Glaxosmithkline and Aids Drugs for Africa

Case Study: GlaxoSmithKline and AIDS Drugs for Africa

1. Introduction

1.1 Situational Analysis

Situational analysis of GlaxoSmithKline and the drug market in South Africa.

Strengths:

* Successful merger of Glaxo Wellcome and Smithkline Beecham

* Largest pharmaceutical company in the world

* Profit rate in 2000 close to 28%

* Annual research budget of $4 billion and 16,000 scientists as staff

* Leading maker of medicines for AIDS

* Introduced Retrovir, Epivir, Combivir, Trizvir antiretroviral medicines

* Patented drugs which entitled the sole right to Glaxo to sell vital AIDS medicine in WTO countries till 2016

Weaknesses:

* Pharmaceutical industry involves huge spending on research and development

* Requires patent or otherwise the investment on R&D goes wasted

* Drugs are very expensive costing $10,000-$15,000

Opportunities:

* The sale of AIDS drugs was projected to be a growth area for pharmaceutical companies

* Overall spending on AIDS drugs in developed countries expected to grow from $3.4 million in 1999 to $7.1 billion by 2009

Threats:

* Entrance of other pharmaceutical companies like CIPLA with generic drugs that are very cheap

* Provision of compulsory licensing

* Nations could also engage in parallel importing also known as gray market importing

* Stigmatization of sexually transmitted diseases like AIDS in the society

* Activists campaigns demanding the company to cut cost of AIDS drugs for Africa

2. Analysis of the Case

The analysis of the case is done using the Stakeholder Theory Approach.

Stakeholder refers to persons and groups that affect or are affected by, the organisation’s decisions, policies and procedures. Stakeholder Theory Approach argues that corporations serve a broad public purpose, to create value for society. Success of a business venture depends on maintaining the trust of all essential stakeholders.

Market Stakeholders

Market Stakeholders...