Transcript GlaxoSmithKline 2005

“Best in France” Case Study
GlaxoSmithKline
By: Sasha Richardson, Serge Savasta, Kedar Iyer,
Daniel Traylor, Philipp Haenle
Executive Overview
 GSK - Worldwide
 GSK - France
 GSK - Products
 GSK - Clients
 Why France?
 GSK - Values
 Adaptation to France
 Constraints in France
 Key Benefits
 Essential Advice
GSK - Worldwide
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GlaxoSmithKline (GSK) is a world leading research-based
pharmaceutical company
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GSK R&D is based at 24 sites in 11 countries
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Headquartered in the UK
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Operations based in the US
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One of industry leaders (est. 7% of world's pharmaceutical
market)
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Leader in four major therapeutic areas:
- Anti-infectives
- Central nervous system (CNS)
- Respiratory
- Gastro-intestinal/Metabolic
GSK - Worldwide
 2004 Annual Results GSK worldwide:
- Sales of £20.3 billion
- EBIT £6.1 billion ($11.1 billion)
- Pharmaceutical turnover : £17 billion
- Consumer healthcare turnover : £3.2 billion
 100,000 employees worldwide
 40,000 in sales/marketing
 35,000 employees at 82 manufacturing sites in 37 countries
 15,000 in R&D ( R&D budget ~ £2.8bn/$5bn)
GSK - France
 Registered in May 2001 in Marly - le – Roi
 5650 employees in 4 production sites:
Evreux, (2 000 employees), Mayenne, Hérouville, Notre
Dame de Bondeville, Ulis (main research site)
 2nd largest branch after US; Largest GSK branch in
Europe
 3rd largest pharmaceutical group in the French market
GSK - France
 2004 Revenues €3.23m
 2 main activities:
- GlaxoSmithKline Labs (account for 95 % of sales)
- GSK Public Sector (5% of sales i.e non-prescription & OTC)
 Contribution by Business Unit:
- Pharmaceuticals:
€1.425m
- Export :
- Public sector (non prescription&OTC)
€1.634m
€0.172m
 315,6 million Units produced for over 100 countries
 65% of French production output for export
GSK - Products
 GSK is a leader in four major therapeutic areas-antiinfectives, central nervous system (CNS), respiratory and
gastro-intestinal/metabolic.
 In addition, GSK is a leader in production of vaccinations
and has a growing portfolio of oncology products.
 The company also has a Consumer Healthcare portfolio
comprising over-the-counter (OTC) medicines, oral care
products and nutritional healthcare drinks, all of which
are among the market leaders.
Pharmacological Products produced in
France:
Anaesthesia
HIV treatments
Anti-asthmatics
Neurological
Antibiotics
Oncological
Anti-malaria
Oral Anti-diabetics
Anti-thrombolytics
Respiratory
Anti-viral
Rhinitis/anti-allergy
Cardiovascular
Smoking Cessation
Dermatological
Urology
Gastro-intestinal
Vaccines
GSK - Clients
Who are GSK’s clients?
 GSK's clients are Patients.
 However, as selling/advertising directly to customers is
prohibited in France, GSK’s customers are the doctors
who write prescriptions. Based on demand created by
prescriptions, GSK sells through two primary distribution
channels, wholesalers & retailers (pharmacies)
How does a presence in France help or hurt the
company's ability to satisfy client demands?
 France is the largest market in Europe, so GSK’s
presence in France is imperative
 French made is perceived as ‘high quality’
Why France?
 The pharmaceutical industry is global
 “A must” to be present in the largest European
market in order to maintain competitive in the
pharmaceutical industry
 France is the second largest market in the world
for pharmaceutical products
 To foster partnerships with government
authorities and lobby for new drugs
GSK - Values
“Performance with Integrity”
Core Values:
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Transparency
Innovation
Partnership with all stakeholders
Be reactive/responsive in order to bring new
medicines to the patient
GSK - Values
…and their fit to the French Culture
French value system:
 Emotional
 Achievement oriented
 Collaborative and team oriented
Hence, difficult to implement, but gradually
adaptive and successful.
Adaptation to France 1/2
People management
Easy adaptation to the French market due to GSK’s European origins and familiarity
with stringent regulations common to the industry.
• Few hurdles with respect to people management.
