D operation has been under-performing those of its peers, she said: “Our R&D is what we need to improve on…we have not translated our output into commercial success. As R&D reads out, we have to be able to back our winners.”

The other eyebrow-raising move is that Ms Walmsley now intends to devote four-fifths of GSK’s global R&D budget to just four fields.
Two of these are respiratory diseases and infectious diseases like HIV – where GSK already enjoys strong market positions. Yet she also now intends to include in that grouping “very specific assets” in cancer and immuno-inflammation.
This is something of a change of approach from Ms Walmsley’s predecessor, Sir Andrew Witty, who in 2014 exchanged part of GSK’s oncology business for the consumer and vaccines business of Swiss rival Novartis.
The field of cancer treatment is highly competitive and costs are high which is why some drugs giants, such as Eli Lilly, the US giant famous for Prozac, announced earlier this week that it was dropping its cancer projects. Ms Walmsley has clearly seen something in GSK’s remaining cancer projects she likes the look of.
Essentially, though, this is all about introducing what Ms Walmsley calls greater “commercial rigour” to the company’s decision-making on how it develops its drug pipeline. Its new head of global pharmaceuticals, Luke Miels, poached earlier this year from rival AstraZeneca, will be tasked with seeing this through. Efficiency changes elsewhere, she insisted, were aimed at getting the drugs developed by GSK to the people who need them more quickly.
Demographic changes and an ageing population in advanced economies mean governments and other bodies that buy drugs will have to make their money go further. That means that the pricing pressures with which GSK and the rest of the global pharmaceuticals industry has struggled in recent years are likely to intensify.
These changes, Ms Walmsley insisted, are therefore essential if GSK is to grow in future.
However, she stressed, GSK’s reason for existing remains unchanged: “This company does important work. Our purpose matters – to help millions of people do more every day, feel better and live longer. We keep hundreds of millions of people well – from new-born babies to the elderly. This purpose will remain the ultimate priority under my leadership.”
And this is a message that cannot be stressed enough. Ms Walmsley admits that, in common with other big businesses, GSK has suffered an erosion of trust in recent years. Rebuilding that will be every bit as challenging as the operational and efficiency improvements she has unveiled.

Source: Sky

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups. I am an author of various websites including Franchise UK https://www.franchise-uk.co.uk

Check Also

Poll reveals generational split over economy

A huge inter-generational divide has been revealed over whether Labour or the Conservatives would …

Free Franchise Guide

Free Franchising Guide

 

Interested in buying a franchise? The our FREE Franchise Guide is a must! The guide contains lots of information to help you decide if franchising is right for you.

 

To claim your Free Franchise Guide click here