Importance of the company Glaxo - *Importance of the...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
*Importance of the company`s activity (whether it produces a good or a service) for the Egyptian market. GLAXOSMITHKLINE (GSK) EGYPT The pharmaceutical industry has been classified as a ‘sunrise’ industry of the future. The term sunrise is the optimistic adjective to describe a range of industrial activities that share a set of common characteristics of being “…relatively new, technologically progressive concerns investing heavily in given the high vulnerability of their products to rapid technological obsolescence…”. Sunrise or new-economy industries include companies operating in the fields of electronic data processing, electrical and electronic engineering, aerospace and pharmaceuticals. The pharmaceuticals industry distinguishes itself from other manufacturing activities with its research intensity, as the share of sales allocated to research and development (R&D) has currently reached 18.5 per cent, up from 11.4 per cent in 1970 (PhARMA 2002). These figures are unrivalled by any other new economy industry. The Egyptian market for pharmaceuticals is estimated at US$ 1 billion, with local production covering roughly 94 per cent of local demand by volume (American Chamber of Commerce in Egypt, 2001). Sales have increased by over 150 per cent from 1991 to 2002 (Ministry of Health and Population 2002). The Egyptian pharmaceutical market is a predominantly multiple-source drug market, in which the production of generics has proliferated under the auspices of a patent regime (Law 132 of 1949), which only provides patents for processes. Subsidiaries of foreign multinationals produce virtually all of their products under license for the parent company. Two types of manufacturing activities characterise the supply side of pharmaceutical production. Research-based companies produce breakthrough Generic manufacturers produce off-patent products, with production costs basically divided between manufacturing and marketing. Judging by market capitalisation figures, research-based pharmaceutical companies control huge financial resources, a fact which has effectively awarded this group of TNCs financial power that exceeds the GDP of developing countries. Egypt is a case in point. The merger between GlaxoWellcome and SmithKline Beecham in January 2001 resulted in the creation of the second-largest pharmaceutical production entity in the world (ranked by global sales), with an estimated 7 per cent of the world's pharmaceutical market. GlaxoSmithKline (GSK ) pharmaceutical sales currently stand at US$ 24.8 billion, and the company’s net profit is US$ 6.5 billion. While GSK is headquartered in the UK, the company’s operations are truly global . GSK has a long track record of mergers and acquisitions, the largest of which has been the merger between Glaxo and Wellcome to form GlaxoWellcome in 1995, and that between GlaxoWellcome and SmithKline
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Beecham, which began in 2000 and was executed in 2001. The latest merger
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/04/2012 for the course AASTT 24 taught by Professor Khlilaburass during the Spring '12 term at Arab Academy for Science, Technology & Maritime Transport.

Page1 / 5

Importance of the company Glaxo - *Importance of the...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online