GSK Bangladesh chairman shares insights with The Daily Star
Fifty countries are now listed as ‘least developed’. All these LDCs may not remain on the list in future. With time, many will graduate to upper-income levels, broadening prospects in many areas, including healthcare.
GlaxoSmithKline (GSK), a leading pharmaceutical and healthcare company, looks to cash in on the prospects in the LDCs, aiming to build a larger base for long-term growth in business.
As part of its goal, GSK that operates in more than 100 countries, has already unveiled its plan to cut prices of its patented medicines and vaccines for LDCs and vowed to reinvest 20 percent of its profit a year generated from each of the country in the segment.
“As countries, the least developed ones will not remain so in future. That’s really part of our business approach. What we want to do is for the bigger GSK footprint,” says Duncan Learmouth, senior vice-president for developing countries and market access.
Learmouth shared his insights with The Daily Star in an interview last week, two months after the global pharmaceutical company formed ties with three international NGOs — AMREF, CARE International and Save the Children — to strengthen healthcare infrastructure.
Along with other LDCs, Bangladesh is also included in the list of reinvestment initiative of GSK.
The amount of reinvestment by GSK will be 1 million pounds a year. The fund will be used for improving healthcare infrastructure in hospitals, clinics and creating awareness among healthcare professionals, nurses and physicians by training.
“We are focusing on how we can best make our contribution to benefit healthcare infrastructure,” said Learmouth, also chairman of GSK Bangladesh, which ranks 12th among the top 20 drug makers in Bangladesh’s Tk 600 crore pharmaceutical market.
GSK that operates in both drug and consumer healthcare segments in Bangladesh, will partner with CARE Bangladesh in implementing its reinvestment programme.
He says GSK has not set a time limit on reinvestment. “But we bear a very ‘long term’ commitment. In my mind, it means at least 10 years.”
GSK rolls out another strategy: lower price and higher volume business.
Learmouth says GSK looks at the issue of affordability of its medicines and vaccines to ensure increased use of its products in the developing countries.
“The strategy we can pursue is to reach more patients in more difficult areas, say, remote rural pockets,” says the official of GSK, which has a share of around 5 percent of the world’s pharmaceutical market.
“What we want to do is more flexible pricing for our business model. So what we think is, we want to put more focus now on developing countries to build a bigger patients usage base, which helps us in the long term,” he says.
Already the company has announced its plan to cut prices of a number of its patented vaccines and medicines in Bangladesh and other LDCs in line with its objective of ensuring access to medicines and increase usage.
Prices of patented medicines and vaccines — for asthma, cancer, pneumonia and diarrhoea — in LDCs will be no more than 25 percent of the UK prices, said the official.
“We do have a corporate responsibility to make all our innovative products available in every country of the world,” he says.
The price cap however will not apply to generic drugs. But Learmouth says GSK also looks at generic products that are already in the market.
According to Learmouth, price reductions for patented medicines and vaccines will be between 10 and 60 percent, starting from August.
He says there may be impact on the revenue from the cut in prices. But GSK has a longer term view in terms of its investments.
“Rather than looking at one to two-year payback on an initiative like pricing, we look for three to four years,” he says. “We recognise there is need for more upfront investment to build the business for the longer term growth.”
He says as a company or an organisation, GSK works quite hard in emerging markets and it is not just developing countries.
“What we try to see is finding the right point for our products that is higher in the volume segment. What we anticipate is that the price reduction will lead to a higher volume of medicines reaching patients everywhere and therefore compensating for the loss in price per unit,” Learmouth adds.
“We expect overtime the price reduction will result in better sales and improve the profit earnings and in some cases the benefit of profits will be apparent in the longer term when we are able to reach more patients,” says Learmouth, citing that for a majority of the cases, price reduction led to higher volumes.
“In some cases, volumes have exceeded and we got bigger profits. So really it does pay back and we have to make sure we get to the right prices, which more patients should afford,” he adds.
”We expect to gain revenue in the long term. We feel we have flexibility to do it.”
-With The Daily Star input
