Drugmaker GSK cuts back in Africa to hone emerging markets model

LONDON (Reuters) - GlaxoSmithKline is cutting back operations in Africa as its new Chief Executive Emma Walmsley seeks to make the British drugmaker more competitive in emerging markets by ditching her predecessor’s expansion plans for the continent.

The move, which a GSK spokesman said on Wednesday would result in an unspecified number of job losses in sub-Saharan Africa, follows disappointing sales for many pharmaceutical companies in the region.

Five years ago, forecasters predicted annual African drug sales would reach $45 billion by 2020. Today, the same experts at research company IQVIA, previously known as IMS Health, suggest it is more likely to be around $25 billion.

Walmsley’s tenure since she took over in April 2017 has been marked by tough reviews of existing activities, leading to plans to divest some product lines, as well as a major overhaul of GSK’s drug research pipeline.

She announced in July 2017 that GSK would create a new, more competitive operating model for its emerging markets business, which set the stage for the African shake-up.

GSK will no longer market medicines to healthcare professionals in 29 sub-Saharan African markets and instead adopt a distributor-led model.

However, the group will continue to run local operations in Kenya and Nigeria, and South Africa will remain managed by the drugmaker’s local partner Aspen Pharmacare. GSK will also retain representative offices in Ivory Coast and Ghana.

The company said the changes, which were agreed at the end of last year, would not stop it working with governments and multilateral agencies like the World Health Organization, Unicef and the vaccines group GAVI.

“Patient access to medicines and vaccines will not be affected by this change,” the spokesman said.

The decision is an about-turn from the strategy laid out by former CEO Andrew Witty in March 2014 when GSK set out plans to make targeted investments of up to 130 million pounds ($179 million) in Africa and create hundreds of jobs.

Under Witty, GSK went further than many other companies in committing to fair prices in developing countries, with a pledge to cap the prices of its patented medicines at no more than 25 percent of developed world prices.

Reporting by Ben Hirschler; editing by Alexander Smith