SWOT Analysis of GSK (GlaxoSmithKline)

Summary of GlaxoSmithKline SWOT Analysis

The SWOT analysis of GSK (GlaxoSmithKline), in short, highlights several key strengths, weaknesses, opportunities, and threats that shape the company’s strategic position. Among GSK strengths, the company boasts a robust global presence, operating in over 115 countries with an efficient sales and distribution network. Its strong research and development (R&D) capabilities, underpinned by significant annual investment, ultimately enable rapid innovation and the launch of new products.

GSK also benefits from a diversified product portfolio, spanning medicines, vaccines, and consumer healthcare, which reduces business risk and ensures resilience against market fluctuations. Its reputable brand portfolio includes household names such as Sensodyne and Advair, and the company maintains a strong financial position.

However, the GSK SWOT analysis also reveals notable weaknesses. GSK’s reputation has suffered due to past scandals and job losses, impacting public trust. The company’s heavy reliance on UK and EU markets exposes it to risks from political and economic changes, such as Brexit.

Opportunities for GSK include expanding in emerging markets, particularly India, and capitalising on growth in the wellness and vaccine sectors. Technological advancements, especially in AI-driven drug development, present further avenues for growth.

Threats identified in the GSK SWOT include increased competition from generic drugs, patent expiries, and pricing pressures in key markets like the US. Overall, the GSK SWOT analysis underscores the company’s strong foundation and adaptability but highlights the need for ongoing innovation and reputation management.

Strengths

• Research and Development capabilities – Firstly, a new financial investment into R&D will allow GSK to grow competitively as the company focuses on identifying new products and streamlining existing manufacturing through data management and AI infrastructure (Hirschler, 2017).
• Global Sales and Patents – GSK, in essence, operates as the sixth largest pharmaceutical company with a presence in over 115 countries. In fact, GSK controls some of the most profitable drug patents, one being the asthma drug, Advair which in 2016 generated one-tenth of the GSK’s group revenue of £27bn (Financial Times, 2017).
• Strong brand portfolio – GSK also control some of the world’s most recongisable brand names (Sensodyne, Aquafresh, Nicorette, Advair). Moreover, these brands constantly perform yearly for GSK (GSK, 2016).

Weaknesses

• GSK’s brand image – In contrast, GSK face controversies surrounding a Chinese corruption scandal, market manipulation in the UK, Tax issues in the US. Additionally, there was PR fallout from the sale of the beloved British Howlicks brands and the loss of over 300 jobs. GSK have ultimately recently developed a poor reputation for trustworthiness (Financial Times, 2017).
• Heavy reliance on UK markets – The threat of Brexit, ultimately, will heavily hit GSK’s operations as a majority of their manufacturing is based on UK/EU trade. The rise in import charges and weakened pound have led to GSK having to draw up contingency plans to whether they might have to move their operations (Vina, 2016).

Opportunities

• Growth opportunity in the wellness sector – Traditional drug treatments, in short, face threats from new generic rivals. However, growth in the wellness sector of skincare products have opened a new opportunity to target premium customers (Financial Times, 2017).
• Growth opportunity within Indian – While global pharmaceutical sales are falling, the Indian medical market is one of the few growth areas. Currently, 30% of GSK’s profits are made from India (The Economic Times, 2017).
• Growth in technology – Also, streamlining drug manufacturing is emerging as a new competitive trend with the race to develop artificial intelligence to aid in drug trials. Controlling the patents on this new technology will emerge as very profitable for future markets (Hirschler, 2017).

Threats

• Increase competition from generic drugs – For GSK, several key patents have expired since 2010 leading to a mass growth of generic drug rivals. Generic drugs, in short, undercut the premium GSK brand alternative and threaten earnings. As a result, it is now up to GSK to fund R&D and look to creating new patents for future developments (Vina, 2017).
• Drug prices controls – Finally, pressure on competitive drug prices in markets like the US are forcing GSK to price more competitively and creating pricing wars between rival pharmaceutical companies.
  • As a result, US drug prices rose 12.4% in 2016, adding extra costs to marketing in that region (Ward, 2016).

