Things are smoothing out for GlaxoSmithKline in China, according to a new report from China-based business intelligence publication Caixin. Given that the Asia-Pacific region is drawing enormous interest in the biopharma world, a mending of relationships is quite critical for GSK.
The British pharma behemoth has had a rough go of it over the past couple years, with accusations of bribery complicating its status in the world’s second-largest economy. Caixin writes:
Five of GSK’s executives were handed suspended prison sentences by a Chinese court last year and it was fined 3 billion yuan. The company has downsized its workforce in the country, firing employees it says violated its code of conduct.
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GSK CEO Andrew Witty told Caixin that this scandal’s delayed the company’s plans to expand in China – and that dealing with the blowback has been “a very difficult, painful process,” but that “it’s in the past now.”
GSK is dropping drug pricing in China to attract more customers, repair its brand and build its strength in the country, Witty told Caixin. Increasing sales volume will offset lower drug costs, he said.
“None of my competitors are doing what we’re doing,” Witty said. “I think other companies will follow us.”
Caixin posted a comprehensive Q&A with Witty here. Some highlights from Witty include:
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- GSK is looking to address the demands China’s huge population, and rising economic living standards, at an affordable level. It’s also important for drug companies to understand the target market, and develop technologies that address the right illnesses.There’s also a need to reform the Chinese health care system and make it more transparent.
- Vaccination provides a huge opportunity in China for drug companies. So is upgrading health facilities nationwide, so that poorer communities can have access to modern health care.
- Witty on pricing drugs low and making revenues off of volume: “Actually, whether you have a high price and a low volume, or a lower price and a high volume, you still produce the same income. I think that’s the solution you have to move forward on. I think there is a win-win outcome where companies can continue to generate a good return on investment and can get a reward for innovation, but they do it not simply by having a very high reliance on prices. They have a mix of more affordable price with a bigger volume, and that’s how they’ve produced the returns. I think that’s entirely doable, and China is the perfect example because it’s so big. Because it’s so big, it is a very good place to try and develop this kind of business model.”
