Glaxo Smith Kline Pakistan Limited Commerce Essay

Glaxo Smith Kline Pakistan Limited Commerce EssayGSK Pakistan Limited was created on January first 2000 through the merger of SmithKline Beecham Pakistan and Glaxo Wellcome Pakistan and it stands as the largest pharmaceutical company in Pakistan today.GSK leads the industry in value, volume and prescription food market sh bes. Some of their key brands include Augmentin, Panadol, Seretide, Betnovate, ranitidine and Calpol in medicine and renowned consumer health grapple brands include Horlicks, Aquafresh, Macleans and ENO.GlaxoSmithKline (GSK) is one of the Pakistans largest re seek-based pharmaceutical corporations that discovers, develops, manufactures and markets branded human health products. GSK has two main backup divisions, pharmaceuticals and consumer healthc are. This profile deals with the pharmaceuticals division, which generates 85% of GSKs gross revenue.GlaxoSmithKline (GSK) is also Pakistans leading research-based pharmaceutical company with a powerful combination of skills and resources that provides a platform for delivering strong growth in todays rapidly changing healthcare environment.GSK also has leadership in four major(ip) therapeutic areas anti-invectives, central nervous system (CNS), respiratory and gastro-intestinal/metabolic. Company produce medicines that treat six major disease areas asthma, virus control, infections, mental health, diabetes and digestive conditions. In addition, GSK is a leader in the secondant area of vaccines and are developing new treatments for derrierecer and has a growing portfolio of oncology products.The company also has a Consumer Healthcare portfolio comprising over-the-counter (OTC) medicines, oral care products and nutritionary healthcare drinks, wholly of which are among the market leaders.GSK is primarily center on the development, fruit and distribution of its own products. GSK is an important contributor to the national skills pool in areas of chemical and pharmaceutical research, manufac turing, anxiety practice and sales marketing. grinder LOCATIONSRegistered Office1. GlaxoSmithKline Pakistan Limited35-Dockyard, West Wharf,Karachi -74000.Telephones 92-21-2315478-82Fax 92-21-2313632Other Offices1. GlaxoSmithKline Pakistan LimitedF-268, S.I.T.E.,Near research labour Square,Karachi-75700Telephones 92-21-2570665-69Fax 92-21-25726132. GlaxoSmithKline Pakistan Limited18.5 km, Ferozepur Road,P.O. Box No. 244,LahoreTelephones 5811931-35Fax 5820821GSKS FINANCIAL infoFive Years Sales yearsSALES (rupees in billions)20026.920038.120048.820059.4 (Growth by 6.2%)200610.1 (Growth by 7.1%)GRAPHICAL REPRESENTATION OF SALES (in millions)Companys Five Years ProfitYEARSPROFIT (rupees in billions)20020.5420031.0220041.4720051.81 (Growth by 23.3%)20061.66 (Decrease by 8.2%)GRAPHICAL REPRESENTATION OF PROFIT (in millions)Revenue breakupBenchmarkingRatio NameWYETHSEARLEABBOTTGSKCurrentRatio4.101.7144.764.4Inventory overturn1.69 times10.11 times4.69 times3.0 timesTotal Asset Turnover6 0%10.2%1.17 times1.1 timesProfit Margin on Sales0.1820.0320.170.16 simoleons Per Share1123.5310.2112.2Return on Assets10.93.219.921.5CORE VALUE OF GSKGSKs value is based on its research strength linked to production marketing. The core of value concept is from the inventories of new chemical entities and it captures value through a high intensive sales and marketing surgical procedure. Essential to the over each(prenominal) value proposition is the synergy of RD, production and moneymaking(prenominal) activities. GSK has been committed to its social and health related activities. Good Corporate Citizen is core value of GSK.Core values of GSKs can be summed up as a belief in performance with integrity, coupled with entrepreneurial spirit, focus on innovation, a sense of urgency and a passion for light uponment.GSK are works to ensure the culture guides and informs e very(prenominal)thing they do by adhering to these core principles, they seek to create a climate in which the bes t nation can always achieve to their full potential, and in turn divine service millions of people live longer, healthier and happier lives.NEW CHEMICAL INVENTROIES merchandise and commercial activitiesSynergy of RDGSKHigh intensive sales.Core Competencies of GSK GSK has the core competencies in genetics, to enable them to integrate genetics effectively and responsibly into their current practice. Competency in these areas represents the minimum knowledge, skills, and attitudes