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Glaxo CEO: Time To Diversify, Help Poor Countries

From Associated Press (February 2, 2010)

NEW YORK--Andrew Witty, who took over as GlaxoSmithKline PLC’s chief executive in May 2008, has been remaking the company from a pure pharmaceutical business to a diverse healthcare conglomerate, a strategy most rivals now are pursuing.

The London-based maker of asthma treatment Advair and heartburn drug Zantac now is challenging Merck & Co. as the world’s dominant vaccine maker, even competing head-to-head on lucrative shots to prevent cervical cancer. Glaxo also sells nutritional products from weight-loss pill alli to vitamin and energy boosters Geritol and Vivarin. And it has a fast-growing consumer health business with heavily advertised products including Beano to prevent gas and Nicorette smoking-cessation gum.

The company will report its fourth-quarter results on Thursday, when it is expected to announce elimination of up to 4,000 of its 99,000 jobs worldwide. Like rivals, it is losing sales to generic competition and reducing staff in Western countries.

Witty is pushing to sell more products in fast-growing "emerging markets" such as Brazil, Russia, India and China. But Witty also is increasing efforts to bring medicines for tropical diseases to the poorest countries, at minimum profit.

Last month, in a speech before the Council on Foreign Relations in New York, Witty pledged to expand his company’s pool of patented compounds that others can use for free to try to develop medicines for neglected tropical diseases -- and to hand control to a nonprofit group.

Glaxo will give up to 60 outside scientists from universities and foundations access to a lab facility it calls the first-ever Open Lab, for developing new medicines for diseases plaguing poor countries. Witty also said Glaxo will give scientists around the globe free access to data on 13,500 drug compounds that show some effectiveness against malaria, one of the most devastating tropical diseases.

In a recent interview with The Associated Press, Witty discussed his goals, how the current strategies and programs have come about, and more.

In the months before he took over as CEO, Witty held nine meetings, in the U.S., the UK and other countries, with groups of about 40 people from every segment of the company -- scientists, salespeople, factory workers and staff in pharmaceuticals, biologicals and consumer products. He asked each to name three things the company should stop and three things it should protect or build upon.

Q: What did you decide as a result?

A: "We want to do more for people in less-developed countries, those in the least fortunate countries. resonates with the employees. It’s enormously satisfying for them."

"For us to really maintain a position in the world society, we can’t just sit here and say, ‘We’ve made a great place in America, Europe, five or six other countries.’ We have skills, capacities, approaches, technologies that can work all over the world (not just countries) where we can command high prices."

Q: What have you been doing to remake GlaxoSmithKline?

A: "It’s all a work in progress (but) the strategy’s laid out: Grow and diversify as a global company, improve our research and development, and simplify our structure."

"What I want is to be is, of course, a drug company, but a very successful vaccine company, a successful consumer company and ... a growth company in the emerging markets."

"So I doubled the amount of consumer research and last year we made 11 acquisitions. Up through the third quarter, our consumer business was the fastest-growing consumer business in the world," with sales rising faster than at Procter & Gamble Co. and Unilever PLC.

Q: What do you mean when you say you are "re-personalizing" your research operations?

A: "I’m a massive believer in individuals discovering drugs," not high-tech machines that screen thousands of compounds every hour.

"Eureka moments occasionally happen in one brain, more often in five brains together, so we are energizing our research groups."

"We have opened up to be much more external in our collaboration ... so we bring more ideas in from outside and those ideas are more diverse than ever."

Q: What is your strategy now that the era of thriving from the profits of a few blockbuster drugs is over?

A: "We’re striving to deliver multiple products every year. The reality for GSK is growth from diverse areas -- nutritional drinks, over-the-counter pain relievers, weight-loss products, toothpaste and vaccines (targeted for sale) to government."

Instead of drugs for the masses, the company is developing specialty drugs for narrower groups of patients, such as just-approved Arzerra for a slow-progressing blood and bone marrow cancer, and experimental drug Benlysta, which could become the first new lupus drug in 50 years.

Q: What’s the benefit of diversity?

A: "We’ve got the company moving on a broad front. That gives me confidence we can deliver sustainable growth without the tremendous volatility that characterizes the pharmaceutical industry."

Posted: February 2010