Challenges to the pharmaceutical industry's blockbuster-driven Research Paper

Challenges to the pharmaceutical industry's blockbuster-driven business model, and the effectiveness of GlaxoSmithKline's st - Research Paper Example After discussing the challenges associated with the use of the Blockbuster-Driven Business Model, the effectiveness of GSK’s strategies to meet these challenges will be tackled in details. 2. About the Company: Business Press and Analyst’s Narratives on GlaxoSmithKline (GSK) and Its Business Performance (i.e. Sales Revenue, Stock Prices, and Market Share) Based in Britain, GlaxoSmithKline (GSK) is a science-based health care company that aims to develop a wide-range of medicines through product researches and innovation (GSK, 2013a). Serving 115 countries worldwide, GSK is one of the top three biggest pharmaceutical companies around the world (GSK, 2013a ; Gilbert, Henske and Singh, 2003). To develop and innovate new drugs, GSK spent as much as ?4 billion in 2002 (GSK, 2013a). Back in July 1986, the share price of GSK was only 7.31 (Yahoo, 2013). Since January 1992, GSK’s share price has been fluctuating due to a series of merger and acquisition, expiry of patent s, heavy investment on new drug innovation, and tight competition in the market. Between 1979 to 1993, GSK filed 6 patents on Augmentin (Community Catalyst, n.d.). As a result, GSK’s share price started to increase in December 1992 at 30.75. ... It was between 1994 to 1995 when GSK contested their point-of-views with the federal appeals court concerning the legal issues behind patent infringement on one of their famous ulcer drug called Zantac (Los Angeles Times, 1995). Since the federal appeals court supported the arguments made by GSK, Novopharm – a Canadian company was not allowed to sell the generic version of Zantac in the U.S. throughout the period when the patent right is still effective (Los Angeles Times, 1995). One of the possible reasons why GSK’s share price significantly decreased from 69.50 in December 1998 down to 48.75 in February 2000 and 35.05 in February 2003 was because of patent litigation of GSK’s Paxil (Evaluate, 2002). In relation to the expiration of GSK’s patent on Advair in 2010, GSK’s share price has also significantly decreased from 42.29 in December 14, 2009 down to the lowest point at 33.46 in May 24, 2010 (Yahoo, 2013). Because of GSK’s business strate gy, this company managed to gradually increase its share price up to 52.51 in December 2013. Since it takes 10 years for GSK to develop new patented drug (Williams et al., 2008), this company has been continuously developing other promising drug that can compete or even better than their existing â€Å"blockbuster† drugs. (See Chart I – Historical Trend of GSK’s Share Price below) Chart I – Historical Trend of GSK’s Share Price Source: Yahoo, 2013 One of GSK’s â€Å"blockbuster† drugs was the Advair Diskus – an inhaler which can be used in the treatment of chronic asthma and chronic obstructive pulmonary disease (COPD) such as bronchitis or emphysema (Kitamura, 2013; Recruiting Experts Worldwide, 2013). Costing roughly US$300 per dose, the selling of