necessary for health professionals from all disciplines (medicine, nursing, allied health, public health, dentistry, psychology, social work, etc.) to provide patient care that involves awareness of genetic effects and concerns.BUSINESS PROFILEGlaxoSmithKline (GSK) is one of the Pakistans largest research-based pharmaceutical companies that that discovers, develops, manufactures and markets human health products. It is an modern company that produces branded products only, which it has developed itself. T he company has two main divisions, pharmaceuticals and consumer healthcare. The consumer healthcare businesses of GSK consist of over-the-counter (OTC) medicines, oral care products, such as the toothpaste brands Aqua fresh, MacLeans and Sensodyne, and nutritional healthcare drinks. The pharmaceuticals division is the largest part of GSKs businesses and can be divided into prescription drugs and vaccines. The headquarters of GSK are located in the UK. The company operates in some clx national markets. GSK conducts RD at more than 20 sites and employs 15,000 employees in RD. GSK is involved in many different RD partnerships with academic institutions, biotechnology companies and other pharmaceutical companies. The company has a leading position in genetics and in new drug discovery technologies.BUSINESS PROFILEPharmaceuticalsConsumer healthcareVaccinesPrescription drugsOver-the-counter (OTC) medicinesOral care productsNutritional healthcare drinksViral VaccinationToothpasteBacterialM acleansAqua freshHeart diseaseInfectionSkin conditionSensodyneBUSINESS STRATEGYGSKs business goal is to be a world leader in pharmaceutical industry. In order to achieve this, the company seeks to improve its RD pipeline, utilise a focused drug portfolio strategy and selective in-licensing agreements for the external contracting of RD. The company links RD closely to commercial operations to maximize the value of its RD portfolio. Furthermore, GSK seeks to increase brand induce recognition among customers and to develop improve versions of older products, on which new patents can be obtained. It is a common strategy of branded drug producers to develop improved versions or more convenient formulations of drugs on which the patents have expired, and to persuade doctors and patients to use the enhanced version.Business strategyBeing best place for best people to do their best workOptimising the performance of key products runing the product pipeline for patientsImproving access t o medicinesSupply Chain of GSKSupply Chain focusing consort to GSK, is a process for ensuring continuity of proviso through the rapid identification of actual and potential add together range of a function of mountains issues enabling pro-active management and the prevention of natural depression and out of inventorying situations.SUPPLY CHAIN MISSION OF GSKGSKs Supply Chain mission is to construct, harmonize and improve quality of all the product and go with the hold still for of satisfying the chain of suppliers suppliers and customers customers by providing right product, at the right time, in the right quantity, to the right place and becoming highly recognized by our employees, customers and shareholders and long-suffering by Government laws and regulationsGSKs Objective of Supply Chain Issue Management To prevent subaltern and out of stock situations occurring. Pro-actively identify any potential give chain issues with the purpose ofpreventing low stocks and stock o uts occurring. Resolve hang on chain issues, at a local level where possible, exceptingissue types categorized for immediate escalation. yield a fast and effective mechanism for escalation where issuescannot be sufficed at local level. Enable delivery of root cause analysis complete with honour up action toensure the causes of actual and potential low stocks and stock outs areunderstood. To have one information source for all communicate chain issues. To have global visibility of all turn in chain issues. To enable rapid tactical solvent to commercial opportunitiesSupply Chain IntegrationP R O D UC TFLOWsales force activity (SFA)Transportation supplierfactory storage warehouseManufacturingSales stations/WarehouseCustomerPharmaciesDistributorsINFORMATIONFLOWGSKs Supply Chain StructureMr. Ahmad Jamal Qudsi (Commercial)Distribution ManagerDISTRIBUTION MANAGER mystify at SCHEDULERMASTER SCHEDULERCAPAPCITYPLANNERPRODUCTION PLANNERPRODUCTION PLANNERMr. Sajjad Zahid Shaikh (GMS) Manager