GlaxoSmithKline and AIDS Drugs for Africa

Presented by (Group 4) : Nakul Agarwal (D004), Sanket Guhagarkar(D020),Tanvi Gupta(D026),Piyush Jain(D029), Saurabh Jain(D030)

Overview of GlaxoSmithKline
GlaxoSmithKline (GSK) British Multinational pharmaceutical, biologics, vaccines and consumer healthcare company: Worlds fourth largest pharmaceutical company Established in 2000 by the merger of Glaxo Wellcome plc and SmithKline Beecham plc

Mission
GSKs mission is to improve the quality of human life by enabling people to do more, feel better and live longer 7% of total global pharmaceutical sales Total company sales: 21.2 bn / $31.8 bn Our International Region covers 80% of the worlds population

Primary Areas of Business

GlaxoSmithKline (GSK) operates in three primary areas of business: Pharmaceuticals, which includes prescription pharmaceuticals Vaccines; which includes developing preventive vaccines for major diseases Consumer Healthcare; which includes oral health, nutrition, wellness, and skin health consumer health products GSK is the only company in the world that holds the patents over the drugs used for HIV/AIDS treatment In 2009, GSK (85 %) partnered with Pfizer(15%) to institute a global specialist HIV company ViiV Healthcare which is a dedicated to delivering advances in treatment and care for people living with HIV.

HIV / AIDS in Africa

Major public health concern Sub-Saharan Africa alone account for an estimated 69% of all people living with HIV and 70% of all AIDS deaths in 2011 Southern Africa worst affected region on the continent

Core Interest of GSK in Africa

Huge opportunity for GSK s HIV / AIDS drugs as more than 25 million people were infected with HIV causing virus in 2001 Developed countries accounted for 90% of the sales Criticism Glaxo has been criticized by human rights and shareholder activists for not doing enough to make available HIV / AIDS drugs to people in Africa

Access To Medicine (ATM) Outlook

Developed a sustainable long-term approach to improve Access to Medicine (ATM). Targets Index Diseases (IDs) GSK has strengthened its flexibility in its approach to Intellectual Property relating to neglected diseases and pricing In the ATM Index 2010, GSK Ranked 1st overall Above average ATM Performance Management system Above average and diverse stakeHolder engagement for numerous access initiatives

Developing Countries and Market Access (DCMA)

Aim : To improve access to GSKs HIV medicines to Lesser Developed countries(LDCs) in Africa and Asia at an affordable price Mission: `Bringing more affordable, quality GSK medicines and vaccines to patients who need them in the worlds poorest countries. GSK also has three corporate strategies comprising its Access to Medicine Corporate Principle, as follows: Pursuing flexible pricing strategies; Refocusing R&D activities to reflect the needs of developing countries; and Seeking innovative partnerships to try to reach people who would otherwise not have access to medicines and vaccines.

Governance: Performance Management & Incentives

Focus on Volume Growth rather than Delivery of Profit GSK instituted bonus schemes for its senior managers for effective delivery of its initiatives that improve access to medicines in LDCs GSK has instituted bonus schemes in its DCMA units to directly incentivize managers who increase access to medicine

The rewards are based on volume growth rather than the delivery of profit
The company has also instituted a Presidents award scheme to formally recognize examples of initiatives that improve access.

This also ensures sustainability, because though the medicines are made available at a reduced price, the total number of customers are increased by increasing its availability thus leading to equitable profits

Stakeholder Engagement
Customers : Patients who need Antiretroviral drugs and doctors who prescribe them are primary stakeholders GSK has the moral obligation to provide the ingredients of each drug so that Doctors can access the effectiveness of particular drug Core Stakeholders : They are scientists who create effective drugs by dedicated R & D and investors who invest in GSK for funding these R & D projects GSK should utilize these funds efficiently to create a value for their stakeholders Society : Aids inflicted population of Sub saharan region. GSK should provide cheap drugs and create awareness about health and hygiene Business Partners : This includes Regulators and Distributors who help GSK ti effectively spread the drugs to the concerned patients.

