Executive summaryScope

The purpose of this research project was to analyze leading pharmaceutical manufacturer GlaxoSmithKline’s (GSK) commitment to public relations (PR) through a case study and secondarily develop abbreviated public relations including a minimum of five current GlaxoSmithKline tactics and five proposed tactics regarding GSK’s involvement in healthcare reform and accessibility to medicine initiatives.Research findings

GlaxoSmithKline has committed an extraordinary quantity of resources to its PR plan as evidenced by its corporate website, 2008 Corporate Responsibility Report, and reported marketing and PR budget.

GlaxoSmithKline clearly defines its publics, key issues and has formalized public statements surrounding the pharmaceutical industry. The GSK website contains pertinent public relations information that is easily accessible and most often available for download.

GlaxoSmithKline may benefit from expanding its PR efforts into emerging media including leveraging viral marketing tactics, better use of social media, and online engagement of its key publics. However, it should be noted that the pharmaceutical industry is

highly regulated and all marketing tactics are closely scrutinized by regulatory bodies. Therefore, GSK’s opportunities to leverage emerging media may be limited in comparison to less regulated industries. At a minimum, its efforts to move forward with emerging media will progress slowly.

GlaxoSmithKline places a priority on and excels at communicating with its external publics. However, while outside scope of this project , I found that GlaxoSmithKline has historically struggled to communicate with its internal publics , especially its employees. As noted by Pharma Analyst, Jim Edwards and GlaxoSmithKline, by retaining Fleishman-Hiliard to conduct a public relations plan focused an engaging employee, changing company moral, and gaining employee buy-in regarding new corporate initiatives.

Going forward, I recommend that GlaxoSmithKline apply its external public relation strategies to its internal publics, namely GSK employees.

GlaxoSmithKline Public Relations Plan

Pricing: GSK does not compete on price; instead Gsk leverages low cost suppliers, internationally. Procurement staffers are placed internationally and perform quality audits and develop personal relationship with suppliers in its various business regions. (Hanon 2007) according to Bruce Ceniti group manager of GSK procurement in today’s market we

need to understand who we are doing business with anywhere in the world (Hanon 2007)GSK reports that its net profit increased in second quarter of 2007 due to the material in the reduction cost and a change in the product mix explains the improvement in the profitability this quarter (GSK, 2007)Place: GSK has historically marketed its product globally and has sales team in the United States, Europe, India and Taiwan (Hanon 2007)Promotion: GSK utilizes the following mediums to market its product; televisions, advertisements, print ads:, magazines and newspaper, corporate sponsorships such as NASCARS , mail-in-rebates, outdoor advertising, radio, corporate websites and product specific websites such as www.boniva.com.(stanton,2008)According to fierce Pharma GSK ranks number one in advertising spend amongst is competitors (martino, Stanton,2008)GSKS 2007 advertising budget is equaled to $2.457 billion(Stanton,2008).the budget breakdown included spending in :

(1) Magazines $387 million(2) Newspaper 37 million(3) Outdoor $900,000(4) T.V $742.4 million(5) Radio $14.2 million (6) Internet $29.4 million

GSK utilized the central route of the elaboration likelihood method(ELM) in its promotional campaigns by it use of experts and independent bodies to lend credibility to its campaigns, it has promoted results

of clinical trials; created news liens focusing on the benefit to public health and individuals and it has used real customer testimonials(PR week UK,2002 )

GSK SWOT AnalysisStrengths(1) Proactive in Reputation/PR management(2) Actively benchmarks and analysis metrics regarding reputation and social responsibility.(3)World leader in pharmaceutical industry, GSK is the second largest pharmaceutical company worldwide

Weakness(1) Capital intensive industry. The pharmaceutical

industry is monetary, infrastructed and a labor intensive industry

(2) High risk, high reward industry

Opportunity(1) Global market(2) Underdeveloped nations(3) Genetic cloning/ genetic R&D

Threats(1) Unknown outcome of pressing U.S political and

legislative health care reform(2) International geopolitical regulations(3) Unprecedented litigious society

The Industry

According to hoovers the pharmaceutical industry includes 17,318 companies top$600 billion in annual sales and includes companies that research, develop, produce, and sell chemical and biological substances for medical or vetinary use, including prescription, generic and OTC drugs, vitamins and nutritional supplements; drug delivery systems and diagnostic substances and related product, equipment and services, including distribution and wholesale.

