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Strategy And Ratio Analysis Of Gsk

1301 words - 6 pages

Strategy Analysis of GSK

Pharmaceutical Industry Overview of GlaxoSmithKline (GSK)

In Bangladesh, the pharmaceutical sector is one of the fastest growing sectors. After the promulgation of Drug Control Ordinance - 1982, the development of this sector was accelerated. In 2008 the total size of the pharmaceutical market in Bangladesh was estimated to be USD 700 million and is growing at a steady rate. The pharmaceutical sector is the second highest contributor to the National Ex-Checker and the largest white collar labor intensive employment sector of the country. There are 245 registered pharmaceutical manufacturing companies in Bangladesh. The local pharmaceutical manufacturers cater ...view middle of the document...

Also government regulations are lenient to give chance for better competition. Little subsidy or regulation prices are there. Distribution channel for the products are not controlled by 1 or 2 big firms rather it is an open distribution channel. Customer’s low switching costs have also contributed to the force. The 2nd force of Buyer’s Power is relatively low in the industry. The 3rd force is supplier power which is also relatively low. This is attributable to the fact that the supplier’s products are not differentiated and the switching cost of supplier is not that high. The 4th force of Threat of Substitute Products is very low for obvious reasons. The substitute for pharmaceutical products are very hard to find as the alternative of allopathic medicines are very insufficient and not worth mentioning in case of market share. Also the fact that pharmaceutical products, (e.g. Drugs) serves the basic human need of right to health. So the substitutes are not mentionable. The 5th force, which is Intra-Industry Rivalry, is very high. The market size of pharmaceutical industry in Bangladesh, with nearly 250 pharmaceutical companies, has grown by 16.83 per cent in 2009. As there are large numbers of competitors, the % of fixed costs is also large. Also in case of most of the generic medicines, products are undifferentiated and the customer switching costs are also low or none.

The competitive positioning of GSK

In 1948, Glaxo Laboratories (Pakistan) Limited was incorporated having its registered office in Karachi. Initially it was a wholly owned subsidiary of Glaxo Group Limited. After that in 1949, First branch in East Pakistan was opened at Dewanhat, Chittagong. And in 1953, Public offer of shares were made at the request of the Govt. It started spreading its spectrum from being an importer to a manufacturer by establishing its own manufacturing unit at Chittagong in 1967. The values on which the group was founded have always inspired growth. As a research based pharmaceutical company their mission is to improve the quality of human life.
GSK Bangladesh’s portfolio includes both pharmaceutical products and consumer products. The pharmaceutical side includes prescription medicines, vaccines and non prescription medicines. In Bangladesh, GSK's consumer brands are the major players in the health food drink category. The powerful portfolio includes Horlicks, Boost, Maltova and Viva which owns an enviable market share of 85%. Among them, Horlicks, a trusted & heritage brand, enjoys 76% market share. Horlicks has been re-launched in 2008.
When we analyze the situation we see that it has differentiated its approach in the marketing of its consumer healthcare products (e.g. Horlicks) through intensive research. They do not engage in price wars in this category as they are the market leaders here so they charge a premium. In some other cases for instance the generic drugs, they go...

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