Some commentators (and ex-Glaxo employees) on Corante speculate:
December 2, 2014
A (Sad) Look Back to 2006 At GSK
It’s generally painful to go back a few years and look at the large-scale pronouncements of a drug company’s upper management. Thanks to commenter Metamonad, we can, in light of tomorrow’s GlaxoSmithKline re-org, step back to 2006:
At the time of the £107bn merger of Glaxo Wellcome and SmithKline Beecham in 2000, the architect of the deal, Glaxo’s chief executive Sir Richard Sykes, spoke of creating the “Microsoft of the pharmaceuticals industry”. Now Mr Garnier, previously the head of SmithKline and the man who became the chief executive of the merged company, believes ramping up investment in the research and development of new drugs is crucial to making this vision come true.Mr Garnier said: “In terms of creating the Microsoft, this is a vision of the most R&D intensive company which I completely agree with. We have a chance to step away from the rest of our competition if we execute our plan well and we’re now in a position to do so.”
GSK is the second-largest drug company in the world, with a 7 per cent market share behind America’s Pfizer at 11 per cent. Last week Mr Garnier’s contract was extended by seven months to May 2008 so he could steer the group through a crucial year that will see the launch of several key medicines. They include Cervarix, a vaccine for cervical cancer, Tykerb, an oral treatment for breast cancer, and Eltrombopag, a blood clotting agent in the treatment of breast cancer.
These blockbuster drugs are set to bring in billions of dollars of extra revenue, enabling the company to pour large chunks into drug discovery from 2008, Mr Garnier said. This year the group is spending $4.4bn on developing new medicines, around 16 per cent of overall revenues, but the goal is to get that figure to the 20-25 per cent range over the next 10 years.
So how’d that work out? Tykerb has had a rough time of it in some clinical trials, and its revenues last year were about $340 million and falling. Ceravix brought in $270 million, down 37 per cent (although that drop was mostly due to trouble in the Japanese market). And eltrombopag, known as Promacta, was a brighter spot, with $307 million in revenues, up 46%. But you’ll note that all three of these put together did not bring in a billion dollars of revenue in 2013, which would surely not have made anyone happy if you’d told them that in 2006.
And the R&D spend last year was 15% of overall revenues – less than the starting point in the above article, and nowhere in sight of that 20 to 25%. And with the company set to cut even more tomorrow, I think we can rule that out for the near future, too.