GlaxoSmithKline plc is an international pharmaceutical and consumer healthcare company headed by

Sir Christopher Gent. Its the worlds third largest pharmaceutical company in revenue. It was formed
when Glaxo Wellcome and SmithKline Beecham merged in 2000.GSK aims to become an indisputable leader in pharmaceutical industry and to improve quality of human life through its research and innovation. There are many macro factors such as tax change, trade barriers, government policy, demographic changes that will affect the decision of managers of a company and to analyse all these factors, the management could categorise them using PESTLE model (Gillespie). It is a very useful tool for understanding market position, potential, business position and direction for operations.

This classification distinguishes between:

Political factors- These include change in government policies and its degree of interventions. Due to increasing social and financial burden on healthcare, political pressure has been created (verma,

2009).Government put pressure on these companies to sell at prices that may fail to pay for the development of new products or to recover the past development cost. The issue facing GSK is a decline in the pace of new drugs and patent expiration of some of the leading revenue producing drugs (wikinvest).
According to (Fleck, 2003) Under political pressure and pending lawsuit in the United States, British pharmaceuticals giant GlaxoSmithKline Plc announced on 28 April that it was cutting the prices of its leading COMBIVIR treatment for people with HIV/AIDS in poor countries by 47% to 90 US cents a day.

Economic factors- These include changes in interest rates, economic growth, taxation, inflation and exchange rates. Many major markets in which GSK operates are facing financial difficulty due to a sharp recession, resulting in declining sales, operations and difficulty in raising capital .Being a global company GSK conducts a large portion of its operations outside UK and fluctuations in exchange rates adversely affects its financial result (investegate, 2010) . GSK deals with high value transactions which may result to an increase financial loss because of risk positions in hedge funds and mismanagement of money. Social factors the demand for a certain product can be affected due to changes in social trends and willingness of individuals to work. Health is an important social and personal requirement and GSK plays an important role in meeting societies need for good health (verma, 2009).The impact of various global epidemic like Swine Flu, AIDS has resulted in media attention to the company. This forced the company to make efforts to create and maintain good industrial-government and society relations.GSK is trying very hard to engage AIDS problem in sub Saharan Africa, comparing to other pharmaceutical companies.GSK is recorded for giving the largest amount of global good causes among any FTSE 100 companies (Sarah Holland, 2005). Technological factors-Technology helps in creating new products and new processes. It can improve quality, reduce cost and lead to innovation (Gillespie).A technology change will benefit the consumer as well as the company. Development of a new product is important to the companys ability to increase sales and to replace older products upon expiration of patent rights. A product candidate can fail at any stage and may even fail to receive regulatory approvals (investegate, 2010). With good genomics, new ways of discovery and better technology to conduct test suggest that there could be a drastic reorganization of the company.

Environmental factors: these factors include climate and weather changes. With drastic climate changes due to global warming and with increasing environmental awareness this external factor is becoming a significant issue for firms to consider. The laws of various countries impose actual and potential obligations on GSK to remediate the sites. Failure to obligate properly these risks could result to additional remedial costs that could materially and adversely affect its financial result (investegate,

2010).GSK is aiming to cut its carbon emission to 55% by 2015 target (gsk).
Legal factors- In UK there have been many significant legal changes that made an impact in the companys behavior. These changes can affect the firms costs in the form of new systems and procedure and they may even disturb its demand. Failure to apply to these laws, rules and regulations may result in legal proceedings. In USA, GSK is responding to the state government investigations into pricing and marketing of drug products, these may also result to damages or fines in respect to violation of law (investegate, 2010).

The main strategy of GSK is to make a difference to the quality of life of people through medicines that are useful and add value for stakeholders and society. The company strategy makes sure that it is well positioned to manage the challenges that lie ahead.

Bigger Environment- GSK shows an upward trend in its entire market segment. The company is highly valued and has a strong market position and growth. The major issue with pharmaceutical industry is high competition and changes within the products. To maintain its competitive advantage GSK is being constantly upgrading its organizational structure and spending a lot in research and development (Pharmaceuticals Industry Analysis, 2009) . Ultimately, GlaxoSmithKline believes that its competitive advantage is dependent upon the discovery and development of new products, along with effective marketing of existing products (Mel).

How GSK competes with existing competitors like AstraZeneca, Avanti:

Key new products: GSK enhance its strong position by bringing innovative products, it just launched two drugs Avandia and seretide for the purpose of diabetes and asthma respectively (gsk). Key Therapeutic Franchises: GSK is planning to launch extra-strength formulations drugs for the pediatric and adults to meet demand for the bacterial resistance antibiotic.

Enhancing Research and Development Productivity: The main reason for its competitive position in relation to its competitors is the GSK s research and development activities and its continuous investment.

