Glaxosmithkline Pharmaceuticals Ltd:Annual Report 2023-24 Analysis

GlaxoSmithKline Pharmaceuticals Ltd: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

GlaxoSmithKline Pharmaceuticals Ltd. (GSK India) has a long history rooted in its parent company, GlaxoSmithKline plc, a global pharmaceutical giant. The origins in India date back to 1924 with the establishment of H.J. Foster & Co., later evolving into Glaxo Laboratories (India) Private Limited in 1950. Burroughs Wellcome & Co. established a presence in India in 1912, eventually merging with Glaxo to form Glaxo Wellcome India Limited in 1996. Finally, the global merger of Glaxo Wellcome and SmithKline Beecham in 2000 resulted in GlaxoSmithKline Pharmaceuticals Ltd. in India.

Headquarters Location and Global Presence:

The headquarters for GSK India is located in Mumbai, Maharashtra, India. GSK itself is a global company with a presence in over 150 countries. While GSK India primarily focuses on the Indian market, it also contributes to GSK’s global supply chain.

Company Vision and Mission:

• GSK’s Global Vision: To be a leader in science and technology, delivering innovative medicines, vaccines, and consumer healthcare products that improve the lives of people around the world.
• Mission: To improve the quality of human life by enabling people to do more, feel better, and live longer.

Key Milestones in Their Growth Journey:

• 1924: H.J. Foster & Co. established.
• 1950: Glaxo Laboratories (India) Private Limited established.
• 1996: Glaxo Wellcome India Limited formed.
• 2000: GlaxoSmithKline Pharmaceuticals Ltd. established following the global merger.
• Significant expansion of manufacturing facilities and product portfolio over the years.
• Strategic partnerships and collaborations to enhance research and development capabilities.

Stock Exchange Listing Details and Market Capitalization:

GSK India is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). (Market capitalization data should be updated from a live source.)

Recent Financial Performance Highlights:

(Provide data like revenue, profit, growth rate, and key financial ratios from their latest annual reports and quarterly updates. Mention specific figures and period).

Management Team and Leadership Structure:

(Name of Managing Director and key leaders. The leadership structure typically involves a Board of Directors and a management team responsible for various functions like R&D, Manufacturing, Sales & Marketing, Finance, etc.)

Notable Awards or Recognitions:

(List any significant awards received for innovation, sustainability, corporate governance, or employee practices).

Their Products #

Complete Product Portfolio with Categories:

GSK India’s product portfolio spans a wide range of therapeutic areas, including:

• Pharmaceuticals: Anti-infectives, Respiratory, Vaccines, Dermatology, Central Nervous System, Metabolic Disorders, Pain Management, Oncology
• Vaccines: Pediatric Vaccines, Adult Vaccines (Influenza, Hepatitis, etc.)

Flagship or Signature Product Lines:

(List key brands that contribute significantly to GSK India’s revenue.)

Key Technological Innovations or Patents:

(Mention any innovative drug delivery systems, novel formulations, or patented technologies used in their products.)

Manufacturing Facilities and Production Capacity:

GSK India operates manufacturing facilities in [list locations - e.g., Nashik, Vemgal]. (Provide general details on production capacity. Specific numbers might be proprietary.)

Quality Certifications and Standards:

GSK India maintains stringent quality standards and certifications, including:

• Good Manufacturing Practices (GMP)
• ISO Certifications

Any Unique Selling Propositions or Technological Advantages:

(USP of products include focus on science, research & development, novel drug delivery systems, or combination therapies.)

Recent Product Launches or R&D Initiatives:

(Highlight any recently launched products, clinical trials in progress, or research collaborations. This information is usually available in their annual reports and investor presentations.)

Primary Customers #

Target Industries and Sectors:

• Healthcare Providers (Doctors, Hospitals, Clinics)
• Pharmacies and Retail Drug Stores
• Government Healthcare Programs

Geographic Markets (Domestic vs. International):

Primarily focused on the Indian domestic market. They contribute to global product supply within the GSK network.

