GlaxoSmithKline PLC ADRGSK

Morningstar Rating

Stock Research and Analysis

by Damien Conover, CFA

As one of the word's largest pharmaceutical companies, GlaxoSmithKline has used its vast resources to create the next generation of medicines. The company's innovative new product lineup and expansive list of patent-protected drugs create a wide economic Read more

Bulls Say

Using effective product life cycle planning, the company introduced Coreg CR, an extended-release formulation of Coreg IR, which lost patent protection in 2007.

Glaxo is well positioned in the vaccine market thanks to its blockbuster potential vaccines, Cervarix for HPV and Synflorix for pneumococcal disease.

The consumer business line is poised for continued growth led by weight-loss product Alli, which could eventually generate several hundred million pounds in sales.

Glaxo does a good job of obtaining insurance coverage for its drugs--a critical step to achieve successful drug launches. Typically, the company generates more than 80% Tier II coverage in managed-care access.

Glaxo has shown success in expanding its product lines through external partnerships, including Boniva and Alli with Roche RHHBY and Lexiva with Vertex VRTX. Read more

Bears Say

The cardiovascular side effect concerns with Avandia could escalate if the product is removed from the market, creating a Vioxx-like litigation nightmare.

Generic launches of Lamictal and Valtrex could weigh on near-term growth.

Cervarix and Synflorix lost the first-mover advantage to Merck MRK and Wyeth WYE, respectively.

While diverse operating platforms insulate the company from product-specific problems, this safety comes at the cost of slower growth potential.

In the past few years, major patent losses for antidepressant Paxil and anti-infective Augmentin have drained resources from the company. Read more

Strategy

Glaxo operates across all major therapeutic classes, as well as in the vaccine and consumer businesses. The multiple operating platforms provide more opportunities for growth and insulate the company Read more

Management

Glaxo selected the president of its European pharmaceutical business, Andrew Witty, to succeed Jean-Pierre Garnier as CEO in June 2008. Witty's leadership in increasing sales in a cost-conscious European environment should be an asset in the United Read more

Profile

Within the pharmaceutical industry, GlaxoSmithKline ranks second only to Pfizer in market capitalization. The company wields its might across multiple therapeutic classes, Read more

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