 Broad talent pool of highly skilled engineers and upper level managers (excellent
engineers, scientists, researchers make France a great fit for an R&D based industry).
 Middle management is the weak link in the French labor market.
 Struggle to recruit “star” international candidates. Paris is not seen as a location
with high growth opportunities to build a career.
 Management development needs to focus on international and leadership notions to
better fit to the Group’s culture.
 Workforce Planning made difficult by the lack of flexibility of French employment
systems. Unions are critical link; lasting relationships with unions ease workforce
problems.
Adaptation to France 2/2
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Team performance is valued more than individual performance. Hence,
Performance appraisals are closely linked with team performance outcomes.
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Performance based compensation is less relevant than in Anglo-Saxon
corporate cultures.
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Motivation practices such as the “employee of the month” nomination are
absolutely prohibited in France.
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Job Design and Job Assignment fit French regulatory and cultural
constraints.
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Communication with personnel account for recurrent negative criticisms
but positive counter proposals are characteristic to French culture.
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Paris was natural choice for their headquarters to launch operations in
France as real estate costs were a negligible part of GSK’s operations
Constraints in France
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Cumbersome to acquire work papers for international
transfers from non-EU states.
Social security and firing costs in France are higher in
Europe, but the high quality human resource pool largely
makes up for the social costs.
GSK, a global enterprise, established a work force based
primarily on the French labor pool, thus communication
problems never existed; top executives and many other
managers speak fluent English.
GSK France operates as a subsidiary to GSK Worldwide,
allowing for some degree of autonomy in operations; this
approach also nullifies French management integration
issues.
Key Benefits
What are the key benefits of being in France?
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Product quality: high quality manufacturing facilities built and
operated by leading French managers, engineers, and laborers;
GSK positively reinforces its brand by employing a French labor
force.
France provides the largest revenue/profit center in Europe;
margins are consistent with company standards.
Location benefits: most employees are hired locally; living in
France is prerequisite for much of the work force.
Social security costs are relatively high, however the associated
costs are negligible when compared with the revenues
generated in the French market.
Market growth and penetration come with innovation which are
linked to R&D expenditures; market structure and competitive
advantage are based on scientific breakthrough and government
approvals.
Essential Advice 1/2
What advice do you offer to other companies in this sector concerning use of
France as a location?
1. Before coming to France
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Assess the available market share: French market is the largest
“pharma” market in European. Entry in the market requires a
pharmaceutical company to set up a large subsidiary in France. Without
prospects for significant market share, market entry must be re-thought.
Clearly identify the employment rules and fiscal policy constraints:
Entry in the French market needs substantial capital expenditures,
including set up and approval costs uncommon in neighboring European
states.
Relationships with labor officials and medicine regulators is critical
(Sécurité Sociale, Ministère de la Santé, Authorisation de Mise sur le
Marché, etc.) French market entry is aided by job creation, corporate
headquarters, production facility development, and R&D research
programs. Maintaining a healthy working relationship with the
authorities is absolutely necessary since regulatory authorities control
the medicine market, advertisement & pricing policy.
Essential Advice 2/2
2. Adaptating to France
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Maximize efforts on R&D: France produces highly talented researchers that aid
innovation necessary for growth. The pharmaceutical industry is about R&D. In
addition, performing R&D in France means investing in French knowledge. This
facilitates the establishment and maintenance of cooperative relationships with
health authorities.
Size manufacturing based on a “hub” strategy for Europe. France is nearly the
largest market in Europe (in under 3 years, according to recent studies).
Manufacturing products in France enhances quality standards. However, a close
look must be taken at the potential to use French manufacturing facilities as hubs
for Europe and Africa for example.
3. Future investments in Europe
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Invest in Eastern European countries, like Poland, for manufacturing may costs
savings become key in this extremely profitable industry; manufacturing could be
re-located to countries within Europe with lower cost of living.
We Thank
 Mr. Patrice BRIOL, HR Director (Corporate and Scientific HR)
[email protected], +33 1 39 17 80 28
 Ms. Sophie MARCHANDISE, Financial Controller
[email protected]
 Mr. Jean-Francois CHAMBON , Director of Public Affairs
[email protected]
Our Team
 Sasha Richardson, [email protected]
 Serge Savasta [email protected]
 Daniel Traylor [email protected]
 Kedar Iyer [email protected]
 Philipp Haenle [email protected]