GlaxoSmithKline

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GlaxoSmithKline
Type Public ( LSE: GSK
NYSE: GSK)
Founded 2000, by merger of Glaxo Wellcome and SmithKline Beecham
Headquarters Brentford, London, United Kingdom
Key people Sir Chris Gent, Chairman
Jean-Pierre Garnier, Chief Executive
Julian Heslop, Chief Financial Officer
Industry Pharmaceutical
Products www.gsk.com/products
Revenue £23.2 billion ( 2006)
Net income £7.8 billion ( 2006)
Employees Over 100,728 ( 2005)
Website www.gsk.com

GlaxoSmithKline plc ( LSE: GSK NYSE: GSK) is a British based pharmaceutical, biologicals, and healthcare company. GSK is a research-based company with a wide portfolio of pharmaceutical products covering anti-infectives, central nervous system (CNS), respiratory, gastro-intestinal/metabolic, oncology and vaccines products. It also has a Consumer Healthcare operation comprising leading oral healthcare products, nutritional drinks and over the counter (OTC) medicines.

Corporate profile

As the second largest pharmaceutical company in the world (after Pfizer), the company had sales of £23.2 billion and made a profit of £7.8 billion in 2006. It employs around 110,000 people worldwide, including over 40,000 in sales and marketing. Its global headquarters are GSK House in Brentford, London, United Kingdom, with its United States operations jointly based in Philadelphia and Research Triangle Park (RTP) in North Carolina and its consumer products division based in the Pittsburgh suburb of Moon Township, Pennsylvania.

The company is listed on the London and New York stock exchanges. The majority of its activity is in the United States, although the company has a presence in almost 70 countries.

In 2006, pharmaceutical sales accounted for £20.08 billion (or 87%) of GSK's total sales. Sales are based around a broad range of products with the most successful (starting with highest sales) being:

  • Seretide ( Advair in US), a combination of the bronchodilator salmeterol and the steroid fluticasone
  • Avandia (rosiglitazone), a PPAR-gamma agonist
  • Lamictal (lamotrigine), an anticonvulsant used to treat various types of epilepsy and type I bipolar disorder
  • Wellbutrin (bupropion), an anti-depressant
  • Zofran (ondansetron hydrochloride), used to prevent nausea and vomiting associated with chemotherapy and radiotherapy for cancer
  • Valtrex (valacyclovir), an antiviral drug used in the management of herpes simplex and herpes zoster (shingles)
  • Coreg (carvedilol), a non-selective beta blocker indicated in the treatment of mild to moderate congestive heart failure
  • Imigran / Imitrex (sumatriptan), a triptan drug including a sulfonamide group for the treatment of migraine

Corporate governance

Current members of the board of directors of GlaxoSmithKline are:

  • Chris Gent (Non-Executive Chairman);
  • Dr Jean-Pierre Garnier (Chief Executive Officer);
  • Lawrence Culp (Non-Executive Director);
  • Sir Crispin Davis (Non-Executive Director);
  • Julian Heslop (Chief Financial Officer);
  • Deryck Maughan (Non-Executive Director);
  • Ian Prosser (Senior Independent Non-Executive Director);
  • Ronaldo Schmitz (Non-Executive Director);
  • Moncef Slaoui (Chairman, Research & Development);
  • Tom De Swaan (Independent Non-Executive Director);
  • Robert Wilson (Non-Executive Director);
  • Daniel Podolsky (Non-Executive Director).

Paul Allaire (Non-executive Direcor)- Member of Council on Foreign Relations and Bilderberg Steering Committee.

Merger history

There are four main companies in the history of GSK: Burroughs Wellcome & Company, Glaxo Laboratories, Beecham, and SmithKline and French.

In 1880, Burroughs Wellcome & Company was founded. Wellcome Tropical Researches Laboratories was opened in 1902. McDougall & Robertson Inc. was bought by the Wellcome Company to be more active in animal health. Also, the production center was moved from New York to North Carolina in 1970 and the following year another research centre was built.

Glaxo was founded in Bunnythorpe, New Zealand. Originally a baby food manufacturer processing local milk into an early baby food by the same name, which was sold in the 1930s under the slogan Glaxo builds bonny babies. Still visible on the main street of Bunnythorpe is a derelict dairy factory (factory for drying and processing cows' milk into powder) with the original Glaxo logo clearly visible, but nothing to indicate that this was the start of a major multinational.

