GSK uses price cuts to access emerging markets

Simon Dingemans, gsk GlaxoSmithKline (GSK) has said it aims to secure drug volume growth in China and other emerging markets by cutting its prices.

The UK’s largest pharmaceutical company has seen this strategy increase its sales in China by 20% in the last year.

The strategy is part of the company’s ongoing global drive to increase patient access to its products.

According to the GSK’s annual report, introducing price cuts in 2009 has caused unit sales of allergy drug Avamys to increase fivefold in emerging markets, while revenue from Avodart (a drug for enlarged prostate glands) has risen by 76%.

“Price reductions are in many ways very important in driving the access and take-up of healthcare coverage,” said GSK’s Chief Financial Officer, Simon Dingemans (pictured). “We see very good volume response to that, which shows the strategy is working.”

He noted that last year, GSK saw its sales rise by 20% in China (to £1bn) and by 5.6% across all emerging markets (to £1.56bn).

GSK is using the same price-cutting approach in another 10 Asian countries and 40 in Africa.

China is the world’s third largest pharmaceutical market, with annual spending on healthcare set to rise to $1 trillion by 2020.