Distribution Network and Sales Channels:

• Extensive network of distributors and wholesalers across India
• Direct sales force targeting healthcare professionals
• Partnerships with pharmacies and retail chains

Major Competitors #

Direct Competitors in India and Globally:

• Indian Competitors: Sun Pharmaceutical Industries, Cipla, Dr. Reddy’s Laboratories, Lupin, Torrent Pharmaceuticals
• Global Competitors: Pfizer, Novartis, Sanofi, Merck & Co., AstraZeneca

Comparative Market Share Analysis:

(Include overall market share and market share in key therapeutic areas. Data needs to be sourced from reputable market research reports).

Competitive Advantages and Disadvantages:

• Advantages: Strong global brand reputation, established presence in India, diverse product portfolio, focus on R&D, high quality standards.
• Disadvantages: Competition from generic drug manufacturers, pricing pressures, regulatory challenges.

How They Differentiate From Competitors:

Focus on innovative products, strong brand, high-quality standards, and ethical business practices.

Industry Challenges and Opportunities:

• Challenges: Increasing competition from generic drugs, pricing regulations, evolving regulatory landscape, rising R&D costs.
• Opportunities: Growing healthcare awareness in India, increasing access to healthcare, rising disposable incomes, government initiatives to promote healthcare.

Market Positioning Strategy:

Focus on being a leading, science-based pharmaceutical company providing high-quality, innovative medicines and vaccines in India.

Future Outlook #

Expansion Plans or Growth Strategy:

(Growth is expected through new product launches, expanding into new geographic areas within India, and strategic partnerships.)

Upcoming Products or Innovations:

(Information on pipeline products.)

Sustainability Initiatives or ESG Commitments:

GSK emphasizes Environmental, Social, and Governance (ESG) factors.

• Focus on environmental sustainability, ethical supply chains, and responsible business practices.
• Reduce its environmental footprint through energy efficiency, waste reduction, and water conservation initiatives.
• Commitment to responsible pricing and access to medicines for patients in need.

Industry Trends Affecting Their Business:

• Increasing demand for innovative medicines and vaccines
• Growing importance of digital health technologies
• Shift towards preventative healthcare
• Emphasis on personalized medicine

Long-Term Vision and Strategic Goals:

To continue to be a leading healthcare company in India, focused on delivering innovative solutions and improving the health and well-being of people. Focus on long-term growth, sustainability, and ethical business practices.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue from Operations: Increasing trend, with a 6% growth from FY2022-23 to FY2023-24, reaching ₹3407.25 crores. Recasted numbers show an increase and then a slight decrease over three years.
• Profit Before Tax (Excluding Exceptional Items): Increased by 14% from FY2022-23 to FY2023-2024.
• Profit After Tax (Excluding Exceptional Items): Fluctuating margin.
• Earnings Per Share (EPS): Increased.
• EBITDA Margins: Improved by 150 bps from FY2022-23 to FY2023-24, reaching 26.43%.
• Net Profit Margin (Excluding Exceptional Items): Improving, but still below levels of 2022.
• Return on Net Worth: Increased from 34.69% in FY2022-23 to 38.77% in FY2023-24.
• Return on Capital Employed: Improved from 47.77% in FY2022-23 to 53.40% in FY2023-24.
• Inventory Turnover Ratio: Positive trend, increasing from 6.74 in FY2022-23 to 7.11 in FY2023-24.

Business Segment Performance #

• General Medicines: Focus brands demonstrated strong growth. Augmentin ranked as the No.1 brand in the Indian Pharmaceutical Market (IPM) in 2023, and Ceftum’s ‘Accessible for all’ campaign expanded patient reach. Calpol 650+ mg and 500+ mg with OPTIZORB formulation were launched.
• Vaccines: Leadership in the private vaccines market, with the Pediatric Vaccines segment showing resilient growth. The launch of Shingrix created a new category in adult immunization.
• Specialty Segment: Nucala and Trelegy showed strong growth, with revenue from Nucala up by 50% and Trelegy by 133% in FY2023-24.