Glaxo became Glaxo Laboratories, and opened new units in London in 1935. Glaxo Laboratories bought two companies called Joseph Nathan and Allen & Hanburys in 1947 and 1958 respectively. After it bought Meyer Laboratories, it started to play an important role in US market. In 1983, Glaxo Inc. moved to Research Triangle Park (US headquarters/research) and Zebulon (US manufacturing) in North Carolina. To be stronger in the medicine market, Burroughs Wellcome and Glaxo, Inc merged in 1995. The new name of the company was GlaxoWellcome. Same year, GlaxoWellcome opened Medicine Research Centre in England. Three years later GlaxoWellcome bought Polfa Poznan Company in Poland.

Beecham opened its first factory in St Helens, Lancashire, England for rapid production of medicines in 1859. Beecham Inc. bought companies for various products. It added Lucozade energy drink and Macleans tooth paste to its product chain in 1938. The following year it added hair products for men by buying another company. In 1943 it decided to focus more on improving its research. It built Beecham Research Laboratories and six years later it bought C L Bencard Inc. which specialized in vaccines.

The GSK Headquarters in Brentford.
The GSK Headquarters in Brentford.

In 1830, John K. Smith opened its first pharmacy in Philadelphia. Over the years Smith, Kline and Company favorably amalgamated with the French, Richard and Company because of their successful management decisions. It changed its name to Smith Kline & French Laboratories to more focus on researching in 1929. Years later, Smith Kline & French Laboratories opened a new laboratory in Philadelphia; furthermore, it bought a laboratory called Norden Laboratories which was doing research into animal health to benefit their research in various other areas.

To move on this path, Smith Kline & French Laboratories bought Recherche et Industrie Therapeutiques in 1963 to focus on vaccines. The company also wanted to spread all over the world to capture shares in various medicine markets. Because of this, Smith Kline & French Laboratories bought 7 more laboratories in Canada and US six years later. In 1982, it bought Allergan which was making products about eye and skin. It also merged with Beckman Inc. After this merge, it changed its name to SmithKline Beckman.

In 1988, SmithKline Beckman bought its biggest competitor, International Clinical Laboratories, and enlarged by 50%. The next year, Beecham and SmithKline Beckman became one and changed the name of the company to SmithKline Beecham plc. The headquarters of the company were then moved to England. To improve the R&D in US, SmithKline Beecham bought a new research center in 1995. Yet another new research centre was opened in New Frontiers Science Park two years later.

The latest merge occurred in 2000 with GlaxoWellcome. Since 2000, the name of the company has been GlaxoSmithKline.

Work in the community

For many years now GSK has been a leading contributor to a multinational government and industry alliance to rid the world of lymphatic filariasis ( elephantiasis). LF threatens over one billion people in 83 countries. Approximately 120 million people are infected with the parasites, 40 million of whom have clinical symptoms of the disease. The Global Alliance to Eliminate LF was formed with the support of the pharmaceutical companies GlaxoSmithKline and Merck to help countries with LF respond. GSK has donated over 440 million albendazole tablets to date, which serve as a cornerstone of the program.

JP Garnier, CEO of GlaxoSmithKline added, “The Egyptian data shows that we can now eliminate a disease that has plagued the world for centuries. We remain committed to donating as much albendazole as required to eliminate this disabling disease, but ultimate success will depend on continued long-term commitments by all partners across the globe.”

In addition Glaxo has been short-listed for awards such as The Worldaware Business Award for its work to eliminate malaria in Kenya.

