The threat of competition from generic drugs has prompted a “change to survive” warning from the new head of GlaxoSmithKline.
Andrew Witty wants to create a more diversified global business to reduce GSK’s dependence on a small number of drugs.
His comments came as the group posted pre-tax profits of GBP 1.84 billion in the three months to 30 June, 3% below last year.
Revenues were also 2% lower at GBP 5.87 billion after lower sales of diabetes treatment Avandia – hit by a health scare last year – as well as the emergence of generic rivals to its drugs in the US.
Witty said the pharmaceutical sector faces “immense challenges” as the demands for better and cheaper medicines add to the pressure from generic alternatives. He said GSK would look to make new investments in fast-growing areas such as vaccines and consumer healthcare.
He added that GSK would grow its presence in emerging markets to expand its geographical footprint, through moves such as a tie-up with South African pharmaceuticals firm Aspen announced this week.
The company added that as much as 50% of its new drugs could come from outside the business in the future, as it externalises more of its research and development work to reduce the risk and expenditure involved in developing new treatments.
Copyright PA Business 2008