Major Strategic Initiatives and Their Progress #

• Digital Transformation & Omnichannel Strategy: Focus on digital transformation, including the implementation of an omnichannel strategy to improve customer engagement and experience. The VaxiKart initiative has continued to grow.
• Lymphatic Filariasis Elimination: Partnered with WHO since 2000. In 2023, company supplied 44.5 million albendazole tablets.
• GSK Scholars: About 400 students benefit yearly.
• Selling Excellence: Focused on modernizing the sales organization, enhancing commercial execution, and building sales force capabilities. Initiatives include digital learning, launch of the IMPACT selling model for Shingrix, and the ASPIRE program for line managers.
• Manufacturing and Supply Chain Excellence: The Nashik manufacturing facility completed 40 years, with ongoing efforts to enhance quality, implement QR code compliance, and improve sustainability.
• Water Replenishment: Partnership with Watershed Organisation Trust (WOTR) in Nashik to improve ecosystem conditions and community resilience.
• Women+Water Collaborative: Founding partner of this initiative, which aims to improve access to clean water and sanitation through women’s leadership.
• Community Empowerment: CSR programs focusing on education and healthcare, including the GSK Scholars program, and support for digital learning initiatives.

Risk Landscape Changes #

• Drug Pricing Control: The government’s control over drug pricing remains a challenge, with GSK focusing on high-volume growth products and operational efficiencies.
• Supply Chain Disruptions: Geopolitical crises and reliance on imported raw materials pose supply chain risks.
• Competition: The Indian pharmaceutical market is high competition.
• Regulatory Compliance: Risk management with internal control framework have improved since 2023.

ESG Initiatives and Metrics #

• Environmental Sustainability: Committed to achieving net zero, nature positive, healthier planet with goals set for 2030. Initiatives at the Nashik site include reducing carbon emissions, water replenishment, and waste reduction. Nashik site completed a 4500KL rain water harvest pond.
• Social Responsibility: CSR initiatives focus on healthcare and education, addressing national health priorities and aligning with UN SDGs.
• Employee Resource Groups: Focused on building an inclusive organization with a diverse workforce, groups like The Women’s Leadership Initiative and SPECTRUM.
• Governance: 92% engagement rate in the 2023 GSK culture survey.

Management Outlook #

• Focused on strategic transformation, to reach double digit top-line growth in the next few years.
• Optimistic about continuing growth in the general medicines segment and making an impact in Adult Immunization.
• Maintaining a healthy work environment and company culture, based on being ambitious for patients.
• Maintaining strong industrial relations environment.

Detailed Analysis #

Financial Position Analysis of GlaxoSmithKline Pharmaceuticals Limited #

3-Year Comparative Analysis of Assets, Liabilities, and Equity (Consolidated) #

(₹ in lakhs)

Significant Changes in Major Line Items (>10% YoY) #

• Non-current Assets: Decreased by 8.90% from Mar 2023 to Mar 2024, primarily due to decrease in Loans, capital work-in-progress, and intangible assets. Decrease of 2.06% from Mar 2022 to Mar 2023
• Current assets: Increased by 12.19% from Mar 2023 to Mar 2024 due to an increase in Current investments, Inventory and Other current financial assets.Decreased by 6.84 % From Mar 2022 to Mar 2023.
• Current liabilities: Increased by 14.98% from Mar 2023 to Mar 2024 primarily due to an increase in Trade Payables. Decrease of 11.40% from Mar 2022 to Mar 2023
• Total Liabilities: Increased by 12.21% from Mar 2023 to Mar 2024. Decrease of 10.15% from Mar 2022 to Mar 2023.
• Other Equity: Increased by 2.31 % From Mar 2023 to Mar 2024. Decrease by 37.36% from Mar 2022 to Mar 2023.

Working Capital Trends #

(₹ in lakhs)

• Working capital has increased, indicating improved short-term liquidity.
• The Current Ratio has slightly decreased, but it is still strong.

Debt Structure and Maturity Profile #

As presented on the consolidated balance sheet there are no borrowings. Lease liabilities are present.

Off-Balance Sheet Items #

• Contingent Liabilities: ₹138,37.72 lakhs (primarily related to sales tax, excise, service tax, and legal matters).
• Guarantee given by the Company to the custom authorities: 200.00
• Capital Commitments: ₹8,55.93 lakhs (net of advances).

