Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock...
-
Upload
diana-kennedy -
Category
Documents
-
view
213 -
download
0
Transcript of Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock...
![Page 2: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/2.jpg)
Agenda• GSK Overview
- Fundamentals and business mix- Stock brokers assessments
• Industry Drivers - Changes in industry structure- Future Trends
• Problems and risks (backup)• Recommendations
- New approach to marketing and others- Follow on activity- Financial perspectives
Finance
Strategy
Value Based Management
CompetitiveAdvantage
External Environment
![Page 3: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/3.jpg)
Fundamentals and Business Mix
Business Segment & Geographic Revenue MixBy Business Segments By Region
Pharma86%
Consumer Health14%
US 48%
International 22%
Europe 30%
![Page 4: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/4.jpg)
Challenges – Stock Broker’s Assessment
• Negative outlook of Avandia (10% decline in sales per year)
• Few upside catalysts
• Possibility of withdrawal from the market
• Strong pipeline: phase II and phase III
• Marketing: recent restructuring for marketing team
• Share buyback (?)
![Page 5: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/5.jpg)
Avandia (6%) of the total
• Seretide/Advair £3,313 million 11%• Zofran £847 million, up 3%• Vaccines products £1,692 million, up 23% • Valtrex £845 million, up 24%• Avandia group of products £1,645 million, up 25% • Coreg £779 million, up 38%• Lamictal £996 million, up 19% • Imigran/Imitrex £711 million, up 3%• Wellbutrin £900 million, up 24% • Flixotide/Flovent £659 million, up 5%
![Page 6: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/6.jpg)
Comparison
Company name
Share price, last close
(NTM) (LTM) (NTM) (LTM) (NTM) (LTM) (NTM) (LTM) (NTM) (LTM) (NTM) (LTM)AZN 2,574.00 GBp 3.45 e 3.86 15.2 e 13.9 1.78 e 1.42 16.7% e 20.7% 20.2% e 22.7% 123.5% e 89.0%GSK 1,330.00 GBp 98.53 e GBp 94.54 GBp 13.5 e 14.2 50.15 e GBp 47.76 GBp 21.1% e 22.7% 17.9% e 19.5% 118.4% e 66.4%MRK 53.51 NA NA NA NA NA NA NM NM NA NA NA NANovartis 54.30 3.23 e 2.96 16.8 e 19.4 1.12 e 0.87 18.0% e 20.7% 16.7% e 21.1% 81.3% e 18.2%Pfizer Inc 25.58 NA NA NA NA NA NA NM NM NA NA NA NARoche 211.80 10.66 e 8.98 19.9 e 24.3 4.05 e 3.44 19.1% e 18.3% 23.9% e 20.1% 37.6% e 10.1%Sanofi-Aventis43.03 USD 2.64 e 2.61 11.5 e 13.4 0.88 e 0.76 10.1% e 10.5% 9.6% e 9.2% 46.4% e 24.6%
Price to earnings
EPS Return on net operating
assets (RNOA) (% )
Return on equity (ROE)
(% )
Dividends per share, excluding special
dividends
Total payout ratio (% )
Highest RoE among peers
![Page 7: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/7.jpg)
Industry Drivers– Product in the Pipeline – Marketing: Moving strength to strength– Regulations: tighter controls and tougher business
environment (FDA in USA)– Increasing number of generic claims– Declining number of approvals– Shorter lifetime for ethical drugs– Increase in M&A : winner or loser– Globalization
![Page 8: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/8.jpg)
New Trends in Pharma• Socio economic impacts (Macro factors)
- Change in population and age structure (10% of 08 - 40% of 50)
- Increase of medical PMT in GDP (OECD 8.5%)
• Impact and fusion from High Technology in IT, LS and NT
• Innovative products and equipment
- Electronic pills
- Cutting edge equipment for surgery
- Synthetic body Replacement
• Advent of QOL (quality of life) products
- election, obesity, hair treatment, etc.
