Annual Report - GSK PK

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Annual Report

Transcending boundaries is in our DNA. This is evident in how we continue to discover,develop and bring to market, new medicines and vaccines to address the unmet needs ofhealthcare providers and their patients.As a responsible healthcare company, we drive change by adopting new and innovativemethodologies, aligned with our values, so that we can better serve the evolving needs of oursociety and enable more patients to benefit from our medicines.We firmly believe that keeping the patient at the heart of everything we do is integral to oursuccess; inspiring us to continue on this journey and transcend boundaries.GSK

Contents002Our Vision, Mission and CoreValues004Corporate Information006Financial Highlights007DUPONT Analysis008The GSK Story010026062028065030066031067032070VaccinesKey Operating and Financial DataPrimary CareDirect Cash Flow StatementSpecialty Business UnitMedical AffairsVertical AnalysisAwards 2016Statement of Compliance with theCode of Corporate Governance034GSK ExpectationsGlobal Manufacturing & Supply(GMS)011035Strategic Priorities012Company Profile &Group Structure014Our Behaviour015Organogram016Geographical Presence017SWOT Analysis018Finance019Warehousing andDistribution (W&D)036Environment Health & Safety(EHS)038Quality Management System (QMS)040Corporate Social Responsibility(CSR)042Directors’ Profile044Board & Management Committees046Commercial Trade Channel (CTC)Directors’ Report to theShareholders020055Information Technology021Multi Channel Marketing (MCM)022Human Resources024DermatologyHorizontal AnalysisDirectors’ Report to theShareholders – Urdu056Chief Executive Officer’s Review060Financial Performance at a Glance072Review Report to the Members073Auditors Report to the Members074Balance Sheet075Profit and Loss Account076Cash Flow Statement077Statement of Changes in Equity078Notes to and forming part of theFinancial Statement117Pattern of Shareholding118Categories of Shareholders120Shareholding Information125Form of Proxy127Form of Proxy – Urdu061Statement of Value Added001annual report 2016

Our Vision,Mission and ValuesOur Vision:GSK’s vision is inspiring:“The opportunity to make a difference to millions of lives every day”At GSK we perform in unison by following our strong value system and ethical guidelines as a source of direction and inspirationto help achieve our vision.Each and every member of the GSK family plays a vital role in improving the quality of human life. GSK’s growth and developmentcan be attributed to the contribution of the skills, talent and ideas of its people.GSK follows its core values of respect for people, patient focused, transparency and integrity. We stand committed to helpenhance the quality of people’s lives by providing them with quality products.Our Mission:We are a science-led global healthcare company on a mission to help people“to do more, feel better and live longer”GSK002

Our values and StandardsDoing the right thing without having to be told to do it – because you know in your heart and mind, it’s the right thing to do.Our values guide our day-to-day actions. They reflect our belief that it’s not just what we achieve that counts, it’s also how weachieve it. Operating responsibly and ensuring our values are embedded in our culture and decision-making helps us better meetthe expectations of society.Be patient focusedAct with integrityWe focus on the individual,doing what is right forpatients and consumers.We work with our partnersand customers to improvehealthcare and find newmedicines and vaccines.We are a successfulbusiness that actsresponsibly with integrityand transparency, living upto the standards that arerightly expected of us.003Demonstraterespect for peopleOperate withtransparencyWe support and inspire ourcolleagues to help them bethe best they can be andto achieve great things. Welisten to the world outside ofGSK and use our scienceand scale to take actionsthat advance healthcare.We are honest andtransparent about what wedo, how we do it and thechallenges we face. Weare open to challenge, todiscussion and to improvinghow we work to reflect ourvalues.annual report 2016

CorporateInformationBoard of DirectorsAudit CommitteeMr. Dylan JacksonMr. Husain LawaiChairmanChairmanMr. M. Azizul HuqMr. M. Azizul HuqMr. Mehmood MandviwallaChief Executive OfficerChief Executive OfficerMemberMr. Abdul SamadMr. Abdul SamadMr. Nicolas RagotChief Financial OfficerChief Financial OfficerMemberSyed Azeem Abbas NaqviMr. Husain LawaiMr. Dylan JacksonCluster Legal Director - Pakistan and IranIndependent DirectorMemberDr. Naved Masoom AliMr. Mehmood MandviwallaNon-Executive DirectorMr. Nicolas RagotNon-Executive DirectorMr. Sohail MatinNon-Executive DirectorManagementCommitteeDirector Medical PakistanHuman Resource& RemunerationCommitteeMr. Mehmood MandviwallaChairmanMr. Khalid Mehmood SethiBusiness Unit DirectorDr. Tariq FarooqBusiness Unit DirectorMs. Zainab HameedHead of ITMr. Husain LawaiSyed Muhammad Salman HaiderMemberDirector Commercial Excellence and SpecialityBusiness UnitMr. M. Azizul HuqMemberDr. Gohar Nayab KhanMr. Dylan JacksonDirector Regulatory AffairsMemberMr. Abdul Haseeb PirzadaHead of Corporate Affairs and AdministrationMr. Muhammad Arif TahirDirector Commercial Trade ChannelMr. Ahmad Ali ZiaHR Cluster Head - Pakistan and IranGSK004