Global locations

  • Global Pharmaceutical Operations headquarters in Brentford, United Kingdom with US operations based at Franklin Plaza in Philadelphia, Pennsylvania and Research Triangle Park, North Carolina.
  • Consumer Products headquarters in Moon Township, Pennsylvania
  • Major R&D sites in Greenford,United Kingdom; Stevenage, United Kingdom; Harlow, United Kingdom; Ware, United Kingdom; Beckenham, United Kingdom; Verona, Italy; Zagreb, Croatia; Evreux, France; Research Triangle Park, North Carolina; and Upper Merion and Upper Providence, Pennsylvania
  • Major manufacturing sites for prescription products in Ware, United Kingdom; Evreux, France; Montrose, United Kingdom; Barnard Castle, United Kingdom; Crawley, United Kingdom; Bristol, Tennessee; King of Prussia, Pennsylvania; Zebulon, North Carolina; Jurong Singapore and Cork Ireland; Parma, Italy.
  • Major manufacturing sites for consumer products in Maidenhead, United Kingdom; Cork, Ireland; Mississauga, Ontario; Aiken, South Carolina; Clifton, New Jersey; Memphis, Tennessee; and St. Louis, Missouri
  • GSK has a presence in over 72 countries

Diversity

GlaxoSmithKline was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine and was recognized by the International Charter for its efforts. GSK also received a perfect score of 100 percent from the Human Rights Campaign Foundation's 2005 Corporate Equality Index, an annual report card of corporate America's treatment of gay, lesbian, bisexual, and transgender (GLBT) employees, customers and investors.

Controversy

  • At the AGM on 19 May 2003, GSK shareholders rejected a motion regarding a £22 million pay and benefits package for Jean-Pierre Garnier. This was the first time such a rebellion by shareholders against a major British company has occurred, but was regarded as a possible turning point against other so-called " fat cat" deals within executive pay structure.
  • The company has been targeted by animal rights activists because it is a customer of the controversial animal-testing company, Huntingdon Life Sciences (HLS). HLS has been the subject since 1999 of an international campaign by Stop Huntingdon Animal Cruelty and the Animal Liberation Front (ALF), ever since footage shot covertly by People for the Ethical Treatment of Animals, which was shown on British television, showed staff punching, kicking, screaming and laughing at the animals in their care. On September 7, 2005, the ALF detonated a bomb containing two litres of fuel and four pounds of explosives on the doorstop of the Buckinghamshire home of Paul Blackburn, GSK's corporate controller, causing minor damage.
  • In November 2005, AIDS Healthcare Foundation accused the company of boosting its short-term monopoly profit by not increasing production of the anti-AIDS drug AZT despite a surge in demand, hence creating a shortage that affected many AIDS patients in Africa. GSK announced that it had halted clinical trials of the CCR5 entry inhibitor, aplaviroc (GW873140), in HIV-infected, treatment-naive patients because of concerns about severe hepatotoxicity. In June of 2006 GSK said it was further cutting, by about 30%, the not-for-profit prices it charges for some of these medicines in the world's poorest countries.
  • Pregnant women and those who might become pregnant should avoid taking the antidepressant Paxil because of a high risk of birth defects, according to a committee of obstetricians who published their opinion in the December 2006 issue of the journal Obstetrics & Gynecology. The obstetric practice committee of the American College of Obstetricians and Gynecologists said pregnant women should not take Paxil because two previous studies found that the drug posed up to double the risk of heart defects in fetuses. Neonatal withdrawal symptoms from Paxil have also been documented from mothers taking Paxil during pregnancy.

Legal

In 2003 GSK signed a corporate integrity agreement and paid $88 million in a civil fine for overcharging Medicaid for the antidepressant Paxil, and nasal-allergy spray Flonase. Later that year GSK also ran afoul of the Internal Revenue Service (IRS) and was facing a demand for $7.8 billion in backdated taxes and interest, the highest in IRS history.

On September 12, 2006 GSK settled the largest tax dispute in IRS history agreeing to pay $3.1 billion. At issue in the case were Zantac and the other Glaxo Group heritage products sold from 1989-2005. The case was about an area of taxation dealing with intracompany "transfer pricing" -- determining the share of profit attributable to the US subsidiaries of GSK and subject to tax by the IRS. Taxes for large multi-divisional companies are paid to revenue authorities based on the profits reported in particular tax jurisdictions, so how profits were allocated among various legacy Glaxo divisions based on the functions they performed was central to the dispute in this case.

On December 22, 2006, a US court decided in Hoorman, et al. v. SmithKline Beecham Corp that individuals who purchased Paxil(R) or Paxil CR(TM) ( paroxetine) for a minor child may be eligible for benefits under a $63.8 million Proposed Settlement. The lawsuit won the argument that GSK promoted Paxil(R) or Paxil CR(TM) for prescription to children and adolescents while withholding and concealing material information about the medication's safety and effectiveness for minors.

