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GLAXOSMITHKLINE PHARMACEUTICALS LIMITED
ANNUAL REPORT 2011
MANAGEMENT DISCUSSION AND ANALYSIS
(a) Finance and Accounts
Your Company maintained its prominent position in the Pharmaceuticals
market with Net Sales (net of Excise Duty) registering a growth of 10.7%.
Profit After Tax and Before Exceptional Items grew by 8.6%. Sales of the
Company's Pharmaceuticals business grew by 12.5%, supported by good growth
in the vaccines, dermatologicals, hormonal preparations, gastro -intestinal
and oncology therapeutic segments. Despite material cost escalations and
significant expansion of the field force, Profit Before Investment Income
and Tax amounted to 33% of Net Sales. Profit After Tax and Before
Exceptional Items amounted to 27% of Net Sales.
Cash generation from operations was favourable, with your Company
continuing to look for ways and means of deploying accumulated cash
balances which remain invested largely in bank deposits.
Your Company has not accepted any fixed deposits during the year. There was
no outstanding towards unclaimed deposit payable to depositors as on 31st
December 2011.
(b) Pharmaceuticals Business performance and outlook
Your Company continues to enjoy a leadership position in the categories in
which its products are represented.
The Mass Specialty business of your Company recorded double digit growth
over the previous year. Some of the key brands grew ahead of the market
thereby gaining Market share.
The foray into branded generics market with Zobactin and Esblanem yielded
good results during the year. Zobactin is ranked as the No. 2 brand (Dec
MAT 2011, H.S.A) in a market which has more than 56 brands of
Piperacillin+Tazobactum. In the Meropenem market, Esblanem is ranked at 6th
position (Dec MAT 2011, H.S.A).
Mycamine an in-licensed brand from Astellas became the 2nd largest brand
(Dec MAT 2011, SSA) in the systemic antifungal market. Calcium Citrate
Malate [CCM], the high strength Calcium, re-launched in 2010 has performed
well in a cluttered market of more than 300 calcium oral solid brands and
has jumped from 19th rank to the 2nd rank brand (Dec MAT 2011, SSA) in the
calcium oral solids category during the year. In a market, with more than
70 generics, Ceftum continues to maintain its leadership position and has
been awarded a Certificate of Marketing Excellence in Premium Brand
Category by C-Marc-IPHMR in December 2011.
Your Company has taken the initiative to expand its presence in the
Specialty business to widen its footprint in India. Your Company's
endeavour in Oncology to bring the latest breakthrough/ innovative products
to enhance patient care is well acknowledged by the oncologists. After the
successful launch of Tykerb in 2008, your Company has expanded its presence
further by introducing two new segments, Kidney Cancer and Hematology with
launch of VotrientT and RevoladeT. Votrient is indicated for the treatment
of advanced renal cell carcinoma (RCC). Revolade is for the treatment of
thrombocytopenia (reduced platelet count) in adults with the blood disorder
chronic immune (idiopathic) thrombocytopenic purpura (ITP).
In the cardiovascular business, your Company continues to maintain the
leadership with Lanoxin and strengthened the position with an in-licensed
product, Benitec from Daiichi, Japan. After entering the fast growing
Statin market, Rosutec slotted as the 4th best new introduction from a
Multinational Company in the cardiology space, moved up 10 ranks to the
15th position (Dec MAT 2011, SSA). In the endeavour to consolidate the
cardiovascular portfolio, your Company has launched Angiotec, Ranolazine
one of the emerging chronic angina targets in India. In the Diabetes
segment, your Company is in the process of strengthening its presence by
the introduction of branded generics as volume builders like METLEAD
(Metformin) and new launches of Metformin + Glimiperide (METLEAD G).
The Dermatology business of your Company continues to maintain the
leadership position with 15% market share (Dec MAT 2011, SSA). The topical
steroid portfolio of the Dermatology business is growing ahead of the
market. Topical antibiotics, Anti-fungal and Anti-viral portfolio too have
grown in double digits. The initiative to expand its presence in cosmetic
dermatology through the Stiefel brand promoted by your Company has
reflected in this year's performance by significant gain in market share.
The three represented segments of cosmetic dermatology, acne, dry skin and
sun protection are supporting this growth. Dermocalm, the 19th brand of
calamine launched in 2009, attained 1st rank in 2011 (Dec MAT 2011, SSA).
Mass market activity brands comprising of acute care classic brands had
crossed many landmarks in terms of turnover of brands. Calpol, which is
ranked as No. 1 prescribed product in Indian Pharmaceutical Market as per
(Dec MAT 2011, IMS Rx audit) and Zinetac have crossed Rs. 100 crores.
Neosporin maintained its lead in the topical antibiotic market. Cobadex CZS
remained as a leader in the segment. Calpol T, the new introduction in pain
segment, overtook 75 brands and became No. 3 in Paracetamol+Tramadol market
(Dec MAT 2011, SSA).
Your Company's Rural Marketing initiative continued the excellent pace of
growth and rapidly expanded to many new villages. The growing equity in
these markets was clearly reflective in double digit growth across the
spectrum of brands.
Your Company's Vaccines business grew significantly higher than the overall
vaccines market growth. The key drivers of growth were brands Havrix,
Varilrix and Rotarix. The vaccines field force has doubled over the past
two years thereby enabling better reach and coverage of pediatricians and
non-paed specialties across the country. The year also saw the launch of
Synflorix - a vaccine against invasive pneumococcal disease - the leading
cause of childhood mortality in India. This vaccine will help reduce the
burden of pneumococcal disease in India thereby help in achieving the
United Nations Millennium Development Goals. Your Company continues to
remain the leading company in the Indian vaccines market.
Your company continued the search for new Business Development
opportunities in high growth therapeutic areas.
Exports recorded a sales turnover of Rs. 36.51 crores comprising both Bulk
Drugs and Formulations. Exports of bulk drugs were to major markets like
Japan, France, Indonesia, Jordan, U. K. and Germany.
(c) Opportunities, risks, concerns and threats
The industry growth is largely driven by chronic disease segments viz.
cardiovascular, diabetes, asthma, cancer, and largely influenced by
changing lifestyles. There are signs that health awareness has increased
due to higher disposable incomes, urbanization and greater health insurance
coverage, which could improve further with acceleration in Government spend
on healthcare infrastructure. The adoption of intellectual property rights
has encouraged innovation. The industry continues to remain under price
control; the scope and coverage of the Government's new pharmaceuticals
policy cannot be ascertained, since it is pending review by the Government
and remains an area of uncertainty for the pharmaceutical industry. It is
hoped that the Government will consider several representations made by
industry associations in finalizing the policy. Data Exclusivity/Data
Protection remain a concern area for the industry.
(d) Research & Development and Regulatory Matters
Your Company has received approval for 10 new products and 2 INDs from
CDSCO, which will enable timely access to new and innovative therapeutic
options to patients in our country. Additionally, to support the R&D
efforts of GlaxoSmithKline, your Company submitted 7 global Clinical Trial
applications to CDSCO, and have been granted approval to conduct 4 studies
in the Indian population through the Clinical Operations team in India.
Some of the novel innovator products approved by the regulatory agency in
India during the year under review, include a 10-valent pneumococcal
vaccine (Synflorix) for immunisation of infants and children against
sepsis, meningitis, pneumonia, bacteraemia and acute otitis media;
topotecan capsules (Hycamtin), an oral oncology drug for the treatment of
patients with relapsed small cell lung cancer. In addition, new indications
approved for existing products, viz., micafungin (Mycamine) for use in
patients with aspergillosis and albendazole (Zentel) for treatment of
systemic helminth infections such as neurocysticercosis will be beneficial
to Indian patients.
GlaxoSmithKline continues to be committed to Research and Development of
medicines that will improve the quality of life of people around the world
and truly make a difference to patients. Your company is one of the few
with passion for research and with exemplary skills for turning that
research into medicines, keeping a 'patient first' attitude in everything
that it does. Your Company's scientists work hard to discover new medicines
that prevent, treat or cure diseases. The R&D effort of GlaxoSmithKline is
supported by the Clinical Operations team, which conducts clinical studies
across a number of disease areas ranging from breast cancer, head & neck
cancer, lung cancer, gastric cancer, leukemia, malaria, influenza,
osteoporosis and complicated urinary tract and intra-abdominal infections.
The R&D effort of GlaxoSmithKline Vaccines is also being supported by the
Clinical Operations team in India by undertaking clinical studies for the
vaccine initiatives, key among these are; TB vaccine (Phase II A),
Conjugated Meningococcal vaccine, Herpes Zoster vaccine study (Phase III)
and Epidemiology study to understand prevalence of Streptococcus pneumoniae
serotypes in India.
Your company initiated 6 new clinical studies during the year, most of
which were in oncology. A total of 85 patients participated in these
studies. Your company has trained 36 new investigators on GCP and protocol
related science at approximately 32 clinical trial sites across India.
Quality continues to be a priority as demonstrated by a number of internal
compliance audits with no critical/major findings.
The Medical Affairs team plays a pivotal role in communicating cutting edge
scientific information to internal and external stakeholders. This team
drives all the scientific engagement activities with external experts
across all therapy areas and also ensures that GSK's promotional activities
are in line with the existing guidelines and standard operating practices.
(e) Internal Control Framework
Your Company conducts its business with integrity and high standards of
ethical behavior, and in compliance with the laws and regulations that
govern its business. Your Company has a well established framework of
internal controls in operation, supported by standard operating procedures,
policies and guidelines, including suitable monitoring procedures and self-
assessment exercises. In addition to external audit, the financial and
operating controls of your Company at various locations are reviewed by the
Internal Auditors, who report significant findings to the Audit Committee
of the Board. Compliance with laws and regulations is also monitored.
Your Company's Code of Conduct sets out the fundamental standards to be
followed by employees in their everyday actions. In accordance with the
Code of Conduct, and Standards
associated with the Code of Conduct, employees are required to become
familiar with the legal requirements, policies and procedures applicable to
their areas of operation, avoid conflicts of interest and are tasked with
upward reporting of all unethical and illegal conduct. All employees are
committed to the principle of performance with integrity and ensuring that
activities comply with all applicable laws.
Additionally, Managers are required to certify on an annual basis whether
there have been any transactions which are fraudulent, illegal or violative
of the Code of Conduct. Strong oversight and self monitoring policies and
procedures demonstrate your Company's commitment to the highest standards
of integrity.
(f) Human Resources
In the Human Resources domain your Company continued to focus on the three
strategic pillars of Capability Building, Talent Management and Employee
Engagement.
Talent Management has focused on taking a structured approach emphasising
on creating a talent pipeline at the leadership, the middle management and
at the fresh management graduate intake level. Each function has been
encouraged to identify key talent with a view to retain, grow and develop
them. A few employees have also been moved to international markets as part
of our planned development moves.
A carefully planned Learning and Development calendar was created and
implemented to provide the necessary leadership and skill building
capability to our employees. Under the Employee Assistance Programme -
Wellness and Wellbeing Services were provided to those employees who needed
it. HR surveys were conducted this year to gauge service levels and bring
in better customer service to our employees. The survey findings indicate
that your Company has scored well over the global average.
On the Industrial Relations front your Company's Unions have extended its
support and cooperation in attaining your Company's business objectives.
On the sales training front over 44,000 man days of classroom training have
been invested to enhance the Disease - Product Knowledge - Selling Skills.
Additionally, internet based learning solutions was widely adopted to
promote continuous distance learning.
Given the robust growth plans of your Company, ramp-up of sales personnel
continued with over 600 new front-line sales personnel being inducted into
the workforce last year. As a result, your Company had a staff strength of
5055 employees as on 31st December 2011, compared to 4338 employees at the
end of 2010.
(g) Procurement
The year saw many uncontrollable factors affecting outlook adversely namely
global and local economic downturn, high inflation and depreciating Indian
Rupee - these posed risks in supply continuity coupled with increasing
cost. However, a combination of strategic commodity management and
integration with the global and regional management structure helped your
Company in mitigating these price pressures to a great extent. A global
program of ensuring 100% vendors being audited for global level quality
compliance got completed which would assure RM/PM quality all the time and
is a big step to ensure vendors becoming true partners for reliable supply,
service and quality and with lowest possible total cost to your Company.
(h) Manufacturing
Your Company continues to invest in manufacturing capabilities and the
supply network to support growth at optimum product cost. Nashik site
continues to deliver Albendazole tablets to WHO as a part of the Lymphatic
Filriasis eradication programme. Nashik manufacturing site continue to
focus on waste reduction opportunities through optimising material usage
and pack rationalization. There was considerable focus on improving
Environment, Health and Safety and GMP compliance at both Nashik and Thane
sites during the year.
The Nashik site has embarked upon major investment programmes to augment
the capacity of various dose forms in line with the latest GMP requirements
and the growing market volumes.
Manufacturing Excellence
Nashik site continues to support sales growth through significant volume
contribution by creating supply capabilities through adding best in class
manufacturing equipments. During the year Nashik site supplied ~ 7.2 Bn
dose forms. There was focus on improving the Environment, Health and Safety
at site through living safety training, Zero access machine guarding, and
LOTO programme implementation. Nashik site has also received the WHO GMP
certificate.
(i) Supply Chain
The positive trend of improvement in Supply performance was consolidated
during the year. A key achievement was the stabilization of the vaccine
portfolio through maintaining a consistent supply position for all brands.
This improvement has also helped support the larger business performance
trend. The emphasis on Good Warehousing practices and process control
related to the reverse supply chain continued. Your Company's buildup to a
post-GST optimized model continues through working on preparedness for
regional consolidation timed with the eventual rollout of GST.
(j) Corporate Social Responsibility
During the year, your Company continued its commitment towards social
development by supporting long term ongoing projects while undertaking many
new initiatives.
Your Company implements rural development initiatives through Gramin Arogya
Vikas Sanstha (GAVS), a registered public trust promoted by the Company and
operates predominantly in remote areas of tribal villages in Peth district
near Nashik. Through GAVS, your Company in collaboration with Nirmaya
Health Foundation is running a Tribal health care project in 115 villages
covering a population of over 1 lakh for preventive and curative health
care. GAVS in partnership with Kherwadi Social Welfare Association (KSWA)
has also provided vocational training to 875 tribal youths in this
underserved district for sustainable livelihoods.
Your Company continued its support to Institute for Indian Mother and Child
(IIMC), a non -government organization and reached more than 1.30 lakh
patients including pregnant, lactating, weaning mothers and malnourished
children for health and nutrition in Kolkata. Another health care project
which your Company is supporting through Nirmaya Health Foundation is in
the slum areas of the dumping grounds in Deonar, Mumbai. This project
caters to the health and educational needs of over 6000 rag picker children
and their families.
During the year, your Company proactively supported four voluntary
organizations for cancer care. This included screening camps to facilitate
early detection, treatment, rehabilitation and palliative care of cancer
affected patients from underserved community. Sri Chaitanya Seva Trust was
supported for Cancer screening camps and over 85 camps were conducted,
thereafter 139 patients who were detected with cancer have been treated.
New initiatives were also taken to provide complete assistance to cancer
patients and their families. A Mammography machine was donated to Cancer
Patients Aid Association, while Indian Cancer Society was supported for
rehabilitation of cancer patients through vocational training, employment
and nutritious diet. The Bangalore Hospice Trust, Karunashraya was
supported with donation of medicines for care of critically ill cancer
patients.
In collaboration with Pratham, an NGO, your Company runs shelter homes in
Behraich (U.P.) and Jodhpur (Rajasthan) for 92 underprivileged and
vulnerable children who were earlier exploited as child laborers. In these
shelter homes, besides education and health, the focus is on holistic
development. Your Company also supported 1000 underprivileged girls through
project Nanhi Kali, for primary education to contribute to Millennium
Development goal.
Among other new initiatives taken during the year is the support to
Paraplegic Foundation in Mumbai for rehabilitation of the severely
orthopedically disabled lower socio-economic class patients. The
Installation of Solar photovoltaic technology to meet the electricity need
of 108 girls in residential school in Allahabad to facilitate their studies
was also undertaken. Another regional project continued was the support to
mentally challenged children for special education through Ashirwad Special
Education School, New Delhi.
GSK plc continued its efforts in strengthening immunization infrastructure
in 5 Health Posts of Mumbai slums with PATH, an international development
organization. 'The Personal Hygiene and Sanitation Education (PHASE)
Programme' supported by GSK plc was implemented successfully this year as
well through Pratham, an NGO working towards child's right to education.
GSK plc also extended its support to increased donation of Albendazole,
effective in treating people at risk of intestinal worms as part of its
global program towards the elimination of Lymphatic Filariasis.
(k) Cautionary Note
Certain statements in the 'Management Discussion and Analysis' section may
be forward-looking and are stated as required by applicable laws and
regulations. Many factors may affect the actual results, which could be
different from what the Directors envisage in terms of future performance
and outlook.
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GLAXOSMITHKLINE PHARMACEUTICALS LIMITED
ANNUAL REPORT 2010
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis:
(a) Finance and Accounts:
Your Company maintained its leadership position in the Pharmaceuticals
market with Net Sales (net of Excise Duty), registering a growth of 12.9%.
Profit After Tax and before Exceptional Items grew by 15.1%. Sales
performance in all of the Company's diversified business units i.e. in the
mass market and mass specialty segments, dermatologicals, oncology,
critical care and vaccines helped to support sales growth. Despite
significant investments in field force expansion, Profit before investment
income and tax was maintained at 35% of Net Sales.
Cash generation from operations continues to remain favourable, driven by
business performance and management of working capital. Your Company is
constantly looking at ways and means of deploying the accumulated cash
balances, which remain invested largely in Bank Deposits.
Your Company has not accepted any fixed deposits during the year. There was
no outstanding towards unclaimed deposit payable to depositors as on 31st
December 2010.
(b) Pharmaceuticals Business Performance and Outlook:
Your Company continues to enjoy a leadership position in the categories in
which its products are represented.
Mass Market activity comprising of acute care classic brands such as
Calpol, Phexin, Cetzine, Neosporin, Cobadex CZS, Zyloric grew better than
the market growth thus having robust evolution index as per SSA-IMS
reports. Zemetril, a newly launched brand has climbed to No.1 rank in the
represented category and recently launched Parit-D, Lilo, Cefspan are
progressing well and have gained good market share.
Rural marketing activity 'REACH' registered a robust growth over last year
and results from the efforts of brand building and access to medicine are
visible. Your Company is on way of expanding reach in mass markets to
ensure capturing growth opportunities available in the market.
The Mass Specialty teams continued to record high growth and most of the
key brands grew ahead of the market thereby gaining market share. Augmentin
orals crossed the Rs. 100 crore mark helping Augmentin to retain the
position as the No.1 anti-infective as per IMS report. The focus on
hospital and tender business paid rich dividends with your Company further
distancing itself from its nearest competitor and remaining a strong No.1
in the hospital segment as per IMS Hospital Audit.
Your Company's major foray in the injectible antifungal segment saw some
good entrenchment and success of the recently launched brand Mycamine. The
rest of the critical and acute care portfolio did quite well during 2010
and is expected to grow further in the coming years. Your Company has
entered into Oncology business in 2008 with the successful launch of drug
Tykerb. During the year your Company has taken the major step by reducing
the price by 35% and made it affordable for more number of patients which
has helped achieve growth and also received a positive response from the
Oncologists. In 2011, your Company will continue its commitment to oncology
with the introduction of innovative breakthrough products like Revolade for
the treatment of Chronic Immune Thrombocytopenia and Votrient for the
treatment of advanced metastatic Renal Cell Carcinoma.
In Cardiovascular business your Company continues to maintain the
leadership with Lanoxin and strengthen the position with the in-licensed
product Benitec from Daiichi, Japan. In addition your Company has entered
into fast growing statin market with the introduction of both Atoravastatin
& Rosuvastatin. In Diabetes Care segment your Company has respected the
DCGI order and has withdrawn Rosiglitazone (Windia) from the market while
re-assessing strategy for strengthening our presence in this segment.
The Dermatology business of your Company has recorded growth well ahead of
the market growth and also continues to maintain the leadership in the
segment. Topical antibiotics, antifungal, emollients, sunscreen and acne,
the key therapy segments registered a strong growth. Betnovate range, the
top brand of Dermatology portfolio continues to grow strongly. Stiefel
promoted range has started making visible progress. Dermocalm, the calamine
brand launched in second half of 2009, has gained quick market share and is
now the 31 lead brand in the category.
Your Company continues to be a leader in the Vaccines self pay market. Your
company launched Flu vaccine and continues to do well with all new launches
including Rotarix. Cervarix, a Cervical Cancer vaccine continues to grow in
demand and is the market leader in the HPV Vaccines segment (IMS Vaccines
Audit September 2010). Your Company plans to launch 'Synflorix'-
Pneumococcal vaccine for kids in 2011 New products launched during the year
included Mycamine inj (Micafungin) in-licensed from Astellas and Parit D
capsules (Rabeprazole in combination with Domperidone) in-licensed from
Eisai. Cefspan (Cefixime - oral antibiotic) was relaunched with good
success. Other branded generics launched during the year were Modvate 3
cream (Beclomethasone in combination with Clotrimazole and Neomycin) and
Modvate AF cream (Beclomethasone in combination with Clotrimazole) in
Dermatology. Formulations of Atorvastatin and Rosuvastatin tablets were
launched in Cardiology under the brand names 'Lilo' and 'Rosutec'
respectively. The combination of Paracetamol with Tramadol was launched
under the brand name 'Calpol T'. Exports recorded a sales turnover of Rs.
63 crores comprising both Bulk Drugs and Formulations. Exports of bulk
drugs were to major markets like Japan, France, Indonesia, Jordan, U. K.
and Germany.
(c) Opportunities, risk, concerns and threats:
As expected, India has been relatively insulated from the global recession,
without any significant impact on the growth of the pharmaceutical
industry. The industry growth is largely driven by chronic disease segments
viz. cardiovascular, diabetes, asthma, cancer, and largely influenced by
changing lifestyles. There are signs that health awareness has increased
due to higher disposable incomes, urbanization and greater health insurance
coverage, which could improve further with acceleration in Government spend
on healthcare infrastructure. The adoption of intellectual property rights
has encouraged innovation. The industry continues to remain under price
control; the scope and coverage of the Government's new pharmaceuticals
policy cannot be ascertained, since it is pending review by the Government
and remains an area of uncertainity for the pharmaceutical industry. It is
hoped that Government will consider several representations made by
industry associations in framing the new policy. Data Exclusivity/Data
Protection remain a concern area for the industry.
(d) Research & Development and Regulatory Matters:
GlaxoSmithKline continues to be committed to research and development of
medicines that will improve the quality of life of people around the world
and that truly make a difference to patients. The Clinical Operations group
in India, which conducts clinical studies across a number of disease areas
ranging from cancer, iron deficiency anaernia, coronary heart disease,
osteoporosis, malaria, supports this global and local effort.
Your company is engaged in conducting 22 clinical trials of which 7 were
initiated in 2010. A total of 216 patients participated in these studies,
Most of the clinical studies initiated in 2010 were in Oncology. Your
Company has trained more than 165 investigators at 73 clinical trial sites
across India. Quality continues to be the key priority, and is evidenced by
a number of successful internal compliance audits.
During the year under review, in order to support the launch of new drugs
that would benefit and improve the quality of life of Indian patients
suffering from various diseases, your Company submitted 7 NDAs (New Drug
Applications) for various products including vaccines and 2 IND
(investigational New Drug) applications to the CDSCO (Central Drugs
Standard Control Organization), Ministry of Health and Family Welfare,
Government of India. Your Company has received approval for 6 NDAs and 1
IND from CDSCO, which paves the way for speedy introduction of new drugs.
Additionally, to support the R&D efforts of GlaxoSmithKline, your Company
submitted 6 global Clinical Trial applications to the CDSCO and have been
granted approval to conduct 3 studies on the Indian population through the
Clinical Operations group in India.
Some of the novel innovator products for oral use, approved by the
regulatory agency in India during the year under review, include pazopanib
(Votrient) an oncology product for the treatment of advanced renal cell
carcinoma, eltrombopag (Revolade) for the treatment of immune
thrombocytopenia (ITP), and ambrisentan (Volibris) for the treatment of
pulmonary arterial hypertension. In addition, a new indication approved for
the existing oncology product lapatinibTykerb) in combination with
letrozole will be beneficial for Indian patients with metastatic breast
cancer.
Efforts towards ensuring a speedy review and approval by regulatory
authorities for these products will help achieve early access to new and
innovative therapeutic options to patients in the country.
The Medical Affairs team is resourced to play a pivotal role in
communicating cutting edge information for brand plans and engaging with
external experts to ensure exchange of evidence based scientific
information. The Medical Affairs team also ensures that the highest ethical
standards and medical governance principles are upheld during the promotion
of products by the sales team.
(e) Internal Control Framework:
Your Company conducts its business with integrity and high standards of
ethical behavior, and in compliance with the laws and regulations that
govern its business. Your Company has a well stablished framework of
internal controls in operation, supported by standard operating procedures,
policies and guidelines, including suitable monitoring procedures and self
assessment exercises. In addition to external audit, the financial and
operating controls of your Company at various locations are reviewed by the
Internal Auditors, who report significant findings to the Audit Committee
of the Board. Compliance with laws and regulations is also monitored.
Your Company's Code of Conduct sets out the fundamental standards to be
followed by employees in their everyday actions. In accordance with the
Code of Conduct, and Standards associated with the Code of Conduct,
employees are required to become familiar with the legalrequirements,
policies and procedures applicable to their areas of operation, avoid
conflicts of interest and are tasked with upward reporting of all unethical
and illegal conduct. All employees are committed to the principle of
performance with integrity and ensuring that activities comply with all
applicable laws. Additionally, Managers are required to certify on an
annual basis whether there have been any transactions which are fraudulent,
illegal or violative of the Code of Conduct. Strong oversight and self
monitoring policies and procedures demonstrate your Company's commitment to
the highest standards of integrity.
(f) Human Resources:
Capability Building, Talent Management and Employee Engagement remain the
key focus of your company's Human Resource strategy. Your Company has
continued to build on its capabilities in getting the right talent to
support the different therapy areas in which it does business. These are
backed by robust management training schemes, hiring of key management
personnel, and sales training.
With the objective of engaging employees and providing them an opportunity
to present their ideas, your Company has encouraged its employees to form
voluntary empowered teams. These teams are provided the necessary support
to present their ideas to the Senior Leadership/ Management Committee and
encouraged to execute their ideas. Your Company has also recognized over
200 employees for their contribution towards GSK values, strategic
imperatives and the corporate strategy through its AAA (Acknowledge,
Appreciate, Applaud) Award recognition programme. A wellness and wellbeing
service has also benefited a number of employees in coping with the day-to-
day challenges of modern life. Pursuant to an internal employee survey,
task forces have been formed to address issues around Communication,
Speeding up Organisational Processes and Alignment of Objectives.
With a view to laying greater focus on leadership, your Company launched
the global First Line Leadership programme aimed at building leadership
capabilities amongst its first line managers particularly the more recent
appointees.
On the Industrial Relations front, your Company continued to enjoy a
cordial and harmonious relationship. The Company also launched a Career
Ladder Scheme for its top performing Medical Representatives and re-
designated them as Medical Business Associates. A Memorandum of
Understanding has been signed with the Unions in Kolkata, Delhi and Chennai
regions for their Kit Allowance entitlement.
Given your Company's growth plans, a large number of sales personnel were
hired last year and the ramp-up is expected to continue in 2011 . The sales
training team delivered a record breaking 42000 man days of classroom
training to enhance selling skills and product knowledge. The use of the
internet for Pathology-P rod uct-P romotion Knowledge updates has also been
actively utilized by most Business units to provide professional value
updates to our doctor fraternity.
Your Company had a staff strength of 4338 employees as on 31st December,
2010 compared to 4006 employees at the end of the previous year.
(g) Procurement:
The inflationary pressures in global commodity prices had its impact on raw
and packing material costs. A combination of strategic commodity management
and integration with global processes helped mitigate these price pressures
to a large extent. An Operation Excellence Programme at vendor locations
was successfully executed. Compliance with Environment, Health and Safety
norms and promoting sustainability of natural resource usage at vendor's
locations was a major focus area for vendor engagement. Support was
provided to Sales management to improve the aesthetics of some products,
Audit of vendor sites for global level quality compliance is aimed at
making them partners for reliable supply, service and quality at the most
economical cost.
Sourcing strategies were developed for spend optimization in the area of
marketing promotional support items, promotional printing, air travel and
events management. Key Supplier Reviews in strategic categories were
conducted by engaging the business teams and use of a supplier performance
matrix largely focused on compliance with processes, documentation and
contracts.
(h) Manufacturing:
Your company continues to invest in manufacturing capabilities and the
supply network to support growth at optimum product cost. Nashik site has
delivered 300 million Albendazole tablets to WHO as a part of the global
Lymphatic Filriasis eradication programme. Continuous improvement
initiatives using lean sigma principles and better process understanding
has improved productivity at the sites. Both Nashik and Thane manufacturing
sites continue to focus on waste reduction opportunities through optimising
material usage and pack rationalization. There was considerable focus on
improving Environment, Health and Safety and GMP compliance at both the
sites during the year.
(i) Information Technology (IT) & Supply Chain:
A mobile phone based field activity reporting initiative piloted last year
was successfully launched during the year. The Medical representatives will
now report their activity in near real time using mobile handsets, and this
is expected to improve sales effectiveness. In support of the business
initiative of process simplification, IT enabled new processes for managing
the tender business and web portals for reaching rural medical
professionals have been developed.
Focused initiatives for Consensus Forecasting and Supply Chain Planning,
aligned with global best practices, helped to improve supply chain
efficiencies. Processes related to obsolescence management for destruction
of stocks were reviewed and strengthened, as also cold chain assurance
aimed at mitigating risk. A pilot was launched in the Southern region to
provide inputs for network optimization in a GST scenario.
Corporate Social Responsibility:
During the year, your Company continued with its long term ongoing projects
while undertaking many new social development initiatives.
Gramin Aarogya Vikas Sanstha (GAVS), a registered public trust promoted by
the Company operates predominantly in tribal and remote villages around
Nashik. GAVS covers six blocks of Peth Taluka, Nashik through its Mobile
Clinic and three Medical centres.
Your Company in collaboration with Pratham an NGO, runs a shelter home in
Behraich District, Uttar Pradesh which provides vulnerable children with
opportunities for holistic development, mainstream them into the
educational system and equip them with some vocational skills. The Rag
Pickers project supported by your Company and implemented by Niramaya
Health Foundation at Deonar Dumping ground aims at providing Primary
healthcare services and quality Health Education to the rag picker children
and their families, residing in and around the area. The Company continued
its support to Institute for Indian Mother & Child (IIMC) a non-govern
mental voluntary organization, committed to promote child and maternal
health and literacy set up with the mission to give support to the medical
needs to the poorest and most backward people of West Bengal who have no
access to basic healthcare and medicinal facilities. These children are not
only provided medical facilities, but are also supported with nutritional
supplements on a regular basis. The Company also continued its support to
the aged by supporting the Helpline for Aged run by Dignity Foundation,
while also providing for medical facilities to the rural geriatric
population of Khurda district, Orissa.
During the year, the Company initiated a new project for Cancer detection
among the rural underserved community by partnering with Bhaktivedanta
Hospital in Thane district. This Hospital is devoted to giving holistic
care by way of medical services and it services over 1.5 million people in
its catchment areas within a radius of 10 kilometers. The Company also took
up a new initiative with Navjyoti India Foundation formed by Dr. Kiran Bedi
and is engaged in social upliftment and extending support to marginalized
and vulnerable groups including women and children. Another new social
initiative taken during the year was to train underserved women from
difficult backgrounds as nursing assistants in collaboration with the
Ramakrishna Mission, Chennai, one of the oldest centres of the Ramakrishna
Mission. Education offered by the mission is free of cost to all,
irrespective of religion, caste and creed. Additionally, your Company took
up a project run through Life Trust a charitable Trust, established with a
mission of improving quality of education in Municipal run secondary
schools using technology and visual aids and supporting children with
learning disabilities. Donation of essential medicines / products for
humanitarian causes continued for important events organized for mass
mobilization and participation. The Company supported the ISKCON Food
Relief Foundation's Mid-Day meal project for Municipal school children in
Mumbai and the St. Jude India Care Center for cancer affected children.
GSK plc is implementing the Personal Hygiene and Sanitation Education
(PHASE) Programme in some selected municipality schools in Mumbai and
shelter homes in Maharashtra, Gujarat, Rajasthan and Uttar Pradesh. Also,
the global commitment to the elimination of Lymphatic Filariasis (LF) was
strengthened with the setting up of a production facility for albendazole
at your Company's plant in Nashik to produce 300 million treatments per
annum.
(k) Cautionary Note:
Certain statements in the 'Management Discussion and Analysis' section may
be forward looking and are stated as required by applicable laws and
regulations. Many factors may affect the actual results, which could be
different from what the Directors envisage in terms of future performance
and outlook.
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