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GSK Business Strategy Based on Selling Lots of Vaccines

In its latest effort to increase its sales volume for vaccines and other pharmaceutical products, GlaxoSmithKline (GSK) of Great Britain has officially launched GSKDirect, described as a new “e-commerce platform that simplifies the way customers order vaccines and pharmaceutical products from the company.”1

The opening page of the site reads:

The new GSKDirect is designed to provide the utility you need in a way that simplifies and streamlines how you do business with GSK.

Now you can quickly register with GSK, view product availability, request contracts, view pricing, order GSK products, and manage payments and returns all in one location. Our goal is to give you an industry-leading customer experience. Welcome to GSKDirect!2

GSKDirect is consistent with GSK’s declared business strategy of focusing on volume rather than prices In May 2015, GSK CEO, Sir Andrew Witty, told CNBC that he was betting that volume would “trump” price,” signifying that his company would continue trying to undercut its competitors on pricing in order to gain greater market share.3 

An alternative strategy would have been to push more higher-priced products, such as cancer drugs. But GSK appears to have bet its future on selling lots of vaccines. Last March, the company traded away its oncology business to Novartis of Switzerland in exchange for Novartis’ vaccine business (excluding influenza vaccines).4

According to Witty:

We think we’re really aligned with where the river is flowing. The river is flowing for more volume. We’re going to focus on that, get that volume out there at a fair price, get a good return on our R&D investment, but not be fixated on defending ever and ever higher prices in the developed world.3

Witty is reportedly under pressure from GSK shareholders to increase profitability and stock dividends. Reporter Amirah Al Idrus of the online industry publication FierceVaccines, speculates that if GSK’s volume strategy doesn’t succeed, “Witty’s job could be on the line.”1

GSK is the world’s third largest producer of vaccines. It posted vaccine sales revenue of $5.26 billion in 2014, compared to $6.25 billion by Merck of the United States and $5.85 billion by Sanofi of France.5


References:

1 Al Idrus A. GlaxoSmithKline launched new e-commerce platform for vaccines, pharma products. FierceVaccines Dec. 18, 2015.
2 GlaxoSmithKline. GSKDirect. gskdirect.com
3 Boyle C. GSK CEO: Why we’re betting on drug volume, not price. CNBC May 6, 2015.
4 GlaxoSmithKline. GSK/Novartis transaction. gsk.com.
5 The top 5 vaccine makers by 2014 revenueFierceVaccines Aug. 13, 2015.

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