References for SWOT Analysis of GSK

Sources A-I

• Cookson, S. (2017) Demands of disease drive vaccine science. Financial Times. [Online] Available at: https://www.ft.com/content/ca911ce2-155b-11e7-b0c1-37e417ee6c76 [Accessed 25/07/17]
• Crow, D. (2017) GSK claims new HIV combination therapy will be ‘less harmful’. Financial Times. [Online] Available at: https://www.ft.com/content/c3a90b3c-f20c-11e6-95ee-f14e55513608 [Accessed 25/07/17]
• Financial Times. (2017) GSK: continuity candidate. Financial Times. [Online] Available at: https://www.ft.com/content/20398414-2a96-11e7-9ec8-168383da43b7 [Accessed 25/07/17]
• Fletcher, N. (2017) GlaxoSmithKline to sell UK Horlicks brand and scrap factory plans. The Guardian. [Online] Available at: https://www.theguardian.com/business/2017/jul/19/glaxosmithkline-sell-uk-horlicks-brand-scrap-cumbria-factory-plans [Accessed 25/07/17]
• GSK (2016) Annual Report 2016. GSK. [Online] Available at: https://annualreport.gsk.com/ [Accessed 25/07/17]
• GSK. (2017) Less is more with advanced technologies in manufacturing. GSK. [Online] Available at: https://www.gsk.com/en-gb/behind-the-science/how-we-do-business/less-is-more-with-advanced-technologies-in-manufacturing/ [Accessed 25/07/17]
• Hirscheler, B. (2016) Sanofi, GSK expect further price pressure, more M&A under Trump. Reuters. [Online] Available at: https://www.reuters.com/article/us-usa-trump-pharmaceuticals-idUSKBN13A21M [Accessed 25/07/17]
• Hirschler, B. (2017) GlaxoSmithKline the latest drug maker to recruit robots to find new drugs. Business Day. [Online] Available at: https://www.businesslive.co.za/bd/companies/2017-07-03-glaxosmithkline-the-latest-drug-maker-to-recruit-robots-to-find-new-drugs/ [Accessed 25/07/17]
• Irvine, J. (2017) GSK changes way it accounts for significant legal expenses. Economia. [Online] Available at: https://economia.icaew.com/en/news/april-2017/gsk-changes-way-it-accounts-for-significant-legal-expenses [Accessed 25/07/17]

Sources J-Z

• Mukherjee, S. (2016) How GlaxoSmithKline Is Changing the World. Fortune Health. [Online] Available at: https://fortune.com/2016/08/18/glaxosmithkline-change-world/ [Accessed 25/07/17]
• Neville, S. (2017) GSK chief plans to shake up culture and competitiveness. Financial Times. [Online] Available at: https://www.ft.com/content/8edd1054-6c9d-11e7-b9c7-15af748b60d0 [Accessed 25/07/17]
• Robinson, M. (2016) Glaxo to Pay $20 Million SEC Fine Over Bribery in China. Bloomberg Markets. [Online] Available at: https://www.bloomberg.com/news/articles/2016-09-30/glaxo-to-pay-20-million-sec-fine-over-bribing-chinese-officials [Accessed 25/07/17]
• The Economic Times. (2017) GSK Pharma to invest Rs 1,000 crore in Karnataka plant. The Economic Times [Online] Available at: https://economictimes.indiatimes.com/articleshow/59513334.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst [Accessed 25/07/17]
• Wars, A., and Waldmeir, P. (2015) GlaxoSmithKline navigates difficult path in China after scandal. Financial Times. [Online] Available at: https://www.ft.com/content/7bcaa5de-93c9-11e5-9e3e-eb48769cecab [Accessed 25/07/17]
• Ward, A. (2016) GSK chief says pressure on US drug prices to rise. Financial Times. [Online] Available at: https://www.ft.com/content/3e9b54ca-0c7c-11e6-9456-444ab5211a2f [Accessed 26/07/17]
• Vina, G. (2016) GlaxoSmithKline lays plans to secure post-Brexit supply chain. Financial Times. [Online] Available at: https://www.ft.com/content/02c37d0e-9b85-11e6-b8c6-568a43813464 [Accessed 25/07/17]
• Zhang, C. (2017) Where Is China’s Corruption Crackdown? The Diplomat. [Online] Available at: https://thediplomat.com/2017/07/where-is-chinas-corruption-crackdown/ [Accessed 25/07/17]