GlaxoSmithKline Pharmaceuticals Limited - Financial Analysis (FY 2023-24) #

Revenue Breakdown #

GlaxoSmithKline Pharmaceuticals Limited (GSK) experienced a 6% increase in overall revenue, reaching ₹3407 crores in FY 2023-24. This growth was primarily driven by volume increases, offsetting the impact of the National List of Essential Medicines (NLEM) 2022.

Segment Performance #

• General Medicines: Key brands outperformed their respective categories. Augmentin held the #1 position in the Indian Pharmaceutical Market (IPM) and gained 1% volume market share. Ceftum gained 4% volume market share. Calpol+ (650mg) gained 2.1% value market share.
• Vaccines: Maintained the No.1 position in the private vaccines market with over 24% market share. Revenue from Vaccines in FY 2023-24 grew by 11%, from Pediatric & Adult vaccines.
• Adult Vaccinations: Shingrix launched creating a new category in adult immunization.
• Specialty: Nucala revenue increased by 25% and Trelegy revenue grew by 133% in FY 2023-24.

Geographical Performance #

• India: Contributed ₹3401.68 crores (FY 2023-24), an increase from ₹3197.31 crores (FY 2022-23).
• Foreign Countries: ₹5.56 crores (FY 2023-24), a decrease from ₹19.02 crores (FY 2022-23).

Cost Structure Analysis #

• Cost of Materials Consumed: Increased to ₹504.99 crores (FY 2023-24) from ₹394.35 crores (FY 2022-23).
• Purchases of Stock-in-Trade: Increased to ₹853.08 crores (FY 2023-24) from ₹788.43 crores (FY 2022-23).
• Employee Benefits Expense: Increased to ₹624.39 crores (FY 2023-24) from ₹594.98 crores (FY 2022-23).
• Other Expenses: Increased to ₹593.77 crores (FY 2023-24).

Margin Analysis #

GSK demonstrated improved profitability margins in FY 2023-24.

• Operating Profit Margin: 24.54% (FY 2023-24), up from 23.04% (FY 2022-23).
• Net Profit Margin (excluding exceptional items): 20.30% (FY 2023-24), up from 18.79% (FY 2022-23).
• EBITDA Margin: 26.43% (FY 2023-24), up from 24.82% (FY 2022-23).
• Net Profit (Excl Exceptional items) to Revenue from Operations: Increased from 19% (2022-23) to 20% (2023-24).

Non-Recurring Items #

• Exceptional Items (FY 2023-24): Net loss of ₹(143.62) crores, primarily due to a VRS (Voluntary Retirement Scheme) cost, partially offset by the profit on the sale of property.
• Exceptional Items (FY 2022-23): A net loss of ₹(0.97) crores.

Earnings Per Share (EPS) Analysis #

• Earnings per equity share (excluding exceptional items) from continuing operations: ₹40.83 (FY 2023-24), up from ₹35.72 (FY 2022-23).
• Earnings per equity share (including exceptional items) from continuing operations: ₹34.51 (FY 2023-24), down slightly from ₹35.70 (FY 2022-23).
• EPS from continuing and discontinued operations (Excl Exceptional Items): ₹40.83 (2023-24) vs ₹35.90 (2022-23).

Quarterly Trends #

GSK typically reports its quarterly results during the following months:

• First Quarter: August
• Half-Yearly: October
• Third Quarter: February
• Year-Ending March: May

Cash Flow and Liquidity Analysis of GlaxoSmithKline Pharmaceuticals Limited #

Operating Cash Flow (OCF) #

• FY 2023-24: ₹578,93.67 Lakhs generated.
• FY 2022-23: ₹487,93.59 Lakhs generated.
• Profit before tax and exceptional items was the starting point, with adjustments made for non-cash items (depreciation, interest, etc.) and changes in working capital.
• Exceptional Items were adjusted related to payments for Redundancy Costs.

Investing Cash Flow (ICF) #

• FY 2023-24: ₹8,71.17 Lakhs net inflow.
• FY 2022-23: ₹805,19.45 Lakhs net inflow.
• Main drivers included purchase and sale/redemption of current investments, payments/proceeds for property, plant and equipment, and interest received.
• Exceptional Items adjustment includes proceeds from sale of property.

