GlaxoSmithKline PLC on Wednesday announced a global reorganization designed to strengthen the British drug developer's position in emerging markets and consolidate its North American operations.
Led by incoming Chief Executive Andrew Witty, who replaces retiring CEO Jean-Pierre Garnier on May 22, a new management team will form an "emerging markets" unit focused on building business in China, Russia, Brazil, India and the Middle East. Leading the division will be Abbas Hussain, who joins Glaxo June 2 from rival Eli Lilly & Co.
The company also will create an Asia Pacific unit to handle Japanese and Australian markets, which will be led by Marc Dunoyer, former president of the company's Japan pharmaceuticals unit.
Glaxo's North American division will combine U.S., Canadian and Puerto Rican operations and be headed by U.S. unit president Chris Viehbacher. The company also named former Northern European operations leader David Redfern to the newly created post of chief strategy officer.
"Making the changes required to develop our business for the next decade requires a rigorous and disciplined focus on corporate strategy," Witty said in a statement. "A key element of this new team's remit will be to proactively seek new business opportunities to expand our global reach and drive sales growth."
Emerging markets in the Middle East, China, Russia and India contribute nearly 25 percent of today's pharmaceutical market growth, Witty said, and that rate is likely to accelerate in the future. Growth rates in once-neglected markets could someday triple that of Western nations, he said.
Currently, the company's structure focuses on key regions and its international unit deals with countries outside of that focus. Though the new emerging markets unit is not centralized, the regions it contains represent similar states of development in terms of economy, health care industry and rapid growth rate, according to Glaxo.
"It is essential that we have an operating structure that is dynamic and responsive to the opportunities in these markets," said Witty.
GlaxoSmithKline and its big pharma peers have struggled to drive revenue higher in U.S. and European markets, amid growing generic and branded drug competition and the slowing sales of blockbuster drugs which have saturated the markets.
Glaxo recently reported a 14 percent drop in first-quarter profit, mainly the result of generic competition to its antidepressant and heart medications. Meanwhile, sales of diabetes drug Avandia have fallen due to stricter safety warnings.
Witty said regulatory pressures are a key challenge facing the industry.
