The Slovenia Times

Highly challenging and competitive



The pharmaceutical industry is constantly faced with new challenges such as globalization, consolidations (takeovers and mergers), healthcare system reforms, growing competition, the aging population, new marketing activities etc. How do you see these challenges and how does GlaxoSmithKline, the world's second largest pharmaceutical company, respond to this?

True, we are constantly facing new challenges to which we have to respond. Especially now, when society as a whole is undergoing major changes. Due to some of the factors you've mentioned; governments around the world are trying to balance a number of different goals such as economic growth, education, science and technology, healthcare and at the same time exercise overall budget control. In this difficult environment, our objective is to make sure that the access to our medicines is granted on the long run. We at GlaxoSmithKline are conducting and leading several initiatives on global, European and local levels to establish an environment that meets the needs of all key stakeholders in these areas, including patients, doctors, payers and the industry. Internally, we try to build structures that enable us to be as flexible as possible in identifying changes at an early stage and react quickly to them.

According to some analysts, the main generator of sales growth in recent years has been successful marketing and to a lesser extent the introduction of new pharmaceuticals on the market. In your opinion, why are there fewer new pharmaceuticals on the market?

I believe that there are several reasons for this. One major one is that the progress of medical science in the past fulfilled some of the major unmet needs, which means that we can now control some previously incurable diseases; partially also due to successful research and development in pharmaceuticals. Another reason concerns legislative changes under which a medicine has to go through a longer approval process nowadays and - after having passed this - reimbursement is also very often delayed or even not granted at all, which as a consequence reduces the number of products entering the market.

The pharmaceutical industry is also known for its R&D investments. According to some data, these investments reach around 15% of annual sales because development of new drugs costs approximately one billion USD. How much does GlaxoSmithKline invest in R&D? Which fields are currently given the most attention?

GlaxoSmithKline is dedicated to innovation. Just last year we invested EUR 5 billion into R&D, which is 15% of our annual sales. Translated in EUR this means 11.6 million a day for R&D projects. As a point of interest, let me just mention that we conduct over 64 million extraction tests which help us isolate new compounds and molecules. Over 2,600 studies were listed in our clinical test register last year; they are also posted on our web page. Our research currently is focused on oncology and vaccines, with central nervous system drugs following as a close third.

What do you think about the Slovenian pharmaceutical market, which is small and where, according to Lek and Krka, on which the share of domestic producers is decreasing on account of foreign producers?

The Slovenian market is interesting and special. It is unique in that two generic companies lead the market in sales. One of the reasons why the leading companies on the market are losing their stronghold is probably the lowering of prices as a consequence of changing rules at the beginning of this year. In Austria (which replaced Italy in price referencing) prices of generic drugs are lower than in Slovenia. In other aspects, the Slovenian pharmaceutical market is comparable with other developed countries: very challenging and competitive.

Do you see any obstacles for doing business in Slovenia? What are they and how could they be overcome?

In my opinion, the Slovenian pharmaceutical market is not completely open. There is, for example, strict control over prices, which restricts competition. Market access for new drugs is sometimes an issue. Reimbursement sometimes takes too long and it is not transparent enough. As a member of the Forum of International Research and Development Pharmaceutical Companies (the Forum), we are trying to become accepted as an equal partner in the discussion how to improve the situation.

One of the key points of a good system is the clarity of criteria against which therapeutic progress can be measured throughout a product's lifecycle. The evaluation process needs to be independent, and scientifically robust.

Guidance coming out from health technology assessment should be evaluated independently of the payer. Patients, physicians and the industry should be involved in the assessment process. Some of these points are not incorporated in the current Slovenian system.

Just as in many other countries, the problem in Slovenia is also that a drug is hard for us to sell if there is no reimbursement for it because people are not used to paying for drugs. And there is one more barrier: patient information is very limited in Slovenia - e.g. a press conference cannot be held in order to introduce a new medicine. This is in a way hard to understand, because patients still have access to information through the internet, but this information is not necessarily correct or interpreted correctly. Pharmaceutical companies should definitely be allowed to provide information on drugs in a balanced and understandable manner.

How would you describe the competition on the Slovenian market, besides the two generic companies previously mentioned?

GlaxoSmithKline has a strong position on the market, but competition is intense. In 2006, we came in fifth place with a 5.3% market share; in 2007 we ended up in fourth place with a 5.5% share of the market. We hold third place in retail sales, right after Lek and Krka. All the big R&D companies are also present in the Slovenian market and our natural competitors.

Every company is heading for further growth and outperforming the competitors to achieve the strongest market position. But with most of the companies, it is kind of fair play as we are all convinced about our products and try to get highest number of patients who will profit by them. And this is in the end all what counts.

How are drug sales in Slovenia affected by health insurance policies (especially of ZZZS) since their funds for drugs are decreasing also elsewhere in the world?

Health insurance policy undoubtedly has a negative influence on our sales, but this is the case also elsewhere in Europe. It is a legitimate objective for the health fund to reduce costs, but the savings made should go towards the introduction of innovative medicines. Further reductions in drug expenses might put the availability of certain drugs in the country at risk. It would be beneficial if the pharmaceutical industry and governmental players in healthcare would not oppose each other, but cooperate at a very early stage because both are after all working for the best interest of the patients. Long term development instead of short-term cost containment would be the key. The healthcare systems around the world will have to change in order to remain sustainable, not only drug cost but also system structures have to be reconsidered, and additional methods of providing money for drugs like co-payment should not be rigorously denied.

What are GlaxoSmithKline's plans for Slovenia in the next few years?

We wish to retain our current position and stay ahead of other pharmaceutical companies present on the Slovenian market. Of course we would like to increase our market share and maybe even overtake Lek's after some time. There is room for improvement in the area of hospital treatments, where our present product portfolio is not so broad. The introduction of new drugs for oncology patients, such as a new drug for treating metastatic breast cancer, and the introduction of new vaccines will help improve our market position. Our aim is also to focus further on employee training and to strive towards a creative working environment.

We will try to improve GlaxoSmithKline's image outside the company because we need to be more recognizable. A new programme called Operational Excellence is currently being introduced at the group level, which of course also includes Slovenia. The goal of the programme is to improve our internal structure and processes and to be better at reacting to changes and challenges. An optimal solution has to be found for each country in order to retain investments in R&D at the global level.

GlaxoSmithKline also stresses social responsibility and ethics. What is your contribution in Slovenia?

GlaxoSmithKline also works with communities in developed countries where our company has its branches. In Slovenia, we fund health and education programmes and, like other companies, make donations for medical equipment to hospitals and professional associations. We also contribute to the MEPI programme - an international award for young people based on the Duke of Edinburgh's award scheme, which is also running in Slovenia. This programme is conducted with the support of the British Embassy. Our role in the programme is to organize visits of volunteers who spend time with patients throughout the country. We also contribute to humanitarian and medical expeditions of Slovenian medical students to developing countries. We started at New Year to support the homeless and we are currently evaluating other opportunities how to contribute even more to the Slovenian population as we see this as our responsibility.


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