Industry regulation: regulatory bodies vary internationally. In the United States the pharmaceutical industry is regulated by U.S food and drug administration.

GlaxoSmithKline’s Key Public:Key Public: Consumer and ProspectsGoal: Embrace change through new ways of working, increase accessibility to medicines.Objectives: Lower operational expenses and pass cost reductions to consumers through lower product pricing. Serve more people within underprivileged nations and economically challenged people in developed countries and to support GSK’s mission, “to improve the quality of human life by enabling people to do more, feel better and live longer.”Strategy: Corporate-wide cost reduction programs such as leaner manufacturing processes that reduce costs and global outsourcing. Found or co-found

accessibility to medicines programs and healthcare initiatives through hands-on training and dedicate patient advocates, website, and website registration portal, medical facility point of sale displays, outdoor, television and radio.GSK Tactic: in 2007, GSK’s CEO announced that, “persistent focus across all functions; a reduction in complexity, to be achieved by standardization, consolidation, outsourcing and off shoring; and the exploitation of global opportunities, in regard to procurement, skills, labor cost and arbitrage.” Offer preferential pricing medical programs. Develop a GSK initiative focusing on infant child care and health concerns offering hands-on childcare training events and host synchronous and asynchronous childcare internet video training modules.

Key Public: Domestic regulators, Government, Policy Makers and Lobbyists.Goal: Motivate Regulators, Governments, Policy Makers and Lobbyists to uphold legislation that adequately balances every individual’s right to obtain affordable healthcare and the pharmaceutical industry’s right to make a reasonable profit from its business operations. Objective: Equip policy makers with the knowledge to subsequently formulate legislation and regulatory

changes in favor of healthcare reform and global sustainable healthcare systems within their constituencies/ governments. Strategy: Maintain a voice/presence in current healthcare issues through participating in industry originations, influencing public opinion, and lobbying government leadership. Inform and motivate public of healthcare best practices/approaches.Tactic: Host a global healthcare summit, inviting 1000 of the most influential policy makers a brainstorm, evaluate, discuss current healthcare issues, and exchange global industry ‘Best Practices’ amongst leaders and policy makers.

Key Public: Glaxo Smith Kline Board of Directors, Investors and Shareholders.Goal: Engage in open and forthright all GSK publics.Objective: Establish/build trust regarding promises and opportunities through public events and publics reporting through GSK’s corporate website.Strategy: Deliver on transparent reporting promises and opportunities through public events and public reporting GSK’s corporate website.Tactic: GSK publishes multiple financial reports documenting financial contributions made through grants to patient groups in Europe and international makers. “Being transparent about our support for patient groups help build trust with our stakeholders,

including the groups themselves.” Allow the annual shareholders meeting to be more accessible through a live and interactive video conference and host monthly Executive online chat sessions. Key Public: Non-Government Organization and Patient Groups.Goal: Give NGO and Patient groups members a voice in the healthcare debate and make a difference in the lives of its publics through outreach program involving NGOs and patients groups.Objective: Remain active on a local level and to give back to the communities in which GSK operates.Strategy: Community and Healthcare activism and support initiatives of NGOs and Patient Groups through monetary contributions and volunteer efforts. Tactic: Host 4 healthcare panel discussion and 12 follow-on annual fundraising events NGOs and patient groups; one of the 12 events is designated strictly for GSK employee contributions.

Key public: Glaxo Smith Kline Board of directors, shareholders and investorsGoal: Engage in open communication servicesObjective: To establish trust regarding all GSK publicStrategy: Deliver on transparent reporting promises and opportunities through public events and public reporting through GSK's corporate website.GSK tactic: GSK publishes multiple financial reports

documenting financial contributions made through grand’s to patient groups in Europe and international marketsProposed Tactics: Allow the annual shareholders meeting to be more accessible through a live and interactive video conference and host monthly executive online chat sessions.Targetted metrics:A. Two hundred fifty, registered online share holders meeting, video conference attendees constitutes the tactics successB. A quantity of 50 press mentions constitutes the event's successC. A quantity of 50 million executive chat participants will constitute the events success during the first quarter.