Financing Cash Flow (FCF) #

• FY 2023-24: ₹(561,49.69) Lakhs outflow.
• FY 2022-23: ₹(1543,32.30) Lakhs outflow.
• Primarily driven by dividend payments to company shareholders and intercompany loan movements.

Working Capital Management Efficiency #

• Inventory turnover ratio improved from 6.74 (FY 2022-23) to 7.11 (FY 2023-24).
• Trade receivables turnover ratio increased slightly from 16.11 (FY 2022-23) to 16.34 (FY 2023-24).
• Trade payables turnover ratio decreased to 3.65 (FY 2023-2024) from 3.78 (FY 2022-2023).

Dividend and Share Buyback Trends #

• A final dividend of ₹32 per share was declared for FY 2023-24, pending shareholder approval.
• FY 2022-23: Total dividend (including special dividend) was ₹32 per share.
• FY 2021-22: Total dividend (including special dividend) was ₹90 per share.
• No share buybacks are reported.

Debt Service Coverage #

• The debt service coverage ratio for FY 2023-24: 32.47, an increase from 30.10 in FY 2022-23.
• The debt consists of only lease liabilities.

Liquidity Position #

• Current Ratio: 1.83 (FY 2023-24), 1.87 (FY 2022-23).
• Cash and Cash Equivalents increased significantly from ₹29,74.32 Lakhs (FY 2022-23) to ₹62,14.91 Lakhs (FY 2023-24).
• Significant holdings in current investments (mutual funds) and bank balances provide additional liquidity.

GlaxoSmithKline Pharmaceuticals Limited: Financial Analysis #

Profitability Ratios (3-Year Trends) #

Return on Equity (ROE) #

• FY23-24: 38.77%
• FY22-23: 34.69%
• FY21-22: 99.79% Trend Analysis: ROE has been inconsistent. 2021-22 impacted by other equity.

Operating Profit Margin #

• FY23-24: 24.54%
• FY22-23: 23.04%
• FY21-22: 23.69% Trend Analysis: Operating margin shows a slightly improving trend.

Net Profit Margin #

• FY23-24: 20.30%
• FY22-23: 18.79%
• FY21-22: 12% Trend Analysis: Net profit margin has steadily increased, indicating improved efficiency and profitability.

Return on Capital Employed (ROCE) #

• FY23-24: 53.40%
• FY22-23: 47.77%
• FY21-22: 28% Trend Analysis: ROCE improving YOY, indicating better utilization of capital to generate profits.

EBITDA Margin #

• FY23-24: 26.43%
• FY22-23: 24.82%
• FY21-22: 25%

Liquidity Metrics #

Current Ratio #

• FY23-24: 1.83
• FY22-23: 1.87 Trend Analysis: The current ratio is relatively stable, indicating the company maintains a good ability to cover its short-term liabilities with its short-term assets.

Efficiency Ratios #

Inventory Turnover Ratio #

• FY23-24: 7.11
• FY22-23: 6.74 Trend Analysis: The inventory turnover ratio has slightly increased, suggesting a marginal improvement in inventory management.

Debtors Turnover Ratio #

• FY23-24: 16.34
• FY22-23: 16.11 Trend Analysis: Stable debtors turnover ratio indicates consistent efficiency in collecting receivables.

Leverage Metrics #

Debt/Equity Ratio #

*From the consolidated statement, it is observed that it is 1% for FY23-24 and FY22-23.

Interest Coverage Ratio #

*Not directly calculable, but Finance Costs are very low compared to Profit Before Tax, indicating very high interest coverage.

Working Capital #

• Working Capital: Increased to ’ 1254.90 crores in FY23-24 from ’ 1149.69 crores in FY22-23, showing that the company has a bigger operating liquidity.