• Stem cell research : paradigm change in medical treatment
IT
LSNT
PharmaceuticalIndustry
![Page 9: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/9.jpg)
Recent M&A between Pharmas and BiosBuyer Target Payment ($B) Year
Pharma
Company
Bayer AG Schering AG 19.9
2006
Merck KGaA Serono S.A. 13.3
Abbott Kos Pharma 3.7
Eli Lilly Icos 2.5
Schering Plough Organon Bio 14.4
AstraZenecaCmb. Antibody
MedImmune
1.32
15.62007
Mitsubishi Chem Tanabe Seiyaku 4.3
Shire Phama New River Pharma 2.6
Bio
Company
Gilead Myogen 2.3
2006 Amgen Abgenix 2.2
Genetech Tanox 0.92
Millipore Corp Serological Corp 1.4
Biogen Idec Conforma 0.252007
Beckman Coulter Biosite 1.7
![Page 10: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/10.jpg)
CompetitiveMarket Environment
Change in Business structure
積極的な海外展開Accelerating
overseas operation
Profit
経営効率化Improvement the
efficiency of operations
研究開発への重点投資
Concentrated investmenton R&D
Innovation
Sustainable Growth
業績格差Performance
Gap
Pharmaceutical Companies in past decade: A Clear Divide of Winner & Loser
![Page 11: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/11.jpg)
Recommendation : Approach by the IncomingCEO
• Positioning :‘Front Runner in the global Health Care industry’
• Securing Strong Next Growth Engines- M&A and Strategic Partnership : new technology- Pipeline (patents) management : R&D outsourcing- Emphasizing on the emerging markets (China and India)
• New market strategy and branding - Developing the vaccine market as major target B2B Value added community- Creation on life time value to customers
• Set-up Vision with stakeholders : ’The Most Admired Company in Ethical Market by 2010’
![Page 12: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/12.jpg)
Positioning in Strategic Map
H
F1
F5
F3
F2
F4
GSK
F6
Group A
Group C
Group B
Bio TechnologyBio Technology
Ph
arm
aceu
tica
lP
har
mac
euti
cal
H
L
L
• Economy of Scale• High Technology • Marketing / Brand• Corporate Reputation
Barrier of movementBarrier of movement
Group D
F7
F8
Group F
![Page 13: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/13.jpg)
Financial Perspectives in 2010
Gaining market efficiencies through the B2B network – Reduced marketing costs – Restructuring R&D and new market potential– Enhanced supply chain management • Supply side : mix optimal supply with long-term
relationship• Demand sides : direct link and extra growth margin
Utilizing New Pipelines (patents) : 20% upward in sales
Operational Efficiency by BPR : 5% (Globally)
![Page 15: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/15.jpg)
Ways to Create B2B VAC
• Buying Power : price discount by scale, providing detailed information on suppliers and manufactures
• Increasing Process Efficiency : cost savings by transaction, and work process
• Consolidation of Supply Chains : process consolidation, logistics improvement, inventory reduction, no mediate process
• Accumulation Contents and Community : best practice, KMS, VM, forum, news letter
• Efficiency of Market Research : e-catalogue, auction, exchange, bidding (cyber-market usage)
![Page 16: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/16.jpg)
Value Added Communities
B2B Platform
VAC
(Value Added Communities)
Supplier
Supplier
Supplier
Buyer
Buyer
Buyer
![Page 18: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/18.jpg)
Problems and Risks• Possibility of late stage trial failures• Expiration of patented drugs (pipelines) :$13B in 10 yr• Lack of next Growth engine : M&A $2B over 02-06• Corporate ethics :
- Rejection of benefits package for CEO (Fat Cat) - Customer of animal testing companies (FETA)
- Short-term monopoly profit anti-AIDS drug AZT - Avandia issue: Case pending
• Competition from generic drugs and quick • Change in the industry structure• The New Chairman
– Debunking : from the stories to the global capital market (abundant liquidity)
![Page 19: Class Exercise on GlaxoSmithKline. Agenda GSK Overview - Fundamentals and business mix - Stock brokers assessments Industry Drivers - Changes in industry.](https://reader036.fdocuments.us/reader036/viewer/2022082817/56649e3a5503460f94b2bd5d/html5/thumbnails/19.jpg)
Major development – Potential Revenue
Major NCEs and vaccines in phase III development: ambrisentan – for hypertension Lymphostat-B* – for lupus casopitant* – for post-operative and chemotherapy-induced vomiting and nausea pazopanib* – for prevention of tumour growth mepolizumab – for hypereosinophilic syndrome Promacta* – for patients with low platelet count
New generation ‘flu vaccine*• Globorix – a new combination paediatric vaccine against hepatitis B,diphtheria, meningitis A and C• New meningitis vaccine against meningitis C and Y and Hib*• Synflorix – vaccine to prevent pneumococcal disease.(* entered late-stage in the last 12 months)
Major NCEs and vaccines filed:• Allermist/Avamys – for hay fever; US approval expected in first halfof 2007• Altabax/Altargo – for skin infections; approval expected in 2007• Entereg – for post-operative ileus, approval expected in 2007• Tykerb – for breast cancer; US approval expected in first half of 2007• Cervarix – vaccine to prevent cervical cancer; European andInternational launches expected in second half of 2007• H5N1 pandemic vaccine.Late-stage assets in-licensed during the last 12 months:• Hu-Max-CD20 – for the treatment of leukaemia and non-Hodgkin’slymphoma• gepirone ER – for major depressive disorder• XP13512 – for restless legs syndrome and treatment of neuropathicpain.