GlaxoSmithKline (NYSE: gsk
has reorganized its corporate structure to put an increased focus on
emerging markets. The moves have the blessing of new CEO Andrew Witty,
who will take over the giant pharma on May 22.
A new management group was given the charge of increasing business in
the Emerging Markets, defined as China, Russia, Brazil, India and the
Middle East. The group will be led by Abbas Hussain, who is moving to
GSK from Eli Lilly & Co. Even though the countries are not closely
linked geographically, GSK believes the structure of the pharmaceutical
markets in each nation is very similar, allowing for a unified
Witty remarked that this Emerging Market will produce about 25% of the
overall growth in pharmaceuticals world-wide in the immediate future
and probably a bigger percentage further in the future. Part of the
Emerging Market Group's brief is to establish more business
relationships, which will be good news to the biopharmas that are
already operating in these regions.
GSK will also form an Asia Pacific that will be in charge of Japanese
and sales. Previously, all areas of GSK's sales outside of its key
markets were lumped together in an International division.
Like other big pharmas, GSK has been struggling in the last few years
as it loses its chief moneymaking products to generic competition. GSK
suffered an additional setback when its diabetes drug, Avandia, was
found to have a greater incidence of safety problems than previously
GSK is not afraid to spend money to acquire drugs and technology. It is currently seeking to buy Sirtrus Pharma (NSDQ: sirt
for $720 million, an 84% premium to the price at which Sirtrus was
trading before the takeover offer. Sirtrus works with chemical
compounds known as sirtuins, which are activated by a low-calorie diet
and may provide the same benefits as a low-calorie diet without
requiring patients to actually restrict their caloric intake. The lead
compound for Sirtrus is in clinical trials for Type II diabetes. The
compounds may also have a positive impact on overall longevity.
In December 2007, GSK announced it would increase its investment in its
Shanghai R&D center from $40 million to $100 million, with the goal
of having 1,000 staff members in place by the end of 2010.