GlaxoSmithKline CEO Sir Andrew Witty may have been pressured out for not building shareholder value fast enough. But some experts think he has built the kind of pharma company that many consumers want to see, one that focuses on the long term and sees social impact as a measure of success along with drug discovery and profits.
U.K.-based Glaxo ($GSK) has been ranked among Fortune Magazine's “50 companies in 2016 to Change the World," selected by a panel of experts and the staff at the publication.
The magazine points to a number of moves GSK made this year that benefit communities, as well as its long-term strategy of tiered pricing in the world’s poorest countries, where it works to recoup lost profits with more volume and long-term loyalty. The drugmaker has always said it makes money in every market in which it does business.
In March, for example, GSK announced it would no longer file patents in the 85 countries with the lowest incomes, even as it reinvests 20% of its profits in those areas into health education and infrastructure. Fortune also notes a deal in Botswana this year. Its HIV med partnership ViiV Healthcare is allowing a Chinese drugmaker to produce a cheap version of its leading HIV med Tivicay for a national treatment program there. It is the first time a sub-Saharan country has gotten the latest HIV med for a national HIV campaign.
GSK has been honored before for such approaches. Its third-world pricing strategies have consistently won it the top spot on the Access to Medicines Index, an annual report card designed to gauge drugmakers' work to make medicines accessible and affordable. But not everyone agrees that it does as much as it can to make meds available at reasonable prices. Médecins Sans Frontières, the international charity, has consistently criticized the pricing of its pneumococcal vaccine, to which GSK has responded that it has offered the lowest price it can to keep the vaccine sustainable.
Witty explained the drugmaker’s approach to Fortune this way: “GSK has existed for 300 years. We think about how we can be successful, not just in the next year or the next two years, but in the next 10, 15, 20, 30, 40 years.”
But while GSK and Witty have won the respect of patient groups, it has not impressed some big investors. The GSK board was pressured to let Witty go in the face of weak financial results after he decided to focus on vaccines and consumer goods instead of pushing for more high-priced drugs. But it's not as if the CEO has been blind to the need to make a profit. He has instituted a $1.6 billion cost cutting program in the face of sales hits from generic competition, and focused on some new product launches. GSK in Q2 beat analyst forecasts on earnings and revenue with a 4% jump in sales to £6.5 billion.
Still, seeing the handwriting on the wall, Witty in the spring announced his intention to relinquish the CEO role in March 2017.
- read the Fortune piece
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