GSK's Witty doesn't anticipate dip in profit margins

GlaxoSmithKline doesn't expect profit margins to slip substantially despite an aggressive drive to diversify into areas such as consumer health and emerging markets, CEO Andrew Witty (photo) told attendees at the Reuters Health Summit Thursday.

"I don't really anticipate huge changes going forward," Witty told attendees, adding there is no guarantee that the company's margins will erode significantly over time, according to Reuters. Investors have questioned his emerging markets strategy because of its potential to dilute profitability by focusing on activities like selling branded generic drugs in developing countries.

But Witty said it was wrong to think emerging markets were inherently less profitable. He told the Financial Times in 2008 that believes that brand-building in emerging markets, whether to sell patented meds or generics or consumer health products, ends up benefiting the company across the board. Witty could prove prescient--the company's third quarter's sales were up 3 percent, with sales in emerging markets rising 25 percent. 

Since Witty's policy was implemented, GSK has inked deals with Bristol-Myers Squibb, UCB, Dr. Reddy's and South Africa's Aspen Pharmacare Holdings to expand its reach in emerging markets.

- read the Reuters article

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