Procurement, Shipping, Contracts, Regulatory affairs.PROCUREMENT MANAGERExports mANAGERLocal/ IMPORTED PURCHASE mANAGERWarehouse mANAGERMr. Obaid (GMS) get Managerb-65F-268w.wLHRSales Force Activity( Demand Generated)Supply Chain do byManufacturing Planning(Demand Generated)Procurement PlanningVendors(Quotations asked)LCFollow up import dispatches dynamic headroom Transit TimeMaterial in WarehouseMaterial Available For ProductionProductionReleased by LTRFO BatchesPacking lineFO QuarantineCentral DepotsDispatchesInstitutionsLab Test Results (LTR)Satellite Depots DistributionWholesalersRetailersGSKs Global Manufacturing Supply ProcedureGMS site disposals will be co-ordinated within a unchanging process aboard communication plans. A consistent process will enable GMS in meeting the business case objectives. The process proposed will mostly recommend decisions to the CET based on a balance between Realising the synergy benefits from transferring production Maximising sale proceeds Minimising local labour redundancy on-going supply security Managing political and other local sensitivitiesKey features of the site disposal process are It is GMS-managed with involvement of key stakeholders at the sites and in ratifiedEntities External contracted assistance will enable global marketing of the sitesA phased and co-ordinated approachPhase 1 preparationPhase 2 searchPhase 3 negotiationThe Escalation Process criterion 1Daily (regular)The regular parley between Demand and Supply music directors is the foundation of SCIM. SCIM is only invoked when the concord supply plan cannot be achieved and a village cannot be found by the demand and supply managers. Low stock and out of stock events are entered into the SOLS system or generated automatically. Demand and Supply Managers discuss entered events as appropriate. Supply Managers chance on proposals to resolve the event. Demand managers read proposals and agree by accepting the suppliers response to ev ents with the customer satisfaction flag as a default value of yes or disagree and move the flag to no. If no is selected then definition may be entered into the escalation field. This enables a report to be run selecting any items marked for escalation. Demand and Supply Mangers proactively view trends, and any issues which might potentially pertain the supply of product.Step 2 WednesdayThe Supply Manager prepares for the PCM. Reports are available from SOLS and other supporting computer systems identifying all issues. In particular, the SCIM report from the Data Warehouse. This is to be run for All Issues (in SOLS issues are referred to as events). The Supply Manager cuts his report in preparation for the PCM at the latest this is done on the Thursday morning.Step 3 ThursdayThe PCM is held. At sites of supply the PCM go off all Low Stocks, Out of Stocks and any issues and their potential impact on the sites king to supply. Where no resolution to actual and potential issues is found then the Supply Manager invokes the escalation procedure with the ALM or equivalent. N.B. Issues can be escalated by either the Demand Manager or the Supply ManagerStep 4 Thursday/FridayThe ALM (or equivalent) is brought in by either the Demand or Supply Manager to help resolve the issue identified. The ALM (or equivalent) runs the SCIM report from the Data Warehouse filtering on Unresolved Issues. If resolution can still not be made then the ALM progresses the issue with the Regional Logistics worryr (RLD). RLD chair conference call with ALMs (or equivalent) and any guest Demand or Supply Managers compulsory. RLD compiles consolidated market view for region of issues. RLD tries to find network solutions to supply issues. RLD flags unresolved issues as critical issues in SOLS.Step 5 MondayThe Area Logistics Managers / Directors are brought into the discussions to assist resolution if necessary especially where a potential stock rationing situation might occur. VP of Globa l Logistics (VPGL) runs the SCIM report from the Data Warehouse filtering on Critical Issues. VPGL chairs conference call with RLDs and any guest ALMs, Demand or Supply Managers required. VP compiles consolidated market impact for issues. VPGL flags any unresolved critical issues as exceptional in SOLS. VPGL makes decision escalate critical issues and engage commercial and manufacturing executives.Step 6 Tuesday weeal review by RSDs, Vice-President Global Logistics, Senior Vice President Global Logistics and Strategy and any other appropriate senior(a) manager. The