Corporate News


GlaxoSmithKline gets sales boost from drug price cuts

Posted on January 25, 2011

THE LOCAL arm of pharmaceutical giant GlaxoSmithKline PLC enjoyed sales growth above the industry average in 2010 after gains from drug price cuts finally kicked in, officials said last week.

Price reductions implemented years ahead of the government-mandated cuts allowed GlaxoSmithKline Philippines, Inc. (GSK Philippines) to best competitors and also keep up with cheaper generics, the officials claimed.

Long-term prospects, however, are said to largely depend on the new administration’s ability to improve Filipino’s purchasing power and also upgrade the public health care system.

“The industry barely grew the past two years with sales just rising by just 2%,” GSK Philippines Managing Director Roberto C. Taboada said in an interview.

But for 2010, GSK Philippines “grew above the market,” Mr. Taboada said, declining to elaborate. This was a turnaround from the 7.8% decline in the company’s gross revenues to P8.076 billion in 2009. Net income that year plunged by 92.5% to P58 million.

“We were among the fastest growing [GSK units] in Asia in 2010 because we started doing price reductions here first,” Mr. Taboada claimed.

“We’ve been expanding access to more patients. Our volumes have grown. It’s the right thing to do but it’s also a more sustainable model for the long-term,” he said.

Patients had been offered discounts since 2004 even before the government required price cuts for certain drugs in 2009, Lourdes Desiree D. Cembrano, vice-president for external affairs, said.

“For other companies, price reductions were reactive. It’s harder to generate the volumes that way,” she said.

This has allowed the company to keep up with not just other multinationals but also local generic drug brands especially with nearly two-thirds of the GSK Philippines’ product portfolio no longer protected by patents, Mr. Taboada said.

Generic drugs have so far posed sizable competition against “innovator firms,” enough to prompt Pfizer, Inc. to launch a local unit to market off-patent drugs, earlier reports show.

Moving forward, GSK Philippines expects demand for drugs to rise in line with projections of improved economic prospects, Mr. Taboada said.

The firm “hopes” for continued growth in 2011, he said, even as the Bureau of Food and Drugs has prohibited retail of GSK’s rosiglitazone-containing medicines to treat diabetes. These drugs sold under the Avandia brand had been similarly banned in Europe and Saudi Arabia and regulated in the United States after experts raised concerns over heart attacks associated with the use of the pill.

These products account for just 2% of GSK Philippines sales anyway, Mr. Taboada said.

But a lot will depend more on government efforts to improve the public health care system, the officials said.

While price reductions have yielded higher sales volumes so far, there’s a point when “there is no price low enough” for low-income consumers, Mr. Taboada said.

Government will have to step in to upgrade universal health care to increase access to medicine further, he said. “It will take a long time for government efforts to bear fruit. In the meantime, we will work hard to convince doctors that our [products] are the best for patients,” he said.

GSK Philippines was incorporated in 1968 and currently employs nearly 800 workers. It claims a niche in prescription drugs for asthma and other respiratory illnesses. The firm also runs a factory in Cainta, Rizal for consumer brands Calpol, Astring-O-Sol, Bactroban and Tums, among others.