Friday, 9 June 2017

Title - GlaxoSmithKline plc [Financial Analysis]

Title - GlaxoSmithKline plc [Financial Analysis]




Table of Contents







1. Task 1

1.1 About the company

GlaxoSmithKline plc is a pharmaceutical company that operates in the following three primary areas of business:
1.      Pharmaceuticals which include prescription pharmaceuticals
2.      Vaccines
3.      Consumer healthcare, including nutrition, oral health, wellness and skin health consumer health products

1.1.1.      Its strategic planning

GSK’s business is laid around three strategic priorities that aim at increasing their growth, at reducing risks that the company has to face in the industry that its operates and so that it can improve its financial performance both in short and long term (GlaxosmithKline, 2013). These strategic priorities include:-
1.      Growth in diversified global business
In the last five years, GSK has created a more balanced business and product portfolio that has been able of delivering sustainable sales growth. The company has substantially increased its investment in areas that promise higher growth including emerging markets such as Japan and also in businesses that give them an edge, for example, their global Vaccines and Consumer Healthcare businesses (GlaxoSmithKline, 2013). At the same time, the company has also given a new and improved shape to its US Pharmaceuticals and Vaccines business so that it is able to reflect the changing market dynamics and also to prepare for the launch of newer products. In Europe, the company is getting a new structure so that it can improve the efficiency and focus on resources in such a challenging environment in the market.
2.      Delivering more products lines and increasing value of the existing ones
The company has changed its R&D and the new process is being able to sustain a pipeline of products that would offer valuable improvements in treatment of complex diseases and also those which help in improving facilities that healthcare provider will use to give better services to the ailing. The company has now increased the externalisation of its research and development (Website, 2012). The company has also restructured and speeded up the process of decision making so that those medicines that are differentiated from medications that exist. The company has shifted away from traditional research processes of having long hierarchical chains and has adopted working in smaller and flexible piecemeal functional divisions where accountability is much higher than the traditional working systems.
3.      Simplifying the model on which the company operates
The company has transformed and way it has been operating so as to reduce complexity and becoming more efficient. Over the past four years, the company has completely re-structured itself globally and has been working in such manner so as to save a good amount and convert it into investment for growth of its priority businesses.

1.1.2. Current strategic financial management position

The financial management has been strategised in such as way so as to grow sustainably, their earnings per share and the free cash flow of the company, so as to maximise total returns to shareholders. Financial management has been established on four key financial priorities:
  • Sustainable sales growth over the long term
The sales figure was down 1% for 2012, while the sales were flat and they adjusted for the lesser growth of consumer healthcare brands that have not been the core area. The pressure in the western markets has been overcome through the increasing sales in the ‘growth’ businesses of the emerging markets (Financial Summary, 2012).
  • Improving upon the operating leverage
The core operating margins feel by 0.6% ending up in 31.5%, 0.3 percentage points of this 0.6% fell since the HGS acquisition impacted it. The other 0.3 percentage points happened due to the effect of maintaining flat SG&A on a lower turnover which would be, in part, played down by a lesser expenditure in Research and Development. The company has a deep focus on maintaining and effective cost base. Our operational excellence programme started in 2008 and by now and is expected to deliver an annual saving of £1 billion by 2016. The strategic financial planning includes balancing the cost savings and making continued investment so as to support and launch the pipeline sales (FinancialSummary, 2012).

To read more…….

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