In 2001, the debacle of Acquired Immune Deficiency Syndrome (AIDS) outbreak in South Africa has hardly dealt with by GlaxoSmithKline (GSK) in the middle of controversies involving the GSK’s corporate management, South African government, civil society groups, media organizations and practitioners, stakeholders of the pharmaceutical industry and the public. GSK’s worst case-scenario management was how to maintain a viable venture of its medicines amidst controversial selling and distribution of drugs to Africa.
This case study paper will discuss and analyze the results of settling down the controversial issue of GSK in South Africa, relating how the issue has been settled and GSK alternately deployed its product-market. The paper will be discussed in four parts. Part 1: Case Summary Since the outbreak of the dreadful AIDS disease in sub-Saharan Africa in the mid-90s, many international pharmaceutical companies have found the opportunity for drug distribution, expecting substantial surge of profit.
In 1997, the implementation of the Trade-Related Intellectual Property Rights (TRIPS) by the World Trade Organization (WTO) has granted GSK with a 20-year marketing exclusivity to South Africa as a member country to WTO. Consequently, the granting of the exclusive market distributorship of WTO-TRIPS to GSK has been the center of controversial issue, criticizing that GSK could have total control or monopolize the distribution of therapeutic drugs for AIDS since its medicine brand patents and pricing are the only ones approved by WTO-TRIPS.
As cited, the lobbying of several non-governmental organizations spearheaded by a cause-oriented group of Oxfam and interacted by leading industry competitors of GSK have campaigned for price-cuts of AIDS-drug distribution to South Africa (Lawrence, 2002). The public resistance over GSK’s sole distributorship has even more intense since it found out that a similar drugs for AIDS has been formulated with the same efficacy and of cheaper price. Accordingly, the Chemical Industrial and Pharmaceutical Laboratories (CIPLA Ltd.
) from India has formulated “Douvir” to compete with GSK’s “Combivir” brand of AIDS-drug which was offered to South African government at a cheaper and discounted price. Thus, the inclusion of CIPLA’s Douvir to South African government’s hospitals and distribution throughout the local pharmaceutical outlets has claimed by GSK to violate the compliance to “global intellectual property rights” under the WTO-TRIPS having South Africa as a member country. A lawsuit against South African government was filed by GSK and its stakeholder companies on claim of violating its market distribution exclusivity for AIDS-drug under the WTO-TRIPS.
However, it was ruled out by the South African Legislative body that “having GSK’s sole distributorship for a high-cost AIDS-drug to Africa defeats the requirement of the state to providing affordable and necessary available medicines to immediately eradicate the virulent disease that plague every African lives”, wherein CIPLA’s distributorship was a cost-beneficial offer to South Africa. On April 19th 2001, GSK withdrew its case followed by the court’s interpellation upholding the counterclaim of the South African government.
Part II: GSK’s market positioning Based on the year 2009 industry update, GSK’s global market positioning is outlined in its year 2008 Corporate Responsibility Report, earmarking the venture in significantly emerging markets which are considerably poor and unable to access quality medicines. To cite, GSK’s corporate-social responsibility aims to reaching out the commitment to making available the quality medicines at a reduced pricing of about 45 percent in lesser developed countries effective on April 1st 2009 (GSK.
Com, 2009). As outlined in the 2008 GSK Corporate Responsibility Report, key corporate strategies will be implemented in 2009, such as (1) exploring flexibility on “intellectual property rights” to grant about 500 patents (with 300 pending application) to consolidate for developing substantial therapeutic drugs, (2) price reduction of “patented medicines” in lesser developed countries, and (3) invest GSK’s 20 percent of net sales revenues to help strengthen the establishment of healthcare infrastructure (GSK. Com, 2009).
In summary, the GSK’s market repositioning and targets for 2009 has been initiated by its CEO Jean-Pierre Garner who strategized product marketing by merging or acquiring international and local pharmaceutical companies to venture in therapeutic drug distribution worldwide, retracting the marketing position of GSK that the merging and acquisition of GSK for significant numbers of patenting pharmaceutical companies would ensure the delivery, availability and affordability of quality medicines throughout the global population, specifically in developing and lesser developed countries.
Part III: Linkages of the case to global business and societies The case of GSK can be linked to the development of global business and societies. The San Jose State University (SJSU) College of Business has found the empirical evidence that traces how transnational enterprises (like GSK) diversify into globalization of business.
As cited, the empirical study pointed out the indicators for globalization, such as (1) developing of “global market channels” when a locally-established venture succeed, (2) setting up business operations globally through establishing production plant or partnership abroad, and (3) developing and establishing “global supply chain” in the acquisition of raw materials and overseas labor force (SJSU College of Business, 2009).
Reflective of the empirical findings of SJSU College of Business on globalization or diversification of business in a global scope of operation, it is evident that GSK patterns the global venture through its key strategic approach to mergers and acquisition of pharmaceutical companies abroad.
It may be also perceived that the “drop-off-point” of the case in South Africa, pertaining to the withdrawal of the case, has opted GSK’s global operation with same “operational component” of product-market deployment which is equated to continual distribution of therapeutic drugs at a broadest marketing pipelines of merging local pharmaceutical industries to be established in lesser developing countries. Part IV: Analysis and conclusion on corporate management involvement
The case study depicted in this paper briefly analyzes that GSK has been into global market positioning as indicated by obtaining WTO-TRIPS grants on global intellectual property rights that has succeeded market distribution exclusivity in South Africa as a WTO-member country. In effect, it may be further analyzed that every member country of the WTO from lesser developing economies which are suffering from any pandemic diseases [like of South Africa] can be the potential market targets of GSK in product deployment.
Moreover, as indicated in the GSK’s key corporate strategies for global diversification of business, the merging and acquisition of small yet significant local pharmaceutical companies abroad could surely mobilize the capital investments of GSK to acquire global partnership. In which case, what the SJSU College of Business has been pointing into indicates GSK’s setting up of global business operation, relating the character or business culture of a transnational corporation’s globalization from production to marketing, joint-venture operation (merging and acquisition) and relatively the possible controlling of product-pricing.
On the other hand, CEO Jean-Pierre Garner’s corporate-social responsibility in the share of “social investments” from profitable revenues can merely “sugarcoat” the diversified global capitalization at the “least share” to communities. In conclusion, the case study has found that globalization of industries makes vulnerable the lesser developing countries as always a potential market of transnational companies, like the GSK in South Africa. Thus, globalization patterns the liberal market amidst the plunder of war, famine, hunger and poverty in the so-called third world economies.
References GSK. Com (2009). ‘2008 Corporate Responsibility Report’. Retrieved 02 April 2009 from http://www. gsk. com/media/pressreleases/2009/2009_pressrelease_10036. htm. Lawrence, A. T. (2002). ‘GlaxoSmithKline and AIDS Drug for Africa’. Western Case Writers Association. Retrieved 02 April 2009. San Jose State University College of Business (2009). ‘BUS 166 Power Point Slides: Chapters 7 and 8’. Retrieved 02 April 2009 from http://www. cob. sjsu. edu/doty_l/166sp09ppt. asp.