SCIM report is run from the Data Warehouse filtering on Exceptional Issues. An output from this meeting (or teleconference) can be the establishment of a virtual team to resolve the issue. It will exist until the issue is resolved and is lead by the ALM (or equivalent) supported by the RLD. Where stock rationing is required the RLD will trigger the Rationing process VPGL reports on the commercial impact of exceptional is sues. The RLD assumes overall responsibility for resolution of the exceptional issue.Supply Chain ProcessSupply Chain Issue Management (SCIM) is a process for ensuring continuity of supply through the rapid identification of actual and potential supply chain issues enabling pro-active management and the prevention of low and out of stock situations and regular communication occurs between demand and supply managers. The process is driven from bottom up rather than top down. Issues are to be resolved at the lowest level. Trending analysis is to be done by the Supply Managers. The process is two way between demand and supply. Both supply performance and forecast accuracy are to be reviewed.SCORE MODELPLANNINGBUYINGUSINGSTORESELLINGRMManufacturerMakeDeliverSourceMakeDeliverMakeSourceDeliverSourceDeliverSourcePlanIndentersGSK, PakistanDistributorsReturnReturnReturnReturnReturnReturnSupplierSuppliersSupplierCompanyCustomerWholesalersCustomersCustomer be afterPlanning in GSK, Pakistan, is done by the demand function unit of the finance department. Below is a general diagram which shows how the planning takes placeThe ProcessThe process starts with the doctors which prescribes medicines to the patients. The patients then ask for the drugs from the chemist which is basically a retailer. From retailer an order is then passed on to the distributor which then simultaneously ask for the drugs from the company. right away the daily data on sales is sent to the SMART Department of GSK which uploads the information in the database. Finally the queries and reports which are generated by the SMART Software help the Demand Managers, in the finance department, to predict the future demand for the specific drug.SMART Software basically creates the trend which help managers see the rise and strike in a drugs demands over the years. This helps them to accurately tell the procurement managers the demand required for the raw materials to be purchased for a specific drug.BUSINESS PLANNINGThe unified executive team of GSK does strategic planning on every last day of week which is co-ordinate within a consistent process alongside communication plans. The process proposed will generally recommend decisions to the CET based on a balance between realizing the synergy benefits from transferring production, Maximizing sale proceeds, Ongoing supply security.Corporate executive team (CET)MeetingFinanceDepartmentDiscussCET VP, Planning SourcingNegotiationCET approvalCorporate executive team.DEMAND FORCASTAs mentioned above the demand in GSK is forecasted by the Demand Function Unit of Finance Department. Finance department provides 24 months rolling aggregate demand forecast, which is know as ADS (Approved Demand Statement). This statement shows individual demands for all product lines demanded by end users. The softwares used by the finance department to predicts demands are BIPEX (also known as BPCS) and JD-Edwards.On the demand side markets review their sales pl ans on a regular basis (at least monthly depending on size of market) and feed into the supply sites Production control Meetings through the Supply ManagersUNPLANNED DEMANDUnplanned demand is a demand, which comes unexpectedly Like at the time of War, NATURAL DISASTERS OR ANY EPIDEMICS According to GSK, they have a policy to maintain four weeks safety stock to handle the uncertainties.Stock, in the three categories, intended to maintain supply continuity resulting from a significant event that is unplanned.Top 20 Products (as defined by GSK annual sales, Pharma/Consumer Healthcare)Medically Critical and Access to Medicines productsNew chemic Entities (NCEs), including Product Line Extensions (PLEs)SUPPLY STRUCTURESupply Issues (potential and actual) are reviewed formally each week. At the supply sites this is done at the weekly Production cut back Meeting. Supply Issues are managed on a daily basis but the formal weekly meeting brings all aspects of supply and demand together for review it adds a framework. Then after the supply plan has been made it is forwarded it