Conclusion GSK is facing a severe competition from other pharmaceutical companies and will continue to so in the future. It has always taken competition with a positive mind frame. It has to transfer its weaknesses into advantage in order to grow in the market.

marketing GSK is always involved with promotional practices that are ethical, responsible and principled (gsk, 2009). Over the last decade the database of GSK has changed dramatically and continues to change at a rapid pace. As new technologies come into existence, they bring along new sets of opportunities as well. Progress in science, innovation and technology continue to create fresh possibilities for new products and processes. In turn this has helped in increasing the pace of the industry and thus major players must keep up with changes or else they ll be left out (The History and Analysis of pharmaceutical company ) Despite rapid improvements in healthcare there are still many diseases for which no cure or treatments have been further developed. Dedicated testing and research is of paramount importance if we are to solve these ever growing problems. Hence as a result, in 2009 GSK spent around 3.95 billion pounds on research and development (gsk, 2009). Nearly 78% of this disbursement was in the pharmaceutical segment while the remainder was spent in vaccine research. It is one of the top 25 R&D investors globally. Together with AstraZeneca it dominated the R&D expenditure scene of UK s pharmaceutical sector with nearly 89% of the spend. Investment in R&D for the development of new medicines and vaccines is at the core of GSK S business. It is always in quest for the development of new methods of treatment that ll eventually help different patient groups. GSK and AstraZeneca have always dominated R&D expenditure by UK s pharmaceutical and biotechnology sector. As a consequence it reflects their stature amongst the global leaders of the industry. During the last few years, while AstraZeneca have increased their R&D expenditure more than their sales, GSK has seen a decline in its investment as compared to its sales. But it must be noted that both the companies have much larger operating profits in comparison to their sales than the other major players. (bis, 2008)

Product Life Cycle

A new product passes through a series of stages from introduction to growth, maturity and decline. This series is known as the Product Life Cycle and depends on various factors such as type of product, marketing strategy and market situation (Quick MBA). The product revenue and sales can be plotted in a graph as a life cycle changes, shown below.

The product life cycle of all the pharmaceutical companies is quite similar.the product cycle is divided into 20 years. y y 0-4 Discovery Stage: In this stage the firm build awareness and develops the market for the product. 4-11 Development Stage: In development stage, the firm builds preference for the brands and tries to increase its market share. The product quality is maintained and the firm decides the prices for the products and channels of distribution. 11-15 Post launch: There is a strong sales of the product as it has the monopoly over its patent. Product features may be enhanced to get a competitive advantage. Emphasis on promotion increases. 15-20 Maturity: The sales start declining. Competitors arrive with a similar product. The firm reduces the price of the product to stay in competition. After 20 years the patent expires and the competitors can produce a similar product.

strategy Fleck, F. ( 2003). GlaxoSmithKline,under presssure. world health organisation . Gillespie. (n.d.). Business & Economics. Retrieved from oxford university press: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm gsk. (n.d.). Environmental sustainability. Retrieved 2011, from gsk.com: http://www.gsk.com/responsibility/environmental/index.htm investegate. (2010, Feb Tuesday). GlaxoSmithKline PLC (GSK). Retrieved from a financial express website: http://www.investegate.co.uk/Article.aspx?id=201002251400016903H

Mel, S. d. (n.d.). Application of Porters five forces model to the Pharmaceuticals. Retrieved from http://sajitharchive.bravehost.com/Research/glaxo%20competitive%20analysis%20in%20the%20pharmaceuticals%20industry.htm Pharmaceuticals Industry Analysis. (2009). The History and Analysis of the. Retrieved from http://www.verbigena.com/case_studies/history_analysis.pdf Sarah Holland, B. B.-L. (2005). The Global Pharmaceutical industry. 187-212. verma, V. (2009). pest analysis on health industry. Retrieved from http://www.docstoc.com/docs/26765108/gsk-pharma-analysis wikinvest. (n.d.). Pharmaceuticals - Political pressure. Retrieved from http://www.wikinvest.com/concept/Pharmaceuticals_-_Political_pressure

marketing
bis. (2008). Pharmaceuticals and Biotechnology Sector Summary. Retrieved from http://webarchive.nationalarchives.gov.uk/+/http://www.dius.gov.uk/innovation/statistics_and_analysi s/randd_scoreboard/sector_summaries/pharma_biotech gsk. (2009, nov). marketting practises. Retrieved from gsk website: http://www.gsk.com/policies/GSKmarketing-practices.pdf gsk. (2009). Research and development. Retrieved from gsk.com: http://www.gsk.com/responsibility/global-health/research-development.htm Quick MBA. (n.d.). The product Life Cycle. Retrieved from Quick MBA: http://www.quickmba.com/marketing/product/lifecycle/ The History and Analysis of pharmaceutical company . (n.d.). Retrieved from verbigena: http://www.verbigena.com/case_studies/history_analysis.pdf