GSK CEO Witty Outlines Company's New Strategic Priorities

London (July 23)-As part of a new strategic direction, GlaxoSmithKline CEO Andrew Witty outlined three priorities that are designed to improve the company’s long-term financial performance. These goals supplement the company’s core expertise in small molecules by expanding in consumer healthcare products, biopharmaceuticals (including vaccines), and emerging markets.

“GSK will seek to generate future sales growth through supplementing strength in the core small-molecule pharmaceuticals business with new investments in fast-growing areas such as vaccines and consumer healthcare and new growth areas such as biopharmaceuticals,” said Witty in a prepared statement at a recent investors' conference.  “At the same time, we are actively seeking to unlock the geographic potential of our different businesses, particularly in emerging economies.”

Witty highlighted the potential of GSK’s biopharmaceutical activities, which includes 12 clinical research programs, of which five are in late-stage development. He also pointed to the “catalyzing” effect of Domantis, an antibody specialist acquired by GSK in early 2007 for £230 million ($454 million). Domantis specializes in domain antibodies (dAbs), which may be administered in inhaled, topical, and, potentially, oral formulations as well as by injection and infusion, thereby potentially providing wider applications than conventional monoclonal antibodies.

Witty highlighted opportunities in emerging markets and Asia Pacific, including opportunities for advanced vaccines.  Witty said that investments in capacity and regulatory expertise in these countries was an “immediate priority” for the company.

Further commenting on GSK’s vaccines and consumer healthcare businesses, Witty said: “These businesses offer significant growth opportunities to GSK through new products and geographic expansion. Moreover, with increasing global trends to preventative healthcare and self medication, GSK can be a global leader in meeting the converging needs of customers.”

Witty emphasized GSK’s new strategy to accelerate growth in emerging markets, which includes a recent pact with Aspen, a South African pharmaceutical company. GSK signed a licensing agreement with Aspen and its joint venture partner, Strides Arcolab, last week. The collaboration provides GSK with priority access to a portfolio of 1200 potential new products specific to emerging market needs.

New drug discovery, development and operational models

GSK says it is now focusing on eight research areas: immuno-inflammation, neuroscience, metabolic pathways, oncology, respiratory, infectious disease, ophthalmology, and biopharmaceuticals. The company formed new drug-performance units within its centers of excellence for drug discovery, which includes a center of excellence for external drug discovery. Witty said that in the future, “we believe that up to 50% of GSK’s drug discovery could be sourced from outside the company.”

GSK also created a new global drug-discovery investment board, which allocates capital for R&D based on performance and value-creation metrics set against a three-year business plan. The company also plans to create a new global corporate venture fund that will invest in start-up and early-stage companies focused on advanced technology.

GSK has also begun activities to improve the efficiency of its operations, including further efforts to improve its selling model and manufacturing activities. The company has started a project to generate “substantial” working-capital savings. These programs are in addition to GSK’s ongoing restructuring program.