GlaxoSmithKline Pharmaceuticals Limited - Segment Performance Analysis #

Revenue and Profitability Metrics #

• FY 2023-24 revenue from operations increased by 6% to INR 3407 crores, driven primarily by volume growth.
• General Medicine: 81% revenue share; Key Pharma brands volume grew by 8%.
• Vaccines: 18% revenue share, with 11% growth, led by both Paediatric and Adult Vaccines.
• Specialty: 1% revenue share, 134% growth, mainly driven by TRELEGY ELLIPTA.
• Profit Before Tax (PBT): Excluding exceptional items, PBT from continuing operations increased by 14% to INR 953 crores.
• EBITDA Margins: Improved by 150 basis points to 26.4% in FY 2023-24.
• Net Profit: Excluding exceptional items and including tax adjustments of prior year, grew by 14% to INR 552 Crores.

Market Share and Competitive Position #

• Ranked #1 in the private vaccine market.
• Ranked #1 in the dermatology segment.
• Holds the #2 position in the Indian Pharmaceutical Market (IPM) by volume for acute therapy.
• Ranked #2 among MNCs in the pharmaceutical industry by value.
• Augmentin is the #1 brand in the Indian Pharmaceutical Market (IPM).
• Seven GSK general medicine brands are among the top 100 brands in the IPM.
• Maintained the No.1 position in the private vaccines market with over 24% market share.

Key Products/Services Performance #

• Augmentin: Gained 1% volume market share; ranked #1 brand in IPM.
• Ceftum: Gained 4% volume market share; “Accessible for all” campaign helped reach 50% incremental patients.
• Calpol: Gained 2.1% value market share in the 650mg segment. New and advance Calpol 650+ mg and 500+ mg launched.
• Paediatric Vaccines: Strategic focus on expanding reach to HCPs, enhancing awareness, and adapting to National Immunisation Programme (NIP) changes.
• Shingrix: Launched in FY 2023-24, creating a new category in adult immunization.
• Nucala: Revenue grew by 144% in FY 2023-24, benefiting over 1,700 patients since launch.
• TRELEGY ELLIPTA: India’s first Single Inhaler Triple Therapy for COPD and has had 133% growth.

Geographic Distribution and Market Penetration #

• Covers over 10,000 distinct towns and cities in India.
• Expanding economic growth beyond metropolitan centers, with tier 2 and 3 cities becoming more important.
• Nashik manufacturing site contributed to the reduction of waste.
• 20 contract Manufacturing Organizations are spread across India.

Operational Efficiency Metrics #

• Inventory Turnover Ratio: Increased to 7.11 in FY2023-24 from 6.74 in FY2022-23.
• Debtors Turnover Ratio: Increased slightly to 16.34 from 16.11.
• Nashik manufacturing facility has a production capacity of 5.6 billion tablets and 160 million tubes.
• Nashik facility produces more than 300 million tablets of albendazole every year for WHO.

Growth Initiatives and Challenges #

• Growth Initiatives:
  • Focus on expanding HCP reach and disease awareness for Paediatric Vaccines.
  • Developing the adult vaccination category with Shingrix.
  • Leveraging data and analytics for omnichannel strategies.
  • “Selling Excellence” organization to enhance commercial execution.
  • CSR initiatives like the GSK Scholars program and lymphatic filariasis elimination.
  • Water replenishment and sustainability projects.
  • Implementation of QR code on several products, at both internal facility and CMOs
  • GSK Scholars program to support medical students.
• Challenges:
  • Government control on drug pricing, including the inclusion of Ceftum and T-Bact in the National List of Essential Medicines (NLEM).
  • Supply chain disruptions due to geopolitical crises and reliance on imported raw materials.
  • Adaption to the molecules included in the National Immunization program.

