GlaxoSmithKline Plc (GSK) Q4 2016 Earnings Call

Andrew P. Witty – CEO

Regulations need to be simplified

“…I suspect it’s going to require some simplification of some of the regulatory thicket which exists in the U.S. pricing environment. As you think about in any given zip code in the U.S., you’ve got every single piece of legislation which touches Medicare, Medicaid, Veterans, private, all over superimposed on each other. And so to try and drive a new pricing model through that thicket of regulation, sometimes they’re quite inhibitory in the way in which you might want to innovate your pricing approach.”

…and transparency increased.

There needs to be more transparency. If you look at the University of [California] Berkeley data showing that of $100 paid to an innovative drug company at list, only $63 on average makes it through to the company. That’s $37 out of the $100 are being paid to non-innovators in a system which thinks it’s paying high prices for innovation. So that’s really, that’s something that’s going to have to start to be addressed.”

They are taking a sustainable focus beyond price to volume

“I think on a global basis the countervailing pressure is the enormous expansion of volume opportunity. And I think what we’ve seen at GSK over the last few years in the Vaccine, Consumer, and even the Pharma business is that with judicial adjustments to price, we’ve been able to open up gigantic volumes. And what we’ve shown in these results and certainly the last couple of years’ results is that you can drive your margin up even if your prices are not quite at the leading edge of price but at a level which can open up volume. And that’s a model which I like a lot. I think it’s more sustainable than being preoccupied just with price. And it’s certainly evident that in today’s world if you want to accelerate the arrival of your product into a marketplace, price is potentially an accelerator or a break to that decision making.”

It is never dull over here

“So I’ve had 30 years in this industry, and there’s never been a dull year. And there’s never been a year where it hasn’t felt challenging and interesting. And I suspect the next 30 years won’t be any different. But the reality is the industry does something quite amazing for people around the world. And as long as we keep doing that, it will be a very vibrant industry.”


Simon Dingemans – CFO

Pharma performing better

“Elsewhere in the Pharma portfolio, 2016 saw a better performance from our established products business, as improved supply and mix partly offset the impact of biennial price revisions in Japan and the reshaping of our China business away from older products. ”