The GlaxoSmithKline Case Study
- Important factors influencing the business environment for pharmaceutical firms in the 21st century
Increased access to the Internet, which facilitates the online purchase of prescription drugs from pharmacies around the world (Shull and Morris, 33). The Internet allows consumers to choose from various alternatives and acquire drugs at the best price regardless of physical location, making many Pharmacies turn to e-commerce to grow sales.
A growing population of people aged 65 and above (Shull and Morris, 32). The aged people require more healthcare services as they are more prone to illnesses hence provide a market for prescription drugs.
- GlaxoSmithKline’s Main strengths
High profitability generated from the sale of pharmaceutical products across the world hence more revenue for growth and expansion.
A well-established brand known for quality products. GSK is a multinational pharmaceutical company based in Britain, and its many years of existence makes its products more trustworthy. Also, a diverse product range comprising of prescription drugs, vaccines and consumer health products for various health conditions enables the company to serve a larger market globally (Shull and Morris, 38).
- GlaxoSmithKline’s Main Weaknesses
Negative public image (Shull and Morris, 34)-GSK’s decision to stop the supply of prescription drugs to the Canadian market significantly tarnished the company’s reputation with the consumers and the general public viewing the company as selfish, greedy and insensitive.
Failure to focus on consumer needs- most of the prescription drug consumers had limited income hence wanted access to affordable healthcare. GSK, on the other hand, mainly focused on higher pricing for more profitability in the American market, which made the products expensive.
- Should a firm like GSK be allowed to charge different prices in different markets?
Yes, firms should charge different prices in different markets. Many factors influence the pricing of a product in different markets, for example, demand, taxation rates, operational costs and income levels of the consumers. Therefore, a firm must be allowed to determine different prices that generate reasonable profits in each market.
Was this a restriction of free trade or a brazen use of monopolistic power as asserted by members of congress.
In the GSK case, the differential pricing was a brazen use of monopolistic power (Shull and Morris, 50). The company wanted to use its market control to limit access to affordable drugs. GSK imposed very high prices for its products in the United States and wanted to restrict the consumers into buying the drugs only from the American stores.
Work Cited
Shull, Sara, and Rebecca Morris. Glaxosmithkline’s Retaliation Against Cross-Border Sales of Drugs. 2004, pp. 32-52, Accessed 3 Mar 2020.