to the Procurement Department.Master Production ScheduleThe entire production is based on this plan weather it is Tablet, syrup, or injectables manufacturing. This is set up on the bases of forecasted and some times unplanned demand as well. Date for all the batches is set up tally to this plan but when there is a sense of urgency then there are some changes made. The figure below shows this process is generatedMaster Production ArrivalThis is the inventory, which is going to arrive in bulk, and it is the job of Master Production Scheduler to arrange the bulk. This bulk can either be for export or for the market demand done through forecast. He also sets up when to make the required batch on which date.STOCK MANAGEMENTGSK used inventory management system First in First out (FIFO). Inventory management (FIFO) of strategic stock to ensure proper rotation and reduce the potential of data used. Ite ms at stock keeping unit level where, based on the forward sales forecast/ sales orders, the level of inventory is predicted to fall below 50% of the agreed safety stock within the next 90 days.SAFETY STOCKGSK stores stock in ware houses for maximum flexibility of supply purpose. The stock is taken into account within 1 month of time.Material Management PlanningGSK, Pakistan is using BIPEX (also known as BPCS) to effectively and efficiently handle the Material issues. All transactions are made electronically into BPCS known as Business Planning obtain System. If there is an additional requirement out-of-pocket to abnormal demand then there are some changes made in MRP.Capacity PlanningCapacity means a measured ability to accomplish work. Capacity planning is a process in which capacity is planned based upon expected demand and it needs to be balanced with required capacity utilization and it also outlines the capacity requirements for the production, availability of machines and what are the standard hours, which they are required to meet the forecasted demand. And to manage the capacity control process GSK Pakistan is using 2 systems known as JD-Edwards and BIPEX which is also called as Business Process Control System (BPCS).SUPPLY CHAIN CONFIGURATIONSupply chain manager act upon the process enabling pro-active management of potential and actual supply issues in order that the impact on lost sales is minimized. Supply chain manager resolve supply chain issues, at a local level. The Supply Manager prepares for the PCM. Reports are available from SOLS and other supporting computer systems identifying all issues. In particular, the SCIM report from the Data Warehouse. .MAKE OR BUY DECISIONGSK Pakistan is currently importing 72 drugs, which includes all its vaccines and expensive oncology medicines such as Hycamtin. The curtilage why GSK imports these products are because there manufacturing is very expensive and Pakistan is not self sufficient in the raw mat erials which are required to make these products. Infact the climate of Pakistan makes it very hard for GSK to manufacture vaccines here. Thus all its vaccines are imported from Belgium. Also, these products cater to a very small market segment and manufacturing them here would not be profitable.SOURCINGGsk Medicines contain active ingredients. They also contain other, additional ingredients called Excipients that help ensure the stability, safety and effectiveness of the medicine. They are also added to improve the medicines taste and appearance and to make it easier to take. Some may be used to prolong the life of the medicinePharmaceutical ingredients include both synthetic chemical substances as well as material with biological orgin. Various control methods with chemical, microscopic and microbiological testing is covered during the course. In addition, the different national and international quality control regulations for pharmaceutical ingredients are taught.SOURCING PROCES SThe Weekly ProcessAt the day-to-day level the Demand and Supply Managers are engaged in managing the fulfillment of the order book, ensuring forecasts are unploughed up to date, handling any un-forecasted (abnormal) demand, and resolving any issues. This is normal daily activity. Any issues arising must be discussed with the objective of resolving at local level. Issues can come from either the Demand or the Supply side. The Stock Out and Low Stock (SOLS) Data Warehouse system is the main vehicle for recording and reporting issues and actions taken between Demand and Supply Managers. It is used