GlaxoSmithKline plans major drug price cuts for developing countries, FT reports

UK drug major GlaxoSmithKline aims to reduce the prices of its drugs for poorer and developing country markets, the firm's head of emerging markets, Abbass Hussain, told the Financial Times' Andrew Jack in an exclusive interview. The GSK executive wants to move away from 'white pills in western market,' telling the FT that 'we need to innovate down the pyramid working the market down.'

'My preference is not a high price and 100 units of profit for 100 patients, but to drop the price and make 100 of profit from 500 patients,' said Mr Hussain, adding: 'We fundamentally believe access for more of the masses is the way to go.'

The reductions, expected to reduce prices in most developing countries to below two-thirds of western levels, reflect intensifying efforts by drug companies to tap demand from the faster-growing economies as western markets stagnate. Mr Hussain told the FT that pilot price cuts have increased volumes.

This year, Gbola Amusa, a pharma analyst with UBS, said emerging markets would help the sector maintain annual sales growth of at least 3%, and singled out Novartis, Bayer, Novo Nordisk and Teva as beneficiaries, reports the FT.

GSK and other companies have been forced to reduce prices in recent months by health care systems in developing countries. This year, the Philippines imposed sharp reductions for all drug manufacturers, and Turkey is poised to demand substantial cuts. Mr Hussain said experiments by GSK in lower-price markets had not led richer countries to demand similar discounts, while exports back into richer countries were 'not substantial enough to worry about.'