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Marketing Strategy of GlaxoSmithKline

Table of Contents

  • Executive Summary
  • Introduction
  • Background of GlaxoSmithKline Plc
  • Marketing environment
    • PEST analysis
    • Porter’s Five Forces Model
  • Marketing Strategy
    • Market Segmentation
  • Targeting and Positioning
  • Marketing Mix
  • Evaluation of GlaxoSmithKline’s Strategy and Tactics
  • Recommendations for the Future Development
  • Conclusion
  • References

Executive Summary

The pharmaceutical industry is among the world’s most competitive industries. The industry is witnessing increased growth even amidst the economic slowdown. To study the dynamics and factors affecting the Industry PEST (Political, Economic, Social and Technological) and Porter’s five forces analysis will be conducted in the study. The pharmaceutical industry is highly concentrated and the business is doing well with only a few businesses. The main aim of this study is to analyze the marketing strategies adopted by GlaxoSmithKline Plc; a London based pharmaceutical company (Chaffey et al., 2008). The report would also examine the factors that affect the marketing strategies GlaxoSmithKline Plc has introduced. Since the company is a UK based company, its geographical role in the UK as well as in other countries would also be examined. An analysis of the marketing mix of the company would help in highlighting the key elements of the marketing strategies adopted by the company (Zhou et al., 2010).

Marketing Strategy of GlaxoSmithKline

Introduction

Medicines form an integral part of a human’s life because the discovery and invention of medicines have improved the health and quality of life of human beings. The consumption of drugs has increased rapidly. Every year, around 650 million prescriptions are written by the General practitioners alone in UK (House of Commons, 2005). The National Health Service, UK, sells drugs worth £ 7bn per annum and spends 80 per cent on branded products. After Tourism and Finance it is the most competitive industry in the UK. The United States has the largest pharmaceutical market and the majority of research and development of leading pharmaceutical companies is carried out in the United States itself.  UK accounts for 10 per cent of global spending on research and development. The medical products manufactured by the companies have not only improved the health of the people but has also reduced the need of surgical operations to a large extent (House of Commons, 2005).  One of the leading pharmaceutical companies in the world is GlaxoSmithKline Plc, a company which produces effective medicinal drugs for various diseases. It also has a separate division of health care that manufactures famous oral healthcare and nutritional goods such as Sensodyne, Horlicks, Lucozade, Boost and Gaviscon. The company sells prescription medicines and over the counter medicines. Most of the company’s revenue comes from the divisions of healthcare products which include toothpaste and energy drinks. The top-selling prescription medicine at the firm includes anti-depressant drugs Avandia and Paxil (GlaxoSmithKline Plc, 2013a). The company believes in complying with UK’s national health guidelines and providing the medicine users with beneficial treatment. Currently, the pharmaceutical industry is facing a number of challenges like slow economic recovery, high cost of development of drugs and stricter health regulations imposed by government etc. Pfizer, a leading pharmaceutical company of the world has announced plan to close down its research and development wing in UK to curb down operational costs (Gallagher, 2012). Even in the midst of this economic slowdown, GlaxoSmithKline Plc had seen steady growth. In the year 2012, the company spent £4 billion dollars in the research and development of new medicines, consumer products and new medicines (GlaxoSmithKline Plc, 2013b).  Most of the company’s revenue comes from the US, as prescription drug purchases are subject to the respective country’s price control policies. The USA is the only industrialized nation where there is no price control on prescription drugs. The company accounts for 40 percent of the $350 billion sales of prescription medicine sold worldwide (Albaum, Duerr and Strandskov, 2006).

Background of GlaxoSmithKline Plc

The company which is the second largest pharmaceutical company of the world was formed on 27 December 2000 by the merger of SmithKline Plc and Glaxo Wellcome Plc.  The merger of the two companies required approvals by three governments and stockholders of the company. The European commission had granted permission in May, 2000 and the stockholders of both the companies had given approval in July, 2000. The organizations Foreign Trade Commission and European Commission had granted approvals in December, 2000. These three governmental organizations had asked the company to diverge themselves into the manufacturing of specific drugs and medical products.  The companies believed that the merger will provide economies of scale and scope in marketing. Post merger, the company had a market share of 7 percent in prescription drugs. The company witnessed rapid growth during the tenure 2001 to 2003 and became one of the leading pharmaceutical companies of the world (Albaum, Duerr and Strandskov, 2006).

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