as a formal means of identifying and tracking issues and the actions taken to resolve them. It is a dialogue application for use by the Demand and Supply Managers. Demand nodes will accept the proposals or escalate through the hierarchy. Data can be manually entered into SOLS. Supply sites must respond to recorded stock-out and low stock events according to SCIM time tablePROCUREMENTGSK ha s an extremely large procurement organization more often than not left over from the 2001 merger between Glaxo Welcome and SmithKline Beecham. The purchasing group set a goal of developing what it called best value purchasing strategies, ensuring that GSK is getting the best possible price and cost for everything it buys. That means negotiating the best prices and making sure those contracts are adhered to.GSK has two types of purchases i.e. local purchases and foreign purchasesPURCHASESLOCAL PURCHASES extraneous PURCHASES defenseless Packing MaterialGroup purchasesNon Group purchases (party purchases))NIP (non inventory purchases)PROCESS FLOW FOR PURCHASEPR incorporated inIncorporated ByAgainst requisition ofBIPEXPPICPurchasesJD EdwardsConcern dept.NIPPurchase of inventory is approved through Firm Plan Order (FPO) by Purchase Planning and Inventory Control Dept (PPIC) and incorporates in system N.I.P. Concern department generate approved Purchase Receipt. Procurement Department (P.D.) received signed copy of FPO by PPIC and PR for N.I.P.Type of PurchasePURCHASE FLOW OF PRODUCT AFOREIGN PURCHJASESLOCAL PURCHASESPurchasesRaw MaterialPacking MaterialN.I.P.Fixed AssetsConsumable itemsQuotation callingSelection of Supplier through Quotation Evaluation FormPlacement of Purchase Order (PO) by P.D.Information in POSupplier nameDelivery scheduleQuantity RequiredRate (as distinguishable with supplier)ASUPPLY of GOODSNature of MaterialMaterial Supplied atPurchasesStores.NIPConcern Dept.3way checkInvoice WITH P.R. P.O. by Commercial FinanceIssuance of INVOICE by Supplier.Information in chronicleDelivery Challan .P.O.Recording of Liability depends on LTR.DOCUMENTS ISSUED BY DEPT.AFTER RECEIPT of MATERIAL from SUPPLIERSupply ofDocuments IssuedBYTOPurchasesReceivers Ticket.(RT)Delivery Challan.Stores Dept.Quality Control (QC) Dept.NIPMaterial Receipt Note (MRN)Concern Dept.Incorporated in System.Lab Test Report (LTR)Incorporation of approved lots in BIPEX by QCUp to the QualityAccounts Dept. runs an auto report identify NEW LTRsEntries made by Accounts Dept. for new LTRs DebitCredit approach for NEW LTRStock (Standard rate)xxxPurchases Price Variance (PPV)-GSTxxx PPV- Other than GSTxxx Provision for purchases(actual payable amount)xxx PPV variance (with the Diff.) Fav/ (Un-Fav)xxxxxxPurchases (actual payable amount)xxx Purchases ContraxxxENTRY for NEW INVOICE (after approval of QC)Provision for Purchasesxxx Vendor Control A/CxxxBEntries made by Accounts Dept. for new MRN DebitCreditENTRY for NEW MRNExpense A/C (NIP)xxx NIP Commitment A/C xxx ENTRY for NEW INVOICE NIP Commitment A/C xxx Vendor Control A/CxxxPayment to VENDOREntries made by Accounts Dept. at Payment StageDebitCreditVendor Control A/Cxxx Bankxxx Tax LiabilityxxxRaw MaterialPacking MaterialPurchase FROMQuotation Callingthird PARTYSelection of SupplierRaw MaterialFinished GoodsGROUPPrices are already decided between GlaxoSmithKline Pakistan Limited Group Companies.Placement of Pur chase Order (PO) by PD they incorporates PO, in BIPEX.Receives PERFORMA INVOICE (an agreement to sell) by Supplier.Type of L/COpening of Letter of Credit (L/C) with Bank.Information in L/C L/C .Mode of transportation.Type of L/C. (Usance / Sight)Receipt of cargo Schedule (SS), Suppliers Invoice Bill of Lading B/L (Negotiable Non-Negotiable Copy).Information in SSDate of Shipment.Type of freight paid.At usage at sightC ledger entry of Negotiable Copy of B/L to Shipping Co.Submission of Non- Negotiable Copy of B/L to Ministry of Health for Approval of Material (as required under Drugs Act).Delivery Order (Delivery Challan) receives from Shipping Co.Submission to Custom for Clearance of Shipment.Receipt of SHIPMENTCertificate of Approval for Material by Ministry of Health alongwith exemption certificate (if any).LTR Up to the QualityReceipt of Agents BillTesting of Shipment by QCMaterials Average Lead TimeGSK Pakistan only uses air freight to acquire imported materials and its lead time is approximately 120 days. Note that when materials arrive they also take clearance time which is about 4-5 days for air freight