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Copy of GSK: Succesful Internal Innovation

MOT Case Study
by

Zahrah Farida

on 1 April 2013

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Transcript of Copy of GSK: Succesful Internal Innovation

Successful Internal Innovations 2001: GlaxoSmithKline started operations 2000: Planned Merger of Glaxo Wellcome and SmithKline Beecham was announced 1995: Glaxo and Wellcome merged to form Glaxo Wellcome 1989: SmithKline Beckman and the Beecham Group merged to form Smithkline Beeham plc. 1906: ‘Glaxo’ trademark is registered 1891: Smith, Kline and Company acquired French, Richards, and Company 1880: Burroughs Wellcome and Company was established 1873: Joseph Nathan and Company was established 1865: Mahlone Kline joined Smith & Shoemaker 1842: Beecham’s Pills brand launched 1830: John K Smith opened his first drugstore 1715 : Plough Court Pharmacy was established Company History About GlaxoSmithKline GSK is a science-led global healthcare company.
The company performs researches
and develops a broad range
of innovative medicines and brands.

Their products are used by millions of people
around the world and it helps them
to do more, feel better and live longer.

The commercial success of their brands depends
heavily on creating innovative new products.
In addition, the products are made accessible
to as many people as possible.

This global company is based in the United Kingdom,
and have offices in more than 115 countries.

Their business rely heavily upon innovative
and cutting-edge researches.
Therefore, it is no surprise that they have spent
just under £4 billion in 2012
purely for research and development activities. Primary area of business Pharmaceuticals Vaccines Consumer healthcare KEY PERSON Sir Andrew Witty
Joined GSK in 1985 
Previously held many Sales and Marketing roles in the UK and abroad
In 2003z he was appointed as President of GSK Europe
Joined GSK’s Corporate Executive Team
Became Chief Executive Officer of GSK on 21st May 2008
President of the European Federation of Pharmaceutical Industries and Associations (EFPIA).
Chancellor of the University of Nottingham LESSONS FROM GSK 1. Building an internal innovation foundation

Focus on internal research and development efforts

Focus on the best science and technology to deliver top quality products 2. Improving health through openness.

‘Open Innovation’ strategy 3. Reinvesting 20% profits from the least developed countries back into projects that can help strengthen healthcare infrastructure
Partnering with NGOs, governments and private companies to train healthcare workers and educate people on basic healthcare. 4. Building return
on investment in innovation. 5. Develop an innovative organisational culture 6. Efficient and effective
approach to allocate resources within R&D 7. Develops external
research unit in partnership with other firms and universities Grow a Diversified Global Business Employing 99,000 people in over 100 countries

Offices in more than 115 countries

Major research centres in the UK, USA, Spain, Belgium and China

Extensive manufacturing network with 87 sites globally.

Focuses on pharmaceuticals, vaccines, and consumer healthcare.

Increasing investment in higher-growth areas. Increased the externalisation of research,
allowing GSK to access new areas of science.

Small groups of scientists who are
accountable for their projects. Deliver More Products of Value Implemented a global restructuring program

New major change programme across R&D

Technological advances

Technological opportunities Simplify the Operating Model Innovation Driven 15% of GSK employees, approximately 14,850 employees, work directly on research.

Screens approximately 65 million compounds yearly for research.

In 2012, GSK invested almost £4 billion for R&D STRATEGIC
PERSPECTIVE DISCUSSIONS :
QUESTIONS & ANSWERS Focus in continous improvement in technology,performance,function and quality at a lower cost.

FINANCIAL CONTROL
focus on measuring whether the revenues generated have been in line with what was desired

STRATEGIC CONTROL
clearly delineated objectives and goals focus.The goals should be measurable so that progress can be evaluated at multiple points.and also important to identify major development hurdles and clearly define targets for technology development.

STRUCTURAL AND CULTURAL
Ensure that the firm has the best reporting and communication systems in place,help GSK monitor and improve the culture of innovation at the organization. What are the special planning needs for GSK? With dozens of potential drugs in the works, the company has a pipeline that includes twice as many late stage drugs as its nearest competitor. While the company will have to deal with major loses in patent protectionn in the next three to five years, its significant number of new products should help offset these losses.

If the products are not patented,the expenditure in R&D would get wasted,the competition could copy the drug very easily.So they should considering about patent protection in its planning.
What industry trends should a firm like GSK consider in its planning processes?

Based on GSK’s past performance, what do you believe are the critical implementation issues for GSK with regards to internal innovation?
- GSK created 70 DPUs focused on eight major therapy areas. Among those 35 percent of discovery projects has been terminated. As a result they have earned lower profit than before. The efficient management of the firm’s structural change is critical to GSK’s internal innovation efforts.

- In 2008 GSK spent over 10 percent of its revenue on R&D, and increase annual cost reduction to develop a pipeline of new product.

- Protecting patent

-By 70 DPU working on eight therapy areas for future growth, they manage to implements some special program:
Funding of DPU
knowledge management system for information sharing across DPUs
efficient coordination within DPUs
reinforce organizational culture across DPUs
Drive innovation through employee focus within DPUs

With the restructuring of 2008,GSK made some fundamental changes in its alignment and fit processes.How might these changes affect the other critical areas of implementation? END.
THANK YOU! Roger Connor

Drives the delivery of the GMS strategy

Established for:

- Quality

- Safety

- Sustainability

- Customer service.  President, Global
Manufacturing & Supply (GMS)
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