Company SecretaryAuditorsSyed Azeem Abbas NaqviA. F. Ferguson & Co. CharteredAccountantsChief Financial OfficerMr. Abdul SamadLegal AdvisorsMr. Talal Javed Ahmed *Mandviwalla & ZafarVellani & VellaniFaisal, Mahmood Ghani and CoLegal Consultancy Inc.BankersRegistered OfficeCitibank NADeutsche Bank A.G.Habib Bank LimitedMeezan Bank LimitedStandard Chartered Bank (Pakistan) Ltd35 - Dockyard Road, West Wharf,Karachi - 74000.Tel: 92-21-111-475-725(111-GSK-PAK)Fax: 92-21-32314898, 32311122Chief Internal AuditorWebsite: www.gsk.com.pk* Talal Javed Ahmed – Chief Internal Auditor resigned with effect from November 2016005annual report 2016

Financial HighlightsContinuing Operations 15.71% 7.11% 5.46%SalesRevenueNet assetsper shareEarnings perShareRs. 27,564 M41.85 Times(2015: 23,822 M)(2015: 39.07 Times)(2015: Rs. 7.88) 1.54% 0.08%Return onEquityReturn on Capitalemployed19.53%12.82%(2015: 19.21%)GSKRs. 8.30(2015: 12.81%)006

DUPONT Analysisfor the year ended December 31, 2016Rs. in millionSalesRs. 29,457Net ProfitRs. 2,762Net Profit Margin9.4%Return on Assets12.7% Total Cost*Rs. 29,457x1.39 TimesNon Current Assets** Rs. 9,913Total Assets20.4 %Rs. 26,694SalesAssets TurnoverReturn on Equity–Rs.21,165 Current Assets***Rs. 11,536Owners EquityRs. 13,543–Non Current LiabilitiesOwnership Ratio63.99%Rs. 791 Total LiabilitiesRs. 7,622Total AssetsRs. 21,165 Current Liabilities**** Rs. 6,507Owners EquityRs. 13,543**********Total Cost includes COGS, Selling, Admin, Other Expenses, Financial charges, (less: Other income )and Taxation.Non Current Assets include Assets of disposal group classified as held for Sales/ DisposalCurrent Assets include Assets of disposal group classified as held for Sales/ DisposalCurrent Liabilities include Assets of disposal group classified as held for Sales/ Disposal007annual report 2016

The GSK StoryAt GSK, we are on a mission to help people to do more, feel better, live longer.We research, develop and manufacture innovative pharmaceutical medicines,vaccines and consumer healthcare products and are committed to wideningaccess to our products, so more people can benefit, no matter where they livein the world or what they can afford to pay.GSK008

Today there are millions of people without access to basichealthcare, thousands of diseases without adequate treatmentsand millions of people who suffer from everyday ailments. Wewant to change this. 150 Yearsof providing groundbreaking medical solutionsA portfolio of up to40 new medicines and vaccinesin developmentThat’s why we are harnessing our scientific expertise, ourpartnerships and our global reach to develop and makeproducts for people who need them.As a business we have responsibilities to society, andsociety has expectations of us. Our goal is to meet thoseresponsibilities and expectations – and, where possible, exceedthem.1st every yearin the Access to Medicines Index (ATMI)Top performer in the1st Access to Vaccines Index (ATVI)Behaving responsibly does not compromise commercialsuccess, but enables it. By doing what business does best –in our case, developing medicines, vaccines and consumerhealthcare products and improving access to them – we candeliver strong, sustainable performance and help improve thelives of people all over the world.Delivered more than833 million dosesof vaccines around the world in 2016This is a big challenge. It means that we’ve had to change theway we do things – often quite radically – and we will continueto change, as we look for new ways to improve the lives ofpatients and consumers.99,300Employees150 Global Markets00987Manufacturing Sitesannual report 2016