Risk Framework: GlaxoSmithKline Pharmaceuticals Limited #

Strategic Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies:
  • Focus on differentiated, science-led strategies.
  • Expand reach to healthcare professionals and key accounts, increase patient coverage.
  • Introduction of new formulations (e.g., Calpol 650+ mg and 500+ mg with OPTIZORB).
  • Launch of new adult vaccination categories (e.g., Shingrix).
  • Develop specialty segment (Nucala, Trelegy).
  • Omnichannel Strategy for expansion of reach and coverage.
• Control Effectiveness: Partially Effective
• Potential Financial Impact: Loss of revenue

Operational Risks #

• Severity: Medium to High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies:
  • Multiple CMOs and distribution centers.
  • Nashik manufacturing facility with a production capacity of 5.6 billion tablets and 160 million tubes.
  • Implementation of QR code for product traceability.
  • ‘Benchmark against the best’ approach for quality and continuous improvement.
• Control Effectiveness: Partially Effective
• Potential Financial Impact: Loss of revenue, increased costs

Financial Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable
• Mitigation Strategies:
  • Focus on improving working capital efficiencies and accelerating cash conversion.
  • Cost optimization and efficiency initiatives.
• Control Effectiveness: Effective
• Potential Financial Impact:
  • Revenue from operations, with strong volume, grew by 6%.
  • EBITDA margin improved by 150 bps.
  • Profit Before Tax (Excl. Exceptional Items), grew by 14%.
  • Net Profit (Excl. Exceptional Items) has been impacted by the Voluntary Retirement Scheme, without which it shows an increase of 14%.

Compliance/Regulatory Risks #

• Severity: High
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies:
  • QR code compliance for products.
  • Continuous monitoring of regulatory changes.
  • Engagement with regulatory bodies (e.g., applications to CDSCO for clinical trials).
• Control Effectiveness: Partially Effective
• Potential Financial Impact: Material effect on financial and contingent liabilities

Emerging Risks #

Adult Vaccination #

• Severity: Medium
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies:
  • Launch of Shingrix.
  • National-level campaigns with celebrities (Amitabh Bachchan).
  • Partnerships with HCPs to create an adult immunization ecosystem.

Digitalization #

• Severity: Medium
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies:
  • Using digital to raise consumer awareness of vaccinations.
  • Omnichannel strategies with HCPs
  • Enhancing Vaxikart initiative.
• Potential Financial Impact: Loss of market share

Strategic and Management Analysis of GlaxoSmithKline Pharmaceuticals Limited #

Long-Term Strategic Goals and Progress #

• GSK aims to positively impact the health of 2.5 billion people by the end of 2030, with a focus on preventing and treating diseases using general medicines, specialty medicines, and vaccines.
• GSK seeks double-digit top-line growth in the next few years, evidenced by General Medicines’ growth, Augmentin becoming the No.1 brand in the Indian Pharmaceutical Market (IPM) during 2023, and maintaining leadership position No.1 in Private Vaccine Market.
• GSK targets to expand reach via omnichannel strategies.

Competitive Advantages and Market Positioning #

• GSK holds the No.1 position in the private vaccines market with over 24% market share.
• GSK has the No.1 position in dermatology segment.
• Seven of GSK’s general medicine brands are in the top 100 brands in the IPM.
• Augmentin ranked as the No. 1 brand, Ceftum gaining 4% market share and Calpol+ gaining a 2.1% market share in the 650mg segment, showcasing a strong competitive position.
• GSK is ranked 2nd in IPM in terms of volume in Acute Therapy.

Innovation Initiatives and R&D Effectiveness #

• GSK launched Shingrix, creating a new category in adult immunization, addressing unmet needs.
• The OPTIZORB formulation in Calpol 650+ mg and 500+ mg demonstrates product enhancement to increase the market postion.
• The development of “India Infection Index” for Augmentin.
• GSK is conducting 19 clinical studies.
• GSK is conducting PRISM Study (phase IV) study in patents of severe asthma.
• Nucala and Trelegy in the Specialty segment, are gaining momentum and gaining revenue, 51% and 133% respectively.

M&A Strategy and Execution #

• GSK Plc and Pfizer combined their Consumer Healthcare businesses into a joint venture.

Management’s Track Record in Execution #

• GSK shows consistent growth, with Revenue from Operations at 6% and Profit Before Tax (excluding exceptional items) increasing by 14%, indicating effective management of operations and costs.
• The inclusion of key brands in the National List of Essential Medicines (NLEM) created pricing challenges, but GSK maintained growth through a science-led differentiation strategy.
• The company implemented a Volantary retirement Scheme, incurring significant one off cost.

