GlaxoSmithKline and AIDS Drugs in South Africa (A, B, C, D)

The Fight for Lives and Profits; The Settlement; The Fight Goes On; US Developments
Authors: Yaziji, M.; Lindblom, A.
Source: International Institute for Management Development
Year: 2005
Company Name: Glaxosmithkline
Number of pages: 10

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Abstract:

A: This is the first of a four-case series. The case describes the interactions among pharmaceutical companies, non- government organisations (NGOs), and governments in the context of the AIDS epidemic in South Africa. Oxfam singled out GlaxoSmithKline (GSK) as the target for its new campaign, ‘Cut the Cost'. The goal was to hit where it would hurt the most - GSK's share price. At the same time other NGOs also went after GSK. For GSK the situation in South Africa was extremely delicate. The ultimate issues were patent and price protection globally. The pharmaceutical companies were afraid that cheap generic drugs could flood the West, undermining the entire pricing structure and their ability to fund new research. Defending the patents and prices seemed essential. Yet, fighting the NGOs could bring negative publicity and, ultimately, be self-defeating. Meanwhile, millions of people were dying of AIDS in South Africa.

B: The (B) part of the series focuses on the outcome of the lawsuit against the South African government. But the demands from the non-government organisations (NGOs) keep on coming and Garnier, the CEO of GlaxoSmithKline (GSK), is faced with some tough decisions to make. Should he allow licensing? How should he deal with parallel importation?

C: The (C) part of the series focuses on the actions GlaxoSmithKline (GSK) had to take after being pressured by the non-government organisations (NGOs). The company had been defeated and it agreed to several licensing agreements and price reductions, but the NGOs are still not satisfied. The topic was also gaining importance in the Western media and the big question now was whether it was starting to become an issue in more developed countries, where the vast majority of GSKs' sales and profits were being made.

D: The (D) case focuses on the developments in the US markets. The AIDS drugs issue that had begun in South Africa was beginning to feed a ‘perfect storm' in the US and GlaxoSmithKline (GSK).