Glaxo to invest in diversity, cautious on outlook

Witty told reporters he was also open to expanding into new areas, if it could be shown that these would drive growth. But he ruled out buying a generic drug business in the United States or Western Europe.

The diversification strategy aligns Glaxo more closely with companies like Novartis AG (NOVN.VX) and Johnson & Johnson (JNJ.N), which have long trumpeted the breadth of their healthcare portfolios.

The rethink has become necessary because of the grim outlook for conventional, or small molecule, pharmaceuticals, where a barrage of looming patent expiries promises to slash prices in many therapeutic areas for ever.

That changing landscape means Glaxo needs to focus on areas where there is both an unmet medical need and the scientific potential for developing new products, Witty said.

Glaxo's eight areas of focus for future drug research will be inflammation, oncology, metabolic pathways, ophthalmology, respiratory, neuroscience, anti-infectives and biopharmaceuticals.

The company is also splitting its drug discovery researchers into much smaller teams of 5 to 80 that will compete for funding from a new panel that includes experts from outside Glaxo.

Glaxo already has a reputation for cutting costs, but Witty said more could be done, for example by eliminating duplicate financial accounting systems and reducing the number of packs its pharmaceutical factories produce.

Witty said he was actively looking for bolt-on acquisitions across all areas of Glaxo's business but he was skeptical about big deals, given the pipeline problems facing any large company Glaxo might look to acquire.

(Additional reporting by Mark Potter, Editing by David Cowell)