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By: Sasha Richardson, Serge Savasta, Kedar Iyer,Daniel Traylor,
Philipp Haenle
Best in France Case Study
GlaxoSmithKline
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Executive Overview
GSK - Worldwide
GSK - France
GSK - Products
GSK - Clients
Why France?
GSK - Values
Adaptation to FranceConstraints in France
Key Benefits
Essential Advice
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GSK - Worldwide
GlaxoSmithKline (GSK) is a world leading
research-basedpharmaceutical company
GSK R&D is based at 24 sites in 11 countries
Headquartered in the UK
Operations based in the US
One of industry leaders (est. 7% of world's pharmaceutical
market)
Leader in four major therapeutic areas:
- Anti-infectives
- Central nervous system (CNS)
- Respiratory
- Gastro-intestinal/Metabolic
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GSK - Worldwide
2004 Annual Results GSK worldwide:
- Sales of 20.3 billion
- EBIT 6.1 billion ($11.1 billion)
- Pharmaceutical turnover : 17 billion
- Consumer healthcare turnover : 3.2 billion
100,000 employees worldwide
40,000 in sales/marketing
35,000 employees at 82 manufacturing sites in 37 countries
15,000 in R&D ( R&D budget ~ 2.8bn/$5bn)
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GSK - France
Registered in May 2001 in Marly - le Roi
5650 employees in 4 production sites:
Evreux, (2 000 employees), Mayenne, Hrouville, NotreDame de
Bondeville, Ulis (main research site)
2nd largest branch after US; Largest GSK branch inEurope
3rd largest pharmaceutical group in the French market
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GSK - France
2004 Revenues3.23m
2 main activities:
- GlaxoSmithKline Labs (account for 95 % of sales)
- GSK Public Sector (5% of sales i.e non-prescription &
OTC)
Contribution by Business Unit:
- Pharmaceuticals: 1.425m
- Export : 1.634m
- Public sector (non prescription&OTC) 0.172m
315,6 million Units produced for over 100 countries
65% of French production output for export
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GSK - Products
GSK is a leader in four major therapeutic areas-anti-infectives,
central nervous system (CNS), respiratory
andgastro-intestinal/metabolic.
In addition, GSK is a leader in production of vaccinationsand
has a growing portfolio of oncology products.
The company also has a Consumer Healthcare portfolio
comprising over-the-counter (OTC) medicines, oral careproducts
and nutritional healthcare drinks, all of whichare among the market
leaders.
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Pharmacological Products produced inFrance:
Anaesthesia
Anti-asthmatics
Antibiotics
Anti-malaria
Anti-thrombolytics
Anti-viral
Cardiovascular
Dermatological
Gastro-intestinal
HIV treatments
Neurological
Oncological
Oral Anti-diabetics
Respiratory
Rhinitis/anti-allergy
Smoking Cessation
Urology
Vaccines
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GSK - Clients
Who are GSKs clients?
GSK's clients are Patients.
However, as selling/advertising directly to customers
isprohibited in France, GSKs customers are the doctorswho write
prescriptions. Based on demand created byprescriptions, GSK sells
through two primary distributionchannels, wholesalers &
retailers (pharmacies)
How does a presence in France help or hurt the
company's ability to satisfy client demands?
France is the largest market in Europe, so GSKspresence in
France is imperative
French made is perceived as high quality
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Why France?
The pharmaceutical industry is global
A must to be present in the largest Europeanmarket in order to
maintain competitive in the
pharmaceutical industry
France is the second largest market in the worldfor
pharmaceutical products
To foster partnerships with governmentauthorities and lobby for
new drugs
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GSK - Values
Core Values:
Transparency
Innovation
Partnership with all stakeholders
Be reactive/responsive in order to bring new
medicines to the patient
Performance with Integrity
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GSK - Values
French value system:
Emotional
Achievement oriented
Collaborative and team oriented
and their fit to the French Culture
Hence, difficult to implement, but graduallyadaptive and
successful.
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Adaptation to France 1/2
Easy adaptation to the French market due to GSKs European
origins and familiarity
with stringent regulations common to the industry.
Few hurdles with respect to people management.
Broad talent pool of highly skilled engineers and upper level
managers (excellentengineers, scientists, researchers make France a
great fit for an R&D based industry).
Middle management is the weak link in the French labor
market.