Capital Allocation Strategy #

• GSK is investing in water replenishment and conservation projects, including a partnership with the Watershed Organisation Trust (WOTR) in Nashik.
• The company distributed a dividend of ’ 32 per equity share, absorbing ’ 542 crores, which is subjected to share holder’s approval.
• GSK is investing heavily in CSR initiatives, such as “GSK Scholars Program”

Organizational Changes and Their Impact #

• GSK formed an omnichannel pod within the organization.
• An integrated Respiratory team was created.
• The company is enhancing its commercial execution through changes to sales force.

ESG Framework at GSK India #

Environmental Metrics and Targets #

• GSK aims for a net-zero, nature-positive impact on the planet with ambitious goals set for 2030.
• Water replenishment projects are being developed for sites and key suppliers in water-stressed areas, partnered with the Watershed Organisation Trust (WOTR) in Nashik.
• A 4,500 KL rainwater harvest pond was completed, providing 1.5 months of summer water supply.
• CO2 emissions reduction was reported as follows: Optimization of chiller operations (CO2 Emission reduction- 19.29 tCO2e), HVAC AHU frequency Optimization (CO2 reduction- 11 MT) and Compressed air leakage arresting (CO2 Emission reduction- 14.28 tCO2e).
• A 5.1 MW solar plant was set up, expected to contribute approximately 15% of the company’s total electric load, and projected to provide a CO2 reduction of 163 MT.
• Waste reduction is integrated into the GSK production culture.

Social Responsibility Programs #

• GSK actively engages in CSR initiatives targeting marginalized communities, focusing on healthcare access and aligning with UN Sustainable Development Goals (SDGs).
• The “GSK Scholars programme” supports 398 medical students from underserved backgrounds, significantly impacting STEM education.
• GSK is involved in a long-term commitment to eliminate lymphatic filariasis (LF) in partnership with WHO, contributing 44.5 million albendazole tablets in FY 2023-24 and 3.96 billion tablets to date.
• GSK runs a digital learning initiative (“Smart Classrooms” project) across 54 schools in Nashik, benefiting 11,027 students.
• Community empowerment programs focus on healthcare, education, and Child Nutrition, including digital learning and child nutrition under the National Urban Health Mission (NUHM), affecting over 35,500 beneficiaries.
• Employee volunteer programs have accumulated over 10,700 volunteering hours.
• Women’s Leadership Initiative and SPECTRUM as Employee Resource Groups build a more inclusive organization.
• The “Women + Water Collaborative” was launched in October 2023, partnering with the Water Resilience Coalition.

Governance Structure and Effectiveness #

• The Board comprises nine directors, including two executive directors and five independent non-executive directors.
• The Board maintains committees: Audit, Nomination and Remuneration, Stakeholder Relationship, Corporate Social Responsibility, and Risk Management.
• Compliance with the provisions of the Companies Act, 2013, and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is emphasized.
• The Company’s Corporate Governance Charter aligns with best practices and regulatory requirements.
• Board performance evaluation was conducted.
• A Related Party Transactions (RPT) policy is in place, ensuring arm’s-length transactions.
• Internal Control Framework (ICF), Risk Management and Compliance Board (RMCB), Speak Up programme and a whistle-blower policy exist to ensure Compliance.

Sustainability Investments #

• Initiatives like the water replenishment project with WOTR aim to improve ecosystem conditions, enhance climate resilience, and improve community health and livelihoods.
• Solar panel installation shows a long-term investment in sustainability.

ESG Ratings #

• GSK India received recognition in multiple ESG categories, including awards for education initiatives, marketing excellence, CSR in women and child health, and healthcare communications.
• Specific ESG ratings were mentioned 3R ATING.

Regulatory Compliance and Future Preparations #

• The Company adheres to the QR code regulations for products, covering multiple production lines.
• The company is preparing for the implementation of regulations and received Marketing Authorisation in India for oncology assets.
• Compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, is maintained.
• The Company is in the process of fully complying with the Companies (Accounts) Fourth Amendment Rules, 2022, regarding data backup.
• Secretarial Audit Report (Annexure ‘D’) confirms general compliance with statutory provisions.