Are GlaxoSmithKline's Do-Gooder Moves Genuine or Just Good PR?

He's young, charismatic, innovative and has got heart. At least that's the impression GlaxoSmithKline (GSK) CEO Andrew Witty gives to the outside world. His most recent initiative that's drawing attention? GSK is allowing free access to its library of 13,500 potential malaria treatments. Glaxo also intends to devote the profits from its experimental malaria vaccine to battling tropical illnesses in poor countries.Witty's humanitarian crusade didn't start today. He was appointed CEO designate in October 2007 at age 43. Not long after he became CEO, he put his stamp on the company, setting out "three new strategic priorities that aim to increase growth, reduce risk and improve GSK's long-term financial performance."

Two years later, and GSK is definitely more diversified, aggressively expanding in emerging markets, entering innovative deals such as the HIV deal with Pfizer (PFE) and working on improving its pipeline. Its Stiefel acquisition is one example.

Increasingly Tough Market

But pharmaceutical companies face an increasingly tougher environment. Analysts say they have to drastically change to remain relevant, including shifting business from rich niches to global mass markets and addressing real-world health issues. In that light, Witty's humanitarian efforts take a slightly different shade.

Witty first announced early last year the initiation of a patent pool where it promised to place more than 800 patents and applications for the potential development of medicines for neglected diseases. GSK also said it will reduce the prices across least developed countries and promised to reinvest 20% of profits made from sales there. Not to worry, sales in these countries are quite low, so GSK isn't losing much.

Down the road, GSK said it will invest over $80 million in a new initiative to develop HIV/Aids medicines for children. Witty also says he's actually encouraging Indian generic companies to knock off GSK's patented drugs for sale in poor countries.

Giving Treatments Away

On Wednesday, GSK said it would give away access to some 13,500 potential malaria treatments for others to test and develop. This is after 2 million small molecules were tested in the past year to determine which has potential. The drug maker also is creating an Open Lab in Spain, where 60 scientists can use its equipment and collaborate against tropical diseases.

Meanwhile, GSK hopes to seek approval by 2012 for its experimental malaria vaccine. Glaxo will limit its profit margin on the vaccine to 5% and contribute proceeds to its tropical disease research budget. Malaria strikes about 250 million people each year and kills more than 880,000, mostly children under age five, according to the World Health Organization. More than 1 billion people -- a sixth of the world's population -- suffer from one or more neglected tropical diseases, according to the WHO.

So, are Witty's efforts genuine or really more like public relations stunts that don't cost the company much? Well, Witty also made changes at GSK relating to policy and ethics, such as voluntarily stopping all corporate political contributions worldwide. He also capped payments to doctors and published a list of fees paid to U.S. health care professionals. So, perhaps his efforts are legit.

Little To Lose?

On the other hand, GSK hasn't answered yet the call to join an HIV/Aids patent pool. Since HIV is a lucrative market, his critics claim he limits his efforts to areas where there is little to lose.

Perhaps it is his stints as managing director for Glaxo South Africa and area director for South and East Africa that makes him remember a region of the world others often tend to forget -- and perhaps it is for other reasons. Regardless, there's no doubt such measures can only be beneficial and put pressure on other Big Pharmas to follow suit.

Companies including Novartis AG (NVS), Pfizer, Sanofi-Aventis (SNY), Merck (MRK), Johnson & Johnson (JNJ), Bayer and others have all either created initiatives, donated money and pharmaceutical supplies in the past to fight tropical diseases, according to Bloomberg.
Read Full Story

From Our Partners