The UK leads Europe in Biotechnology and is second in the world in terms of capitalisation, beaten only by the US. 46% of Europe’s biotech companies are British. More than 50% of European drugs in clinical trials are British. This is partly due to the consolidation of maturing companies and in the continuing investment by venture capital groups and institutional investors (the venture capital industry has invested some 344 million in biotechnology over the last ten years).
The Pharmaceutical Industry is the second largest contributor to Gross Domestic Product behind Financial Services. There are several very big players in the UK with GlaxoWelcome, SmithKline Beecham and AstraZeneca being the three largest UK based companies. In America the largest organization (in capital terms) is Merck Sharp and Dohme (MSD), and until recently this was the world’s largest company. In recent years with the merger of Glaxo Welcome and Smith Kline Beecham to form GSK, Merck Sharp & Dohme have been relegated to second position.
There are three distinct types of pharmaceutical companies in the UK:
* Research and Development (An Integrated Company)
* Research Only – i.e. Biotechnology
* Contract Pharmaceutical Organization (CPO) i.e. Snyder and Ashfield
Problems faced by Biotech companies
A recent Commission survey of private biotech companies and public research institutes reveals that 39% of the respondents have cancelled research projects on Genetically Modified Organisms (GMOs) over the last four years. The European Research Commissioner Philippe Busquin said, “In the private sector alone, 61% of respondents have cancelled research projects in this field. Furthermore, between 1998 and 2001, the number of notifications for GMO field trials in the EU declined by 76 %. Now that legitimate consumer and environmental concerns have been tackled by strict EU legislation, it is time to reverse this downward trend. If we do not react, we will be dependent on technology developed elsewhere in the world within the next ten years.”
Enterprise and Information Society Commissioner Erkki Liikanen said: “Practically the entire European biotechnology industry is facing difficulties due to the collapse in investor confidence in knowledge-based industries. Many small biotechnology enterprises, working on medical, industrial, agricultural and environmental applications, are unable to get the funding they need to turn their research findings into a commercial reality. If a large number of such enterprises were to fail, it would seriously undermine knowledge that is critical to the long-term competitiveness of major European industries. Concerted action, involving public authorities as well as the private sector, is needed to improve the investment climate for biotechnology in Europe.”
The EU Strategy for life sciences and biotechnology
In January 2002, the Commission adopted a Strategy for Europe on Life Sciences and Biotechnology, including policy recommendations and a 30-point Action Plan. It proposes a comprehensive roadmap up to 2010 and puts the sector at the forefront of frontier technologies, helping the European Union meet its long-term strategic goal established by the Lisbon European Council in March 2000: to become the most competitive and dynamic, knowledge-based economy in the world, capable of sustainable growth with more and better jobs within a decade.
The Action Plan tackles issues such as human resources in life sciences, research, management of biotech companies, legal issues, intellectual property rights, access to finance, networking of players in this field, the role of public authorities and regulators, public debate and dialogue with stakeholders, ethics, pharmaceutical legislation, GMO regulation, the international framework, and EU policy in developing countries (including agriculture, genetic resources and health).
European institutions support this integrated approach as the way to achieve the Lisbon objective of promoting this high-technology area. Life sciences and biotech can foster growth, create new jobs and benefit a wide range of sectors such as health and agriculture, while at the same time contributing to broader goals, such as sustainable development.
In anticipation of the 2003 Spring Council, the German Federal Chancellor Gerhard Schrder, French President Jacques Chirac and British Prime Minister Tony Blair have stressed the potential of biotechnology to improve European industrial competitiveness and ensure employment opportunities. At the same time, they underlined the importance of developing all aspects of European business to achieve the Lisbon Strategy.
Progress, delays – and the need for action
To assess biotech company’s progress in implementing certain strategies concerning fields such as research, science and society, competitiveness, innovation, access to finance and intellectual property, Genetically Modified Organisms (GMOs), and international issues (the impact of the current situation on GMOs on relations with trade partners and developing countries).
In line with the European Action Plan timetable, the Commission has made progress on a wide range of specific actions and has supported various independent actions undertaken by European regions, academia and industry alike. In some Member States a number of measures are already in place, which ties in with Biotechnological Strategies.
Research in Europe
Although strategy implementation is still at an early stage, a certain amount of progress has been made. A notable achievement has been the adoption of the 6th EU Research Framework Programme (FP6 2003-2006), which will continue to underline basic scientific research and help to build the European Research Area in this and other fields. FP6 devotes 2.225 billion to life sciences, genomics and biotechnology for health. A further 685 million will be dedicated to food quality and safety.
However this is a relatively small amount compared to private investment in this field. European biotech companies invested 7.5 billion in research last year, and biotech-related industry, such as pharmaceuticals and chemicals, substantially more.
