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» 23/07/2009 [Company watch]
China Aoxing Pharmaceutical Corp. Receives Renewal of GMP Certification for Capsule Dosage Form of Pharmaceutical Products
» 15/03/2010 [Industry news]
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» 07/05/2010 [Industry news]
Hong Kong: Recall of all products manufactured by Quality Pharmaceutical Lab Ltd
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GlaxoSmithKline »19/05/2010 [Industry news]
GlaxoSmithKline Makes Aggressive Play for Emerging Markets

(Bloomberg): Because GlaxoSmithKline (GSK) wants to double its China and India revenues by 2015, the company will significantly reduce its prices – as much as 70% – to raise revenues. The company readily admits it is trailing its multinational rivals such as Pfizer (PFE) and Sanofi-Aventis (SNY) in developing markets. Abbas Hussain, President of Emerging Markets for Glaxo, said in an interview with Bloomberg News

 
Because GlaxoSmithKline (GSK) wants to double its China and India revenues by 2015, the company will significantly reduce its prices – as much as 70% – to raise revenues. The company readily admits it is trailing its multinational rivals such as Pfizer (PFE) and Sanofi-Aventis (SNY) in developing markets. Abbas Hussain, President of Emerging Markets for Glaxo, said in an interview with Bloomberg News: There’s absolutely a land grab [in emerging markets] going on right now because obviously there’s no growth in the US and Europe, or very little growth. There’s a real fight on for market share. Glaxo is by no means alone is recognizing the importance of emerging markets, especially China. But it is the first to announce that it will use the tactic of drastically cutting prices to achieve the paradoxical goal of increasing revenues. The price reductions seem to have worked. In some markets, sales volume has grown by factors of six to nine in the past year, according to Hussain. He cited the example of Avamys allergy treatment, which adopted a low-price model in its Mexican launch after doing “very sophisticated pricing research.” Hussain declared: The old mindset at GSK would have been: Come in and launch it and have access only to the top 5% or 10%, to the top people who can afford it. We brought it in at a 50% discount. Within four months the company had won 50% of patients. Hussain continued: The next eight quarters will define who really is positioned in terms of the land grab that’s going on. You can’t be half pregnant in these markets. You either have to go for it, and realize you need huge portfolios, big scale, and reach and distribution, and be willing to innovate, or you decide you’re going to be a boutique player. To realize Glaxo’s lofty targets, the company is increasing its sales force in emerging markets. Glaxo currently has 13,000 sales representatives in the sector and will expand further, especially in China, said Hussain: It really is an absolute volume play. If we decide we need 500 reps in China we’ll go ahead and do that. Glaxo will also grow its emerging market revenues through M&A, according to the company’s CEO, Andrew Witty. In December of 2009, the company bought Algerian drugmaker Laboratoire Pharmaceutique Algerien for $37.6 million and paid $126 million for NovaMin Technology Inc. of the US. However, in a May 7 interview, Witty revealed that Glaxo has walked away from five potential purchases or partnerships since October because prices were too high. Emerging markets as a whole are expected to grow at a 12% to 14% clip. In China, 20% increases are the usual forecast. Glaxo wants its revenue growth to top these benchmarks. Because experts forecast only 5% increases for global drug sales, emerging markets have become a major battlefield for big pharma. Glaxo’s sales in emerging economies in 2009 were 50% higher than two years earlier, rising to $4.3 billion last year. In China, the company has been very active in the markets for flu therapies and other antivirals.

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