Posts Tagged ‘GSK’

The news that GlaxoSmithKline has pledged to cap prices on its medicines in the developing world to a quarter of the levels charged in the developed world, has sent shock waves through the industry. Not so much for the headline-grabbing price cap or for the commitment to reinvest 20% of profits generated in the developing world back into local health systems, but for GSK’s promise to create a patent pool on any of its experimental chemicals or processes that could treat neglected tropical diseases. Campaigners welcomed the news but naturally – since they are campaigners - called for more.

We’ve seen price pledges from big pharma before, even wide scale drug donation programmes, but until now any discussion of opening up intellectual property has been strictly off-limits. After all, intellectual property lies at the core of the pharmaceutical industry, and is zealously protected. Indeed, eight years ago in Johannesburg, GSK took the misguided decision to lead a group of multinationals in taking legal action against the South African government in a bid to protect its IP on HIV drugs. The international community vented its anger, and GSK, more than anyone else, took a battering.

This week’s announcement will cost their shareholders little (profits in the developing world have little impact on the balance sheets) but may make a few of them a little anxious. Andrew Witty, GSK’s chief executive, will be hoping that more of them – and not just the socially responsible investors – will be pleased. Indeed, Witty’s aggressive posturing suggests that this is not so much a brand building exercise but rather a sincere move into enlightened self-interest. In other words, GSK is banking on doing better by doing good. The fanfare that has greeted the announcement suggests that they may be on to something, a genuine point of differentiation from their competitors.

The move will undoubtedly provoke a competitive response, but GSK’s first mover advantage has put them into a strong position. Either way, GSK is heading down a pathway that promises to bring real and lasting benefits to the poor - both in the developing world and developed world - and is beckoning others to follow suit. This is good news indeed.