Struggle to recruit star international candidates. Paris is not
seen as a location
with high growth opportunities to build a career.
Management development needs to focus on international and
leadership notions tobetter fit to the Groups culture.
Workforce Planning made difficult by the lack of flexibility of
French employment
systems. Unions are critical link; lasting relationships with
unions ease workforceproblems.
People management
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Adaptation to France 2/2
Team performance is valued more than individual performance.
Hence,Performance appraisals are closely linked with team
performance outcomes.
Performance based compensation is less relevant than in
Anglo-Saxoncorporate cultures.
Motivation practices such as the employee of the month
nomination areabsolutely prohibited in France.
Job Design and Job Assignment fit French regulatory and
culturalconstraints.
Communication with personnel account for recurrent negative
criticismsbut positive counter proposals are characteristic to
French culture.
Paris was natural choice for their headquarters to launch
operations inFrance as real estate costs were a negligible part of
GSKs operations
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Constraints in France
Cumbersome to acquire work papers for internationaltransfers
from non-EU states.
Social security and firing costs in France are higher inEurope,
but the high quality human resource pool largely
makes up for the social costs.
GSK, a global enterprise, established a work force
basedprimarily on the French labor pool, thus communicationproblems
never existed; top executives and many othermanagers speak fluent
English.
GSK France operates as a subsidiary to GSK Worldwide,allowing
for some degree of autonomy in operations; thisapproach also
nullifies French management integrationissues.
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Key Benefits
What are the key benefits of being in France?
Product quality: high quality manufacturing facilities built
andoperated by leading French managers, engineers, and laborers;GSK
positively reinforces its brand by employing a French
laborforce.
France provides the largest revenue/profit center in
Europe;margins are consistent with company standards.
Location benefits: most employees are hired locally; living
inFrance is prerequisite for much of the work force.
Social security costs are relatively high, however the
associatedcosts are negligible when compared with the
revenuesgenerated in the French market.
Market growth and penetration come with innovation which
arelinked to R&D expenditures; market structure and
competitive
advantage are based on scientific breakthrough and
governmentapprovals.
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Essential Advice 1/2
What advice do you offer to other companies in this sector
concerning use ofFrance as a location?
1. Before coming to France
Assess the available market share: French market is the
largestpharma market in European. Entry in the market requires
a
pharmaceutical company to set up a large subsidiary in France.
Withoutprospects for significant market share, market entry must be
re-thought.
Clearly identify the employment rules and fiscal policy
constraints:Entry in the French market needs substantial capital
expenditures,including set up and approval costs uncommon in
neighboring Europeanstates.
Relationships with labor officials and medicine regulators is
critical(Scurit Sociale, Ministre de la Sant, Authorisation de Mise
sur leMarch, etc.) French market entry is aided by job creation,
corporateheadquarters, production facility development, and R&D
researchprograms. Maintaining a healthy working relationship with
theauthorities is absolutely necessary since regulatory authorities
controlthe medicine market, advertisement & pricing policy.
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Essential Advice 2/2
2. Adaptating to France
Maximize efforts on R&D: France produces highly talented
researchers that aidinnovation necessary for growth. The
pharmaceutical industry is about R&D. Inaddition, performing
R&D in France means investing in French knowledge.
Thisfacilitates the establishment and maintenance of cooperative
relationships with
health authorities.
Size manufacturing based on a hub strategy for Europe. France is
nearly the
largest market in Europe (in under 3 years, according to recent
studies).Manufacturing products in France enhances quality
standards. However, a closelook must be taken at the potential to
use French manufacturing facilities as hubsfor Europe and Africa
for example.
3. Future investments in Europe
Invest in Eastern European countries, like Poland, for
manufacturing may costssavings become key in this extremely
profitable industry; manufacturing could bere-located to countries
within Europe with lower cost of living.
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We Thank
Mr. Patrice BRIOL, HR Director (Corporate and Scientific
HR)[email protected], +33 1 39 17 80 28
Ms. Sophie MARCHANDISE, Financial
[email protected]
Mr. Jean-Francois CHAMBON , Director of Public
[email protected]
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Our Team
Sasha Richardson, [email protected]
Serge Savasta [email protected]
Daniel Traylor [email protected]
Kedar Iyer [email protected] Philipp Haenle
[email protected]
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