GSK stakes claim in emerging-markets 'land grab'

GlaxoSmithKline (NYSE: GSK) is racing for territory in emerging markets. The pharma giant is aiming to stake its claim in as many markets with as many products as it can--before its rivals do. "There's absolutely a land grab going on right now because obviously there's no growth in the U.S. and Europe, or very little growth," GSK's emerging markets chief Abbas Hussain, tells Bloomberg. "There's a real fight on for market share."

Hussain tells the news service that GSK wants to outpace the industry average of 12 percent to 14 percent growth in developing country sales. The company has been working hard toward that goal; Hussain has been adding to his 13,000-strong sales force in emerging markets, while the company buys smaller firms--or makes deals with them--to get more share.

One of GSK's strategies for growth in the developing world is discounted prices. In some markets, prices are dropping by 70 percent. And the price cuts are boosting volume as they're designed to do, Hussain says: In some countries, volumes have grown as much as ninefold. As an instance, he tells Bloomberg about introducing the Avamys allergy treatment in Mexico at a 50 percent discount.

"The old mindset at GSK would have been: Come in and launch it and have access only to the top 5 or 10 percent, the top people who can afford it," he explains. Instead, it now has won 50 percent of patients with that low low price. The question, analysts say, is whether the low-price strategy can be sustained. And whether GSK can indeed claim a big enough share of emerging markets where it's behind, such as China and Russia. "The next eight quarters will define who really is positioned in terms of the land grab that's going on," Hussain says.

- read the Bloomberg interview