Sharpening our operations

Commercial and operational excellence initiatives help GSK to continually improve performance	£6 billion profit before tax grew 2% in 2004 More than £2 billion total cost savings since the merger in 2001
"We’re establishing global standards for the quality of sales calls and expectations for our frontline sales managers" David Pernock, Senior Vice President, US Pharmaceuticals

GSK's business comprises Pharmaceuticals (prescription medicines and vaccines) and Consumer Healthcare (over-the-counter medicines, oral care and nutritional healthcare), supported by Global Manufacturing & Supply (GMS).

The Pharmaceutical and Consumer Healthcare businesses aim to maximise their commercial potential by introducing innovative products to as many markets as possible, accelerating the process of bringing new products to market, increasing brand recognition and ensuring that patients have access to new medicines.

Worldwide Sales Force Excellence
GSK's sales force ranks high in industry surveys of healthcare professionals (see below). The Worldwide Sales Force Excellence initiative (WSFE) aims to improve customer satisfaction by identifying and sharing best practice within the sales force, and by strengthening sales representatives' product knowledge. More than 25,000 sales representatives have been trained through this initiative.

The time available to physicians for learning about new medicines and clinical studies is precious. GSK's When, Why, How approach (see below) enables sales representatives to deliver patient-specific treatment options more efficiently and effectively.

Product life cycle management
The Product Line Extension (PLE) approach allows GSK to create what is effectively an entirely new drug within the life cycle of an existing drug. This offers the patient significant clinical advantages, such as increased compliance and safety, increased efficacy and/or more convenient dosage forms.

In recent years, PLEs such as Wellbutrin XL have helped GSK mitigate the impact of generic medicines and have contributed to pipeline momentum. In 2004, GSK lost sales of £1.5 billion to generic medicines, but this was partially offset by sales of PLEs worth £0.6 billion. In 2005, GSK has plans to file four new PLEs: Avandamet XR, Coreg CR, Requip CR and Trexima.

Patient Advocacy: supporting patient needs
GSK's Patient Advocacy initiative is designed to bring GSK closer to patients and advocacy groups, with the goal of improving GSK's understanding of patient needs and enhancing its reputation as a patient-centred company. After all, there are no better spokespeople than patients whose lives are affected by GSK products.

This initiative originated in the US in 2002 but has since been incorporated into GSK's strategic plans throughout the world. In 2004, the annual Patient Advocacy Leadership Summit was attended by more than 400 people (including patient group representatives) from 23 countries.

Consumer Healthcare
In 2004, Consumer Healthcare developed a new business strategy and operating model designed to deliver faster sales growth. It will achieve this through a vigorous focus on product innovation that is tightly aligned to consumer needs. The new model more effectively links together R&D, marketing and commercial operating units, organised to support three categories of brands:

• Global brands: significant brands marketed in multiple markets
• Lead market brands: significant brands marketed in a few markets
• Enterprise brands: valuable local brands.

Global Manufacturing & Supply
GMS focuses on the secure supply of high-quality products to meet patient expectations. It continues to deliver significant and sustainable efficiency improvements across its network of more than 80 factories. For example, the global programme that focuses on principles for lean manufacturing and technology has resulted in better process yields, improved quality and simpler business processes. Global procurement expenditure has reduced due to a continued focus on low-cost supply and e-procurement techniques, such as electronic auctions.

Harnessing Nature's power "The turbines have contributed to the site's overall 25% reduction in its spend on energy and utilities" Paul Londesborough, Site Director, Barnard Castle

GSK's Environment, Health & Safety Excellence initiative includes the long-term goal to drive down the environmental impact of manufacturing and to switch to renewable energy sources. At Barnard Castle in the UK, two wind turbines have been installed, which are capable of providing 10% of the site's electricity when running at full speed.

No.1 Sales force ranking Surveys of US physicians have recently rated GSK sales representatives number one in four physician specialities: allergists, immunologists, paediatricians and pulmonologists.				Sites reduced by 29% Since the merger, GSK has reduced the number of manufacturing sites from 115 to 82 through rationalisation and operational excellence initiatives.
When, Why, How GSK has introduced a global sales call model that focuses on When a GSK medicine is appropriate, Why a physician should consider it for a patient and How to administer it appropriately. By the end of 2004, all sales representatives in GSK's key markets had been trained in this approach.				£300m GMS's Operational Excellence Programme has realised annualised cost savings of £300 million through operational efficiencies with its network of manufacturing sites.