Key Public: Nongovernmental organizations and patient groups.Goal: Give NGO and patient group members a voice in the healthcare debate and make a difference in lives.Objective: Remain active on a local level and give back to the communities in which GSK operatesStrategy: Community and health care activism and support initiatives of NGO's and patient groups through monetary contributions and volunteer efforts.GSK tactics: In 2008 GSK contributed $15,576,232 to U.S. NGOs and patient groupsProposed tactics: Host a 2 day, weekend, fund raising healthcare reform focussed rock concert benchmarking woodstock and the live ad “WE are the World” concerts featuring popular performing artists

with a focus of promoting the importance of healthcare reforms.Targeted metrics:A. Event attendance exceeding 750,000B. National news coverage pre event, during the event and during the event

GSK Public Relation Tactic 1

GSK to strip down through outsourcing and offshoring

GlaxoSmithKline (GSK) is planning to strip itself down closer to the bare bones of the business through further outsourcing and offshoring, with hopes of making itself into a lean, mean, pharma machine.

The pharma heavyweight announced a sweeping restructuring plan in the form of an 'Operational Excellence' programme, designed to achieve savings of up to £700m (€1bn) by 2010 - 40 per cent of which will come from cutting down on manufacturing sites and simplifying production processes and activities to reduce over capacity.

The cornerstones of this new programme are "persistent focus across all functions; a reduction in complexity, to be achieved by standardisation, consolidation, outsourcing and offshoring; and the

exploitation of global opportunities, in regard to procurement, skills, labour cost and arbitrage," indicated GSK's CEO Dr J.P. Garnier.

Garnier highlighted the business areas the firm has already been either offshoring or doling out to third parties: clinical trials; human resources; IT, data management and shared financial services; and back-office functions. In addition, the firm has established a commercial analytics centre in India, conducted a rationalisation of its manufacturing network, and now undertakes global procurement across all functions.

Speaking on the company's ongoing plans to reduce infrastructure and improve efficiency, Garnier said that the firm now has a chance to expand these efforts a little bit beyond the classic areas of selling, general and administrative (SG&A) and manufacturing to also include research and development (R&D) and sales.

In terms of R&D, the company has plans to increase the number of external collaborations it undertakes as well as embrace the budget option that is Asia.

GSK Public Relation Tactic 2Preferential pricing There are many barriers to healthcare in developing countries. Most significantly, poverty, and a lack of political will, has led to a lack of medical infrastructure - hospitals, clinics and medical professionals - that prevents poor people accessing the healthcare they need.

The affordability of medicines is also important and there are two elements to this. First is the ability of governments or patients to pay for medicines. Solving this problem will require developed country governments and inter-governmental agencies to make significant additional financial resources available to developing countries. The second element is the price at which medicines are sold, an area GSK can help to address. We are making key medicines available to developing countries at more affordable prices and in sufficient quantities for as long as they are required. This is a major commitment that we call ‘preferential pricing’.In addition, we negotiate public sector prices with middle-income developing countries on a case-by-case basis. These combine a viable and sustainable commercial return for GSK with increased affordability for the healthcare systems concerned. It is difficult to estimate the number of patients treated as a result of our preferential pricing agreements, since GSK does not control healthcare provision. A report from the UN-led Accelerating access initiative (AAI), suggests that by September 2004 more than 333,000 patients in developing countries were receiving ARV treatments supplied by the seven pharmaceutical companies in the AAI. We added new supply agreements with a number of middle-income countries during 2004. These include an agreement with the Chinese Ministry of Health for preferentially priced Epivir tablets to support China’s national HIV treatment programme, and a number of arrangements in Central and Eastern Europe.

We can only afford to supply products at low prices in the world’s poorest countries if we can still make an adequate return on them in wealthier markets. We have introduced different packaging and tablet colours for many of our not-for-profit medicines to help prevent product diversion.