Equitable Pricing, Manufacturing and Distribution

Tiered (or equitable) Pricing schemes:
For HIV/AIDS medicines, GSK through ViiV Healthcare offers not-for-profit prices in LDCs, in all of sub-Saharan Africa, and in all LICs In middle-income countries, GSK has also introduced intra-country tiered pricing, within markets, to reach new sectors of the population based on assessing the patients ability to pay GSK publicly discloses the proportion of its global revenues covered by tiered pricing programs for HIV/AIDS medicines only In LDCs where it is the sole supplier in that market, GSK caps the prices of its patented medicine including (HIV/AIDS) and vaccines at not more than 25% of prices in the UK, provided this price covers its manufacturing costs

Positives from tiered pricing approach

Prices were reduced by an average of 45%. Sales volumes for the majority of products have increased significantly following the price decreases, and GSK states that this has increased access to these products to more patients. The increased volume for these products in these markets shows that the business model is sustainable and reflects the increased number of patients who now have access to these branded products including HIV/AIDS drugs.

Equitable Pricing, Manufacturing and Distribution

GSKs stand on Patents and Licensing

Public disclosure of pro-access position statements regarding TRIPS and compulsory licensing Although the company holds some patents in LDCs, it has made a commitment not to enforce those patents The company has issued 11 Non-Exclusive Voluntary Licenses (NEVLs) for ARVs for producing HIV related drugs, in places where GSK does not have accessibility at the moment

Patents and Licensing

Trade Aspects of Patents:

Full respects towards TRIPS flexibilities Patents not filed in Index Countries Access-orientated IP/deal-making strategy for ICs ViiV Healthcare has issued NEVLs to 12 generic companies for the manufacture and supply of its regulatory approved products as follows
Aspen Adcock Ingram Biotech Cipla MedPro Strides Feza Ranbaxy Cosmos Universal Ltd Universal Corp Specpharma

Emcure

Aurobindo

The licenses provide each generic manufacturer the option for the manufacture and supply of ViiV Healthcare's entire antiretroviral portfolio for supply to all LDCs, all LICs, and all countries in sub-Saharan Africa

Support for Medical Patent Pool(MPP)

GSK has not yet shared any of its HIV drug molecules to MPP However, GSK has entered formal negotiations with MPP through ViiV Healthcare since Jan 2011, and since then has held several constructive meetings

GSK and Millennium Development Goals

Reduce Child Mortality
GSK has developed pediatric formulations in the form of Anti-Retrovirals (ARV) to treat the children Embarked a global partnership with Save the Children to ensure that every child receives essential healthcare and reduce mother-child HIV transmission GSKs R&D pipeline includes a Phase I biopharmaceutical and a Phase III asset Votrient, both aimed at treating ovarian cancer, and also research is under way on treatments for breast cancer

Improve Maternal Health Combat HIV / AIDS, malaria and other diseases Ensure environmental sustainability Develop a global partnership for development

GSK carries our drug donations in line with WHO guidelines on Product Donations ViiV healthcare works exclusively on research, development and commercialization of HIV treatments

Created a Green Chemistry Performance Unit to research ways to replace hazardous chemicals and processes with lower impact alternatives.

GSK is working with various stakeholders to provide access to HIV/AIDS drugs in lesser developed countries through tiered pricing and various partnerships

Sustainable Philanthropy
In 2011, GSK reinvested approximately USD 6 million due to the companys commitment to reinvest 20% of profits in LDCs In 2010, GSK dedicated approximately USD 84 million in resources to philanthropic projects in ICs, and approximately USD 54 million in 2011 In 2010, GSK started a skills-based volunteering initiative called PULSE that empowers employees to make a sustainable difference for communities and patients in need

References
Book References: Anne T. Lawrence & James Weber (2010), Business and Society: Stakeholders, Ethics, Public policy (12th ed.). New York, NY, 10020

Webpages: GSK, (2013), GSK Annual Summary 2012. Retrieved from http://www.gsk.com/content/dam/gsk/globals/documents/pdf/GSK-AnnualSummary-2012.pdf GSK, (2011), GSK on compulsory licenses, Retrieved from http://www.gsk.com/content/dam/gsk/globals/documents/pdf/GSK-oncompulsory-licences.pdf GSK, (April 2011), GSK on IP and access to medicines in developing countries, Retrieved from http://www.gsk.com/content/dam/gsk/globals/documents/pdf/GSK-on-IP-andaccess-to-medicines-in-developing-countries.pdf Access to medicine index, August 2012, Company profile access to medicine index 2012, Retrieved from http://www.accesstomedicineindex.org/sites/www.accesstomedicineindex.org/file s/company/downloads/company_profile_access_to_medicine_index_2012_03122 012_final_gsk.pdf