The lawsuit stemmed from a consumer advocate protest against Paroxetine manufacturer GSK. Since the FDA approved paroxetine in 1992, approximately 5,000 U.S. citizens – and thousands more worldwide – have sued GSK. Most of these people feel they were not sufficiently warned in advance of the drug's side effects and addictive properties.

According to the Paxil Protest website, http://www.paxilprotest.com, hundreds more lawsuits have been filed against GSK. The Paxil Protest website was launched August 8, 2005 to offer both information about the protest and information on Paxil previously unavailable to the public. Just three weeks after its launch, the site received more than a quarter of a million hits. The original Paxil Protest website was removed from the internet in 2006. It is understood that the action to take down the site was undertaken as part of a confidentiality agreement or 'gagging order' which the owner of the site entered into as part of a settlement of his action against GlaxoSmithKline. (However, in March 2007, the website Seroxat Secrets discovered that an archive of Paxil Protest site was still available on the internet via Archive.org) Gagging orders are common in such cases and can extend to documents that defendants wish to remain hidden from the public. However in some cases, such documents can become public at a later date, such as those made public by Dr. Peter Breggin in February of 2006.

In January 2007, according to the Seroxat Secrets website, the national group litigation in the United Kingdom, on behalf of several hundred people who allege withdrawal reactions through their use of the drug Seroxat, against GlaxoSmithKline plc, moved a step closer to the High Court in London, with the confirmation that Public Funding had been reinstated following a decision by the Public Interest Appeal Panel. The issue at the heart of this particular action claims Seroxat is a defective drug in that it has a propensity to cause a withdrawal reaction. Hugh James Solicitors have confirmed this news.

In February 2007, the Serious Fraud Office in the UK launched an investigation into allegations of GSK being involved in the discredited oil-for-food sanctions regime in Iraq. They are accused of paying bribes to Saddam Hussein's regime.

On March 27, 2007, GSK pleaded guilty in an Auckland District Court to 15 charges relating to misleading conduct brought against them under the Fair Trading Act by New Zealand's Commerce Commission. The charges related to a popular blackcurrant fruit drink Ribena which the company had lead consumers to believe contained high levels of vitamin C. As part of a school science project, two 14-year-old school girls (Anna Devathasan and Jenny Suo) from Pakuranga College in Auckland (New Zealand) discovered that ready-to-drink juice sold in 100ml containers contained very little vitamin C. Approaches by the two teens to the company didn't resolve the issue but after the matter was publicised on a national consumer affairs television show (Fair Go) the matter came to the attention of the Commerce Commission (a government funded 'consumer watch-dog'). The commission's testing found that ready-to-drink Ribena contained no detectable vitamin C.

The company was fined $217,000 for the 15 charges. The number of charges was reduced from 88 and covered a period from March 2002 to March 2006. GSK maintains that it did not intend to mislead consumers and that the advertising claims were based on testing procedures that have since been changed. It was ordered to run an advertising campaign to provide the facts after it admitted misleading the public about the vitamin C component in its Ribena drink. Through its lawyer, Adam Ross, the company accepted Commerce Commission allegations that claims that ready-to-drink Ribena contained 7mg of vitamin C per 100ml, or 44 per cent of the recommended daily intake, were incorrect. The company also agreed television advertising claiming the blackcurrants in Ribena had four times the vitamin C of oranges, while literally true, were likely to mislead consumers about the relative levels of vitamin C in Ribena.

Sport and Trivia

  • The Glaxo Smith Kline site at Barnard Castle is the home to Glaxo FC, a football club founded by some of the workers there. However, the team is now made up mainly of players who do not work at Glaxo.
  • The film, Spy Game, starring Robert Redford and Brad Pitt, was filmed at Glaxo's facilities in Stevenage, which had temporary signage added to make it appear as if the building was the headquarters of the Central Intelligence Agency .
  • The film, Proof a 2005 film starring Anthony Hopkins, Gwyneth Paltrow, and Jake Gyllenhaal was filmed at Glaxo's facilities in Stevenage. .

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