Emma Walmsley, the new Chief Executive of GlaxoSmithKline plc (ADR)(NYSE:GSK) has instituted a strategy of, which is expected to grow the company’s research-and-development operations. Unlike before, the company will not have to deal with so many drug-research projects having withdrawn more than 30 of them. Some of its affected projects include those, which are in their early stages of development.
Glaxo’s competitive edge has been hurt badly previously following its spread of its bets, a practice, which is not common with its peers. This is the more reason why it is pruning its pipeline of projects. However, the company is yet to disclose how it will offload these projects given that the market is becoming more competitive by the day.
Glaxo’s move runs counter to the broader industry
Apparently, the axing of drug development programs will also affect a broad range of ailments the likes of heart failure and dermatology. According to Glaxo’s new boss, the move will be seeking to address a key concern by the investors. Surprisingly, the company will also be ending several other programs, which fall within its new priority areas.
However, despite its justification, the new move runs counter to the broader industry. Notably, the industry has been pushing more investments towards rare diseases given that they are likely to command sky-high prices. This is particularly in the highly competitive areas, which are crowded by the likes of Pfizer Inc.(NYSE:PFE) and Sanofi SA (ADR)(NYSE:SNY).
But the company says it’s committed to improve
Despite all the setbacks, the UK’s biggest drugmaker is giving a priority to the improvement of its core pharma division. This can be witnessed through the company’s sale of Horlicks drinks brand last week. Glaxo also intends to push growth for other areas the likes of respiratory, HIV and infectious diseases.
Ms. Walmsley who took the company’s leadership in April says, “Our priority for the second half of the year is to maintain this momentum and prepare for the successful execution of several important near-term launches in respiratory, vaccines and HIV. “
While at this, it is worth noting that the company has also increased its revenue by 12% to GBP7.32 billion. Meanwhile, Glaxo’s was trading at $40.61 a fall of $0.24 or 0.59%.