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Independent research & practical ideas for global prosperity
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Independent research & practical ideas for global prosperity
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 Posts:March 16, 2010GlaxoSmithKline’s Evolving Business Model: For Profit and For Greater Good?By Nandini OommanWhat is the modern business model? GlaxoSmithKline (GSK) CEO Andrew Witty is leading the front on modernizing pharmaceutical multinational companies (MNCs) with his recent announcement for a customized drug pricing scheme for emerging market economies like India. He outlined the new approach clearly in several interviews such as this one: “Our strategy is to grow our business in middle-income countries by increasing the volume of products we sell,” Chief Executive Andrew Witty said in an e-mailed interview. Extending Glaxo’s flexible pricing program for such nations would “improve the affordability of our medicines, increase access for patients with lower income levels and be profitable for GSK,” he said. In December 2008, shortly after he took over as CEO, Witty signaled his intention to make GSK a lead player in the global development business of increasing access to medicines: “I believe the pharmaceutical industry has a huge role to play. But we need to take much more of a leadership role. Historically we have always reacted to problems. In the future I want us to be proactive, genuinely finding new ways to increase research, increase access and eradicate disease.” And proactive he has been. See here for a chronological list of different policy announcements about GSK’s commitment to the developing world from the reduction of its prices for patented medicines in LDCs in 2009 to a recent announcement in January 2010, at the Council of Foreign Relations of an “open innovation” strategy to help deliver new and better medicines to the developing world especially for neglected tropical diseases. In this excellent talk (and if you have time it is worth watching the video), Witty walks us through the three ways in which he is changing GSK business model around open innovation, in addition to offering customized pricing to countries. These include 1) greater flexibility around intellectual property and knowledge sharing; 2) creating partnerships for researchers to have access to GSK’s industrial scale expertise, processes, facilities and infrastructure in addition to their knowledge and know-how; and 3) releasing access to new compounds for others to join GSK researchers and accelerate discovery. So, what’s different about this model? It strikes me as a win-win approach-one where both GSK AND its country partners are likely to benefit. For GSK, it will create a space to compete in future markets with local firms. For example, as the pharmaceutical sector grows in India, Witty is anticipating competition and jumping in now to ensure access to these markets and to information. For LDCs and emerging market partners, the GSK approach has the potential to increase access to medicines, to direct financial investment to pharmaceutical infrastructure development, and to increase access to knowledge and know-how for their scientists, encouraging them to actively participate in the discovery and development of products. How is GSK making this happen?
Andrew Witty, the economist (yes, and apparently one of the only to head a pharmaceutical MNC!) CEO seems to be thinking well ahead of his peers; other pharmaceutical MNCs are silent on these issues; supposedly staying clear of these countries (LDCs and emerging) right now, still unsure of the potential return on their investments in high volume markets. Witty, on the other hand, seems to be anticipating serious market shifts and designing GSK’s current operations to maximize its profits while doing some greater good. In his words he is building a company that is “constantly earning the trust of society, not just by meeting society’s expectation, but by striving to exceed them, because if you don’t have that trust of society — the society in which we all operate and the societies we strive to serve, then you really, in my view, don’t have a long-term, sustainable business model.” He is modernizing his company from within and in the way it deals with external partners so that the discovery and development of drugs is a more global and dynamic process that never stops. It’s still too early to tell if GSK’s approach will lead to a “successful” model, but certainly worth watching closely to see how it strikes the balance between making markets for itself and making drugs more accessible to the poor. 1 Comment »February 3, 2010U.S. Global Health Initiative: An Opportunity to Provide Short (and Useful) Comments on a Tall OrderBy Nandini OommanMore on the FY11 BudgetYesterday’s release from the White House of the FY2011 budget and a simultaneous release of a consultation draft of the Global Health Initiative (GHI) by the