These companies are making a bigger contribution than other sectors to achieving the Barcelona European Council target, to allocate 3% of Gross Domestic Product (GDP) to research in Europe. If the current trend towards moving biotech research outside Europe continues, this contribution will decrease.
Competitiveness and innovation
To foster competitiveness and innovation in this field, the Commission calls for better co-ordinated research across Europe, better access to finance, in particular to risk capital, and for clear, equitable, affordable and effective intellectual property rights regime in Europe. This requires the swift adoption of the Commission proposal for a Community Patent, and transposition into national legislation of the Directive on biotechnological inventions by non-compliant Member States.
Considerable progress has been made on the legislative framework surrounding GMOs. The new regulatory framework on GMOs, including the Commission’s proposals on traceability and labelling of GMOs and on GM food and feed, provides legal certainty for operators. It also addresses public concerns and aids consumer choice, thereby encouraging further public acceptance of GMO use. It is also important that the regulatory framework is clear and predictable if the rapid decline in European GMO field research is to be reversed.
Science within the Community
Rapid advances in life sciences have created high expectations for curing diseases and improving quality of life, while raising concerns as to their ethical and social consequences. The Commission is committed to ensuring that ethical, legal, social and wider cultural aspects are taken into account in policy-making and research funding. Sensitive issues include human reproductive cloning. The Commission supports a worldwide ban on this issue whereas on human embryonic stem cell research, the Commission will present a report to the European Parliament and Council shortly, as the basis for an inter-institutional seminar on this kind of research.
Biotechnology is currently discussed in many international fora. This is a reflection of the different concerns and objectives surrounding biotechnology, but raises a question of international governance. It is therefore essential to create an adequate forum for promoting an open and transparent dialogue between all stakeholders concerned, facilitating mutual understanding of the concerns and objectives of the different countries and regions. Therefore the Commission recommends giving further consideration (together with all trading partners) to the need for a multilateral consultative forum to contribute to building international consensus on biotechnology.
The role of GSK
GlaxoSmithKline (GSK) is a world leading research-based pharmaceutical company with a powerful combination of skills and resources that provides a platform for delivering strong growth in today’s rapidly changing healthcare environment. Headquartered in the UK and with operations based in the US, the new company is one of the industry leaders, with an estimated seven per cent of the world’s pharmaceutical market.
GSK also has leadership in four major therapeutic areas – anti-infectives, central nervous system (CNS), respiratory and gastro-intestinal/metabolic. In addition, it is a leader in the important area of vaccines and has a growing portfolio of oncology products. The company also has a Consumer Healthcare portfolio comprising over-the-counter (OTC) medicines; oral care products and nutritional healthcare drinks, all of which are among the market leaders.
Based on 2002 Annual Results, GSK had sales of 21.2 billion ($31.8 billion) and profit before tax of 6.5 billion ($9.7 billion). Pharmaceutical sales accounted for 18 billion ($27 billion) with new products representing 27% of total pharmaceuticals sales.
Research and development
As a research-based pharmaceuticals business GlaxoSmithKline must continually renew its product portfolio and the company has already invested over 1.2 billion in 2001 in research and development. The Group continues to pursue opportunities to license in new compounds in development to bolster its product pipeline.
GSK R&D is based at 24 sites in seven countries. The company has a leading position in genomics/genetics and new drug discovery technologies. The GSK R&D budget is about 2.4bn/$4bn.
One of the company’s most important products is a treatment for asthma called Advair Diskus as it was effective in decreasing inflammation and Bronchoconstriction and was easy to use. Sales figures after two months on the U.S. market exceeded expectations as they reached $ 100 million. In Europe this product is known by the name Seretide.
In order to keep sustained income with which to pay the expense of research and development GSK have invested in the ‘Block Drug’ business and in doing so is now one of the major competitors in Consumer healthcare throughout the world. Block Drug’s portfolio includes many well-known brands such as Sensodyne toothpaste, Polident denture cleansers and Poligrip denture adhesives.
Earnings per share
Trading profit increased more than the increase in sales as savings from the integration plans started to flow through. After other items, interest and tax, business performance earnings per share grew at 13 per cent CER, 19 per cent in sterling, over the comparative period of 2000. The company remains on track to deliver business performance earnings per share growth for the full year 2001 of around 13 per cent, or 18 per cent in sterling if exchange rates hold around 30th June levels. As seen in the table below there is a steep rise in post tax profits after the companies merger in 2000 and then after initial investment there is further rise up to 2002.