GSK Public Relation Tactic 3 Developed worldAccess to medicines is not just an issue for the developing world. Even in developed countries some patients cannot afford the medicines they need. This is a particular problem in the US where many people do not have health insurance. GSK has developed Patient Assistance Programs and discount cards in the US to help patients without insurance. We are also introducing discount cards in several middle-income countries to enable qualifying patients to obtain prescription medicines at a discount price. GSK was the first pharmaceutical company in the US to offer a card providing savings on medicines to low-income senior citizens and disabled people. Known as the Orange Card this enabled these people to buy GSK outpatient prescription medicines at a discount of up to 40%. In 2005, 205,672 Orange Card holders received 49,084 prescriptions, saving $5 million (based on WAC-wholesale acquisition cost).

Orange Cards in middle income countries

In 2004 GSK introduced Orange Cards providing discounts on certain GSK prescription medicines for eligible patients in Bulgaria, Lithuania and Ukraine. The nature of the discounts varies between countries, depending on the needs of the patient and the way in which the healthcare system operates. Our Orange Card in the Ukraine gives all asthma and chronic obstructive pulmonary disease patients who are under 25 or over 50, an average discount of 19% on GSK’s Seretide asthma medicine. Asthma patients of any age who suffer disabilities or who are affected by the Chernobyl nuclear disaster are also eligible.

Summary of GSK discount programmes

Country

GSK Programme Number ofPatients

Value ofBenefit toPatients

US Patient Assistance Programs -Free or minimal cost medicines forlow-income, uninsured patients.

565,000 receivedprescriptions

$464 million

US Orange Card - Discounts for low-income senior citizens and disabled people.

205,672 receivedprescriptions

$4.992million

US Together Rx - 347,835 $7.561

Discounts forlow-income senior citizens. Jointindustry programme.

receivedprescriptions

million

US Together Rx Access - Discountsfor all low-income uninsuredpatients. Joint industryprogramme.

10,947 receivedprescriptions

$2.912million

Bulgaria

Orange Card - Discounts forlow-income patients with chronicdiseases.

36,000 patientsReceived prescriptions

$1.75 million

Lithuania

Orange Card - Discounts forsenior citizens and disabled people

12,000 enrolled

$36,400

Ukraine

Orange Card - Discounts onasthma medicine for patientsunder 25 or over 50.

3,500enrolled

$176,000

GSK Public Relation Tactic 4 Advocacy on pricing and competitiveness European activityGuiding principles for relative effectiveness assessments and pricing

Organisations engaged: EU member states, the European Commission,stakeholder representatives participating in the EU’s High Level Pharmaceutical Forum

Industry associations involved: EFPIA, EuropaBioGSK position: Government funding decisions are often based on an assessment of a medicine’s clinical or cost effectiveness. We believe that these value assessments should be conducted transparently and in a timely manner and all key stakeholders should be able to submit evidence for the assessments. Governments should allow greater pricing flexibility when the long-term value of a medicine is not certain at launch. GSK, representing EFPIA, strongly supported the Good practice principles for relative effectiveness assessments which were developed within the framework of the EU’s High Level Pharmaceutical Forum (HLPF). These were adopted in 2008 along with the Guiding principles for good practices implementing a pricing and reimbursement policy. EFPIA’s Health Technology Assessments principles, which the industry has previous adopted and that GSK helped to develop, are aligned with the principles adopted by the HLPF.

Improving regulations that impact on the pharmaceutical industry’scompetitiveness in the UKOrganisations engaged: UK government and the European CommissionIndustry associations involved: ABPI, CBI, Institute of Directors GSK position: The pharmaceutical

industry is one of the most highly regulated industries in Europe. GSK supports strong regulation but has been working with the UK government and the European Commission to propose ways to simplify regulations while achieving the same policy goal. This aligns with the aims of the UK government and European Commission to reduce the regulatory burden placed on industry. GSK submitted a series of 50 proposals to the UK government for simplification of existing regulations. We also made a similar submission to the Commission, focusing on regulations that originate at a European level.

CreditsPooja Dhorda 11Krunal Gilitwala 17Rahul Gilitwala 18Saloni Gosalia 19Sagar Kapadia 22Khushboo Sisodia