State Department signal a strong commitment and evolving action plan from the Obama administration for global health engagement in 2011 and beyond. Read More… 3 Comments »January 21, 2010Scaling-up for Success: PEPFAR’s Prevention ChallengeBy Nandini OommanThis is a joint post with Christina Droggitis. Since its release in December 2009, specific pieces of PEPFAR’s new strategy have triggered much discussion both in Washington, D.C. and abroad. In the spirit of sharing-while-doing, Ambassador Goosby spoke at a Center for Strategic and International Studies (CSIS) event on Tuesday on “Confronting the Tough Challenges in HIV Prevention,” focusing his remarks on HIV prevention in the strategy. Read More… Comment »December 9, 2009Staging PEPFAR 2, Act I: Establishing a Policy FrameworkBy Nandini OommanThis is a joint post with Christina Droggitis and David Wendt. The PEPFAR Strategy
7 Comments »November 20, 2009Family Planning Makes a Comeback with the U.S. Global Health Initiative, But Can We Make It Stay?By Nandini OommanThis is a joint post with Freddie Ssengooba. Family planning is making news again. A new 12 million dollar family planning drive was launched by the U.S. government highlighting how the Obama administration’s funding has kick-started a contraception drive in Africa and other developing countries AND the International Family Planning 2009 Conference just closed in Kampala, Uganda, apparently the first such conference in 17 years! This is a sign of changing times. In her opening remarks at the conference, Amy Tsui of Johns Hopkins University (one of the key conference organizers) and director of the Bill and Melinda Gates Institute for Population and Reproductive Health, lamented the decline in attention to family planning over the last decade, and called for action in a new era that will focus on this critical issue. “Welcome back to Family Planning!” she said at the opening plenary. By the end of the 3 day conference, after multiple sessions on topics ranging from integration, commodity security, male involvement in family planning, etc. closing comments from Ward Cates (FHI) suggest that we have “reached a tipping point” for family planning as it makes a comeback in this era of AIDS. The HIV/AIDS problem is nowhere near solved but where the issue fell silent/restricted in the Bush era, there is strong recognition by the Obama administration that HIV cannot be tackled without investments in family planning and reproductive health. And the message is clearly filtering across the Atlantic to Africa and other continents. Read More… 3 Comments »September 10, 2009Value-Added Communication: PEPFAR Now on Twitter and FacebookBy Nandini OommanThis is a joint post with Christina Droggitis. Congratulations are in order for the Office of the Global AIDS Coordinator (OGAC)! Following the White House’s example of sharing news on a daily basis in order to create a more transparent, participatory and collaborative government, PEPFAR has recently launched both a Twitter and Facebook page to more readily inform us about their activities in the countries they support. This is a great first step in spreading the word on PEPFAR activities, however the main purpose of these pages still remains unclear. Read More… Comment »August 4, 2009Dire Straits: Money for Treatment, Prevention for Free?By Nandini OommanLast week, the Kaiser Family Foundation and the National Alliance of State and Territorial AIDS Directors (NASTAD) released a report of a study on the state of HIV Prevention in the U.S. This week, Drew Altman of the KFF shared his thoughts on the sorry state of spending at scale on prevention in the U.S., “despite the fact that the CDC determined in August of 2008 that the number of new HIV infections in the U.S. is 40% higher than we thought it was – at about 56,000 per year.” While Altman seemed to suggest that global health efforts are more successful at preventing HIV than the U.S. response, I would argue that the state of HIV prevention in the U.S. (especially exemplified by drastic cuts in California) provides a preview snapshot of the global situation in the very near future: with flat lined budgets and freezes on program activities, prevention is unlikely to get the funding it should for programs to be implemented at scale and with intensity. As my colleague David Wendt reported in an earlier post, the worsening financial crisis is already beginning to manifest itself in global funding budget cuts for AIDS in countries where HIV incidence is still very high. With these cuts, countries will scramble to pull together resources for treatment, an important human and political priority in the short term, but it’s less apparent how prevention will be supported both by global funders like PEPFAR and the Global Fund, and by domestic budgets for health. In these dire straits, with a continuing focus on treatment, prevention is unlikely to happen (for real success) for free. Comment » |
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