leasenergyirectioninspirevelopility andlentk acrossndariesGSK ExpectationsSet direction and inspireUsing sound judgment to set a clear & compelling vision thatshows your people how their work contributes to deliveringour strategy and missionSet directionand inspireWork acrossboundariesReleaseenergyDevelop capabilityDevelopcapability andtalentand talentInvesting in your people and building the organizationalcapabilities necessary to implement our strategy, now and inthe futureDevelopcapability andtalentDriveperformanceLiveourvaluesEquipping yourself with the skills and knowledge to dogreat work, now and in the future, and supporting others todo the sameWork across boundariesReleaseenergyDriveDevelopcapability andtalentPerformanceDriveperformanceHolding yourself, your team and others accountable fordelivering quality esCultivating a network of collaborative relationships, based onmutual trust, to ensure the best outcome for GSK as a wholeWork acrossboundariesEnsuring your work supports your team’s goals and theorganizational priorities and applying sound judgment in allthat you doBuilding trusting relationships within and beyond your teamto achieve goals and contribute to the success of GSKLiveourvaluesHolding yourself and others accountable for deliveringquality resultsLiveourvaluesRelease energyCreating a healthy, engaged and inclusive workingenvironment that is sustainable over timeReleaseenergyDevelopcapability sActing as a role model, ensuring everything you do is in linewith our values, serving patients and consumersrivermanceEngaging constructively with others and demonstrating apositive mindsetActing as a role model, ensuring everything you do is in linewith our values, serving patients and consumersLiveourvaluesLegend:Leadership ExpectationsGSKIndividual Expectations010

Strategic PrioritiesOur business is focused on the delivery of five strategic prioritiesestablished in 2008, which aim to increase growth, reduce risk andimprove our long-term financial performance. Everyone at GSK has a roleto play in delivering these strategic priorities.Grow a diversified, global businessWe are creating a more balanced set of three global businesses: Pharmaceuticals, Vaccines and ConsumerHealthcare.Deliver more products of valueWe are investing in innovation to improve our ability to create new medicines, vaccines and consumerhealthcare products that offer valuable improvements in treatment.Simplify the operating modelAs our business continues to change shape, we are transforming how we operate so that we can reducecomplexity and become more efficient. This is allowing us to free up resources to invest in other areas of thebusiness and improve shareholder returns.Create a culture of individual empowermentWe are building a culture where employees are empowered, united by our values and able to achieve greatthings.Build trustWe are committed to operating responsibly and ensuring that our behaviour and actions meet or exceed theexpectations of society.011annual report 2016

Company Profile &Group StructureGlaxoSmithKline Pakistan Limited came into being as an entity onJanuary 1st, 2001 through the merger of SmithKline and Frenchof Pakistan Limited, Beecham Pakistan (Private) Limited and GlaxoWellcome (Pakistan) Limited, and stands today as the largestpharmaceutical company in Pakistan.GSK is a long established investor in Pakistan. Our legacyToday GSK Pakistan is highly successful business withcompany Glaxo Laboratories Pakistan Ltd. was the firstalmost 8% of the value and over 14% of the volume share ofpharmaceutical company to be listed on the Karachi StockPakistan’s pharma market. Major competitors are multinationalExchange in 1951.pharmaceutical companies such as Abbott, Novartis, Pfizer,Sanofi Aventis, and local companies like Getz and Sami. GSKIn Pakistan, the Company deals in Anti-infective, Respiratory,Pakistan has built a competent commercial capability with aVaccines, Dermatological, Gastrointestinal, Analgesics, Urology,track record of successfully integrating the BMS, UCB, NovartisCentral Nervous System, Allergy, Cardiovascular and VitaminsVaccines, and Stiefel businesses, and building a diverse andtherapy areas.profitable business of over 150 brands.As a science-led and global healthcare company, we remainGSK Pakistan presently employs over 2,300 persons acrosscommitted to our mission of making a difference in millions ofits Sales, Global Manufacturing Services (GMS) and Pharmalives every day. To achieve this, we aim to consistently producefunctions. Our Global Manufacturing Services (GMS) inand improve access to quality medicines to help improve thePakistan consists of three facilities; West Wharf, F-268 SITEquality of patients’ lives. Some of our leading pharmaceuticaland Korangi.brands are Augmