Corporate Responsibility Report 2008

Message from the CEO

A new mindset

Welcome to GSK’s Corporate Responsibility report which provides information on our activity and performance during 2008.

We want to be a company that is forward looking, innovative and willing to try new approaches and partnerships; a company that is constantly looking for new and sustainable ways to increase access to our medicines and vaccines, especially for those least able to pay.

We have made significant progress in helping to address global healthcare challenges. For example, over the past ten years we have donated over one billion tablets to the programme to eliminate lymphatic filariasis, a debilitating tropical disease and we are doubling manufacturing capacity to 600 million tablets a year. Our commitment to preferential pricing means we offer our AIDS and malaria medicines at not-for-profit prices in the world’s poorest countries. We also supply our vaccines to organisations such as GAVI and UNICEF at preferential prices, typically 10-20 per cent of the prices in developed countries.

But for every success story, there are examples of where we could do more. As I review our performance, I believe it is time for a new mindset in our industry and a new contract with society. In these difficult economic times it is a challenge to think beyond short-term performance. But we must look to the long-term and not be distracted by our own economic problems when the needs of the developing world remain just as pressing.

To begin with, there are four areas where we can show we are going to do things differently.

First, we are exploring a more flexible approach to intellectual property rights to incentivise much needed research into medicines for 16 neglected tropical diseases where there is a severe lack of research. One option is a Least Developed Country (LDC) ‘patent pool’ in to which we would put our relevant small molecule compounds, process patents or other knowledge, and which would allow others access to develop and produce new products.

Secondly, on 1 April 2009 we will reduce our prices for patented medicines in the 50 poorest countries in the world, the LDCs, so they are no higher than 25 per cent of the developed world price. Where possible we will reduce our prices further while ensuring we cover our manufacturing costs so this offer is sustainable. We also recognise the challenge in middle-income countries where there is a wide disparity in incomes and ability to pay. Here our intention is to work on a case-by-case basis recognising that there is no ‘one size fits all’ solution to improving access to medicines in these countries.

Thirdly, we will seek out partnerships and open the doors of our developing world research centre in Spain. We already know what partnership can achieve – for example, we successfully trialled a malaria vaccine candidate in partnership with the PATH’s Malaria Vaccine Initiative and the Bill and Melinda Gates Foundation. If we extend this approach the benefits will be huge.

Fourthly, working with partners such as NGOs, we will reinvest 20 per cent of the profit we make from selling medicines in LDCs to support the strengthening of healthcare infrastructure in these countries. Our sales in LDCs are relatively low so this profit is limited; initially this funding will amount to £1 to £2 million annually. But by our action we hope to send a signal to all multi-national companies operating in LDCs to join us and make a meaningful change in these countries. In all developing countries we must transform GSK into a local company addressing local healthcare needs. Our Brazilian business is leading the way – supplying vaccines and sharing technical expertise to help build local capacity.

We will not forget that significant healthcare challenges exist in developed countries too. We must work in partnership to create a virtuous circle, where industry gets rewarded for demonstrating genuine innovation, healthcare payers get value-for-money because our medicines save them from high-cost healthcare interventions, and more patients get the medicines they need.

Of course, access to medicines is not the only issue that counts. We want GSK to be recognised around the world - by all stakeholders - as a company with the highest ethical standards.

We made good progress in 2008. We committed to stopping all corporate political contributions from 2009. Our decision to report more fully on our funding for medical education, patient groups and payments to physicians, will increase transparency and provide reassurance to stakeholders. Reflecting our commitment to animal welfare, we took a voluntary decision to end research in great apes, the highest-order of animals next to humans.

It is time for a new mindset in our industry and a new contract with society. With the support of other pharmaceutical companies and partners outside the industry, I believe significant improvements in human health can really be achieved.

Andrew Witty, CEO