2. Introduction
• History: created on 1st January 2001, with the merger of
french company SmithKline and French of Pakistan Limited,
Beecham Pakistan (Private) Limited and Glaxo Wellcome
(Pakistan) Limited- standing today as the largest
pharmaceutical company in Pakistan
- Mainly operates in segments (Pharmaceutical and consumer
healthcare)
3. Products
• Products: Augmentin, Panadol, Seretide,
Betnovate, Zantac and Carpol in medicine and
renowned consumer healthcare brands
include Horlicks, Aquafresh, Macleans,
Zofram and ENO, and many others.
4. Key figures
• Sales Rs.25,231 million volume,
Profit of Rs.1,062 million,
Net profit to Assets was 4.2%
• Outperforming KSE-100 P/E ratio which 11, since GSK`s
P/E ratio was 37.5 in 2013, and has doubled relative
2012.
• Today`s Operational status:
- There are about 79 sites for manufacturing and
- Operates in 33 countries.
- Having 4 major sites in Pakistan, 3 in Karachi, and one
in Lahore.
5. Risks faced by GSK
• Strategic Risk:
- Overly restricted prices, and
- No general policy for pharmaceuticals
• Commercial Risks
• Strategic Risks
6. DFL AND DOL
• DOL = (1.9)
- but, it was 0.7 in 2012.
• DFL = 0.6
- However in 2012, DFL was 0.4, essential in 2013
and GSK had same debt to equity ratio that is 0.1,
showing that cost of debt in 2013 has increased
in 2013 for GSK.
7. Fixed asset Profile of GSK
Year Fixed Asset
2008 2415 (millions)
2009 3830
2010 4190
2011 4794
2012 5815
2013 5973
0
1000
2000
3000
4000
5000
6000
7000
1 2 3 4 5 6
Series1
The growth rate in sales is 9%, showing the success of GSK`s expansion of
operations, P/E ratio is ALSO 37.5.
8. Cash Management Policy
• Focused on generating internal financing
• Very strict stance on short term borrowing
• Dynamic system at work, for determining liquidity
requirement
• Current cash flow operations 4.2, which was at 7 in
2012
9. • Excess cash is invested in government securities.
• cash= 2.1 billion
• Improved operating cycle (from 94 to 82) in 2013
• GSK invests in the highly rated government securities.
• Branches in different banks such as:
- Citibank
- Standard Chartered Bank (Pakistan) Limited
- HSBC Bank Middle East Limited
- Habib Bank Limited
- Deutsche Bank A.G.
- Barclays Bank PLC Pakistan
10. Inventory Management
• Till 2010 GSK used DSS process, left it out
because not having quality of intigertated
information system
• GSK has complete warehouse system
• GSK follows lead time approach, orders 4
times a year with a safety stock of 1 month
forward.
• Overall they order 4 times in year
11. • Since of 2011, GSK is following SAP model for
inventory management
• Improved operating cycle (from 94 to 82) in 2013
Benefits of SAP:
- Integrated information system
- functional areas of financial, human resources, supply
chain management, and marketing
- Model provides real time feature in the transaction.
- Automated updating of the over consumption of stock.
12. Receivable Management
• Follows a very strict policy regarding
receivables owing to products they provide in
market are unmatchable.
• GSK deals in cash or they only one week of
credit to the costumers
• Days to receivable turnover ratio of 5 days,
Reflecting the demand of the products
13. Payable Management
• Spending very aggressively on the R&D
department of the pharmacy, having a long
term perspective.
• Evident from Rs. 150 million increase in fixed
assets.
• Supplier are confident regarding the
prospects and credibility of the GSK, since in
last days to payoff for supplies was 28, now it
is 28.
14. Conclusion
• Efficiently managing its operations
• Has market share of 55%
• SAP is used for effective inventory and other
business operations
• Uses lead time, keeps a safety stock of 1
month, places 4 orders in a year.
• Days of collection period is 5, showing sound
liquidity position of company.
15. • Bright future prospects heavily investing in
R&N, and increasing its investment in fixed
asset by Rs.150 million.
• Owns 4 research centers 3 in Karachi and 1 in
Lahore
