6. What policies should GlaxoSmithKline adopt with regard to:

a) pricing of patented products during the early years of protection and as patent protection is due to expire;

b) attempting to influence public policy through advertising or lobbying? Britain’s GlaxoSmithKline, the second largest pharmaceutical company in the world, was formed on 27 December 2000 by the merger of Glaxo Wellcome PLC and SmithKline PLC. The merged company had over 7% of the world market for ethical (prescription)

drugs. GSK had increases in both sales and profits in 2001, 2002, and 2003. Total sales in 2003 were £21 billion with profit before tax of £6.7 ($37.8 billion and

$12.1 billion respectively at the April 2004 exchange rate of £1.0 # US$1.8). With a number of problems facing the whole pharmaceutical industry, GSK expects 2004 to be a year of transition before it returns to growth in 2005 (GSK, 2004).

Because of the international nature of the companies involved, the proposed merger had required approvals by three governments as well as the stockholders of the companies involved. The European Commission had granted approval in May 2000, stockholders of both companies had endorsed it in July, and both the US Federal Trade Commission and the British High Court had given their approvals in December 2000.