Operating profit (reported)
Operating profit (adjusted)
Pre tax profit
Profit after tax
Figures taken from Hemscott share price index and gsk financial report
GlaxoSmithKline continues to implement the manufacturing restructuring plans initiated by both SmithKline Beecham and Glaxo Wellcome and is proceeding with the integration of the two businesses, together with that of Block Drug. Pre-tax merger and manufacturing savings are now expected to reach 1.8 billion per year by 2003.
GlaxoSmithKline is at the forefront of the fight against HIV/AIDS and has led the development of anti-retroviral medicines, which are having a positive impact against the HIV virus. A strong pipeline of new medicines in early development underlines the company’s determination and commitment to continue delivering innovative medicines and services to patients in the years to come.
Today’s consumers want to know more about their healthcare concerns and options, and take more control of their therapies. This growth in information and knowledge is fuelled by the dramatic rise of the Internet and associated technologies. It is important for Biotech companies to respond to this growth in demand for knowledge, by building a dialogue with consumers and creating greater knowledge and awareness of medicines.
Not only are GSK the principal producers of therapeutic drugs they also has a number of locally developed products such as vitamins, analgesics and cough and cold remedies, which are predominantly manufactured and marketed in Central & Eastern European markets.
GlaxoSmithKline Consumer Healthcare brings oral healthcare, over-the-counter (OTC) medicines and nutritional healthcare products to millions of people in Europe.
Brand names such as the analgesic Panadol, Aquafresh toothpaste and toothbrushes, the energy drink Lucozade and NiQuitin CQ smoking cessation products are household names. In one year, GlaxoSmithKline Consumer Healthcare produces – among many other products – nine billion tablets to relieve stomach upsets, six billion tablets for pain relief and 600 million tubes of toothpaste.
The driving force behind GlaxoSmithKline’s Consumer Healthcare business is science. With four dedicated consumer healthcare Research ; Development (R;D) centres, of which one is in the UK, and dedicated regulatory affairs teams, the business is dedicated to scientific innovation. It is therefore a driving force in the biotechnology field.
GlaxoSmithKline has a wide variety of vaccines, including vaccines against hepatitis A and B, diphtheria, tetanus and whooping cough, polio and influenza. Their Headquarters in Rixensart, Belgium, GlaxoSmithKline Biologicals is the world’s leading vaccine manufacturer with 25% of the world vaccine market. They are committed to discovering new vaccines and developing more cost-effective and convenient combination vaccines to prevent infections, which cause serious medical problems worldwide.
Responsibilities as a leader in Europe
With opportunity comes responsibility. In Europe, biotech companies operate in a constantly evolving political, social and economic environment. Demands are such that they must advocate:
Access to the highest quality medicines for all European citizens;
Completion of the single market for pharmaceuticals;
A competitive European pharmaceutical market with liberalisation in pharmaceutical pricing, especially for medicines that are not paid for by governments;
Efficient and innovative national healthcare systems, preserving unity throughout society;
Increased patient involvement and responsibility for personal healthcare, which include greater access to information and education on medicines from pharmaceutical companies;
European Union collaboration and full acquiescence with existing EU law;
An informed debate on the ethical, legal and social implications, as well as the benefits, of research technologies, e.g. genetics, data privacy, clinical trials.
In the developing world, millions of people do not have access to the most basic healthcare services, including medicines. Developing new medicines is not enough if the patients who need them are denied access to treatment. In an ideal world, all patients, regardless of economic status, would have access to life-saving medicines. Therefore it is important to make access to products a key priority.
There are certain key areas in which to achieve real and sustainable results:
Continued Investment in R&D
GlaxoSmithKline is the only company currently involved in Research and Development for both prevention and treatment of all three top priority diseases of the World Health Organisation (WHO): malaria, tuberculosis and HIV/AIDS
The price plan
GlaxoSmithKline claims it has a strong tradition in providing medicines to the developing world at preferential prices notably for HIV/AIDS antiretroviral treatments since 1997. However some journalists argue that GSK is one of the worst Biotechnological companies in this respect.
In less developed countries only very few people can afford the relatively expensive drugs that are available on the global market. For this reason large potentially profit-making companies such as GSK have come under great scrutiny. If the health of the developing world is to improve, then all sectors of our global society – governments and international agencies, as well as the private sector – must work together in new kinds of partnership, backed by significant public funding.
It is due to this sort of scrutiny that GlaxoSmithKline has recently published its first review on Corporate Social Responsibility (CSR). The document “Performance with Integrity: a review of its commitment to society and the environment” outlines GlaxoSmithKline’s activities and policies across a range of issues, including ethics in business, ethics in the conduct of R;D, access to medicines for the developing world, environment, health ; safety, and employment practices.
GSK have a strong amount of early-stage products with 118 projects in clinical development, including 56 new chemical entities, 21 new vaccines and 41 line extensions.
Biotech firms measure this productivity, not just by the number and innovative nature of the medicines, but also by their value. Commercial value is a measure of a medicine’s ability to address the unmet needs of healthcare customers including patients, healthcare professionals, budget holders and regulators, each with their own perspective on what constitutes a valuable new medicine. R&D aims to generate the right information to respond to these different perspectives, i.e. safety, efficacy and quality information, and also data demonstrating the overall reductions in healthcare utilisation as a result of the use of the new medicine, increased length or quality of life, and increased workplace productivity.
In 2001, GSK invested 2.4 billion in worldwide R&D, of which 1 billion was spent in the UK alone. With the ever- increasing number of biotechnology research teams GSK (having previously been alone in this field) has competition in the race to find important vaccines and cures for diseases such as malaria and tuberculosis.
Research and development teams within biotech firms are responsible for discovering, developing, registering, commercialising and supporting appropriate marketing of prescription medicines and vaccines for the treatment and prevention of human disease.
Scientists in Genetics Research are applying the knowledge gained from the recent sequencing of the human genome to pharmaceutical R&D. Researchers world-wide, are working to identify genes that are implicated in disease and to characterise their function.
Aids victims in Botswana
Collaborations between GSK scientists and other clinical and academic groups have helped identify likely susceptibility genes for Alzheimer’s disease, psoriasis, migraine and Parkinson’s disease. These breakthroughs may lead to the identification of new targets for more effective drug therapy.
GlaxoSmithKline is a leader in the field of Pharmacogenetics, which is the study of how genetic factors affect people’s responses to medicines.
In the future it should be possible to predict who will respond well to a medicine and who might be at risk of an adverse reaction based on an individual’s unique genetic profile. GSK have recently made significant investments in new ultra-high throughput screening facilities in the US, UK and Spain. This will increase the speed and accuracy with which they can find potential cures from large libraries of potential genetic antidotes.
In the area of drug discovery where flexibility and efficiency are important, smaller entrepreneurial Centres of Excellence for Drug Discovery (CEDDs) have been created to focus on specific diseases and therapeutic areas. These centres are designed to be agile and creative to maximise the number of quality molecules that enter the development process.
Research & Development in Europe
GlaxoSmithKline has a large portfolio of products, ranging from tablets and toothpaste to inhalers and complex capsules, in over 36,000 different pack sizes and presentations.
The Global Manufacturing & Supply Network has 30 sites in nine countries (UK, Ireland, Spain, France, Belgium, Romania, Germany, Poland and Italy) in the European region employing 16,000 people.
Between them, the European sites manufacture virtually the entire range of major pharmaceutical medicines marketed by GlaxoSmithKline globally.
Global Manufacturing and Supply (GMS)
Biotechnology firms have other responsibilities as large successful companies in the aid of the developing world that are not just product based.
GlaxoSmithKline, through its Global Community Partnerships team, works to support health and education initiatives in underserved communities throughout the world.
In Europe, the focus is on improving children’s health and to identify areas of need where Biotech firms can make a difference, and work with qualified organisations to build programmes that can be reproduced in communities with similar needs elsewhere. The emphasis is on bringing essential funding and effective management together so that company’s assurances are translated into tangible benefits for communities.
At the heart of it all, however, are people, and each programme tells a powerful story of how business, charitable organisations and communities can come together to make a real difference in people’s lives:
Project Hope, Bosnia – Project HOPE (Health Opportunities for People Everywhere) is a paediatric rehabilitation programme for children injured during the conflicts in Bosnia, Russia and the Ukraine.
Barretstown, Ireland – Barretstown offers seriously ill children an environment to have fun, and develop self-confidence. Over 1,000 children attend each year from 21 countries around Europe.
L’Envol- in France there is a similar program running which is more medical based; treatments such as chemotherapy.
Mayenne -There is a project in place regarding the elimination of
Since 1998, GlaxoSmithKline has been working with the World Health Organization (WHO) on an ambitious health programme to eliminate the disease Lymphatic Filariasis (LF), also known as elephantiasis. This is a disabling and disfiguring parasitic disease that affects 120 million people in 73 countries.
There aim is to donate sufficient quantities of our medicine albendazole for use in all lymphatic filariasis endemic countries for as long as it takes to eliminate the disease. They are also providing essential financial support to WHO and other organisations to enable implementation of treatment programmes in affected areas. By 2002, GlaxoSmithKline had already donated 100 million albendazole treatments as part of our commitment to eliminate Lymphatic Filariasis.
AstraZeneca We’re reporting Annual report and form 2002
Bioinformatics- From Genomes to Drugs Thomas Lengauer (ed.)2001
GlaxoSmithKline The impact of Medicines Annual review 2002
www.raps.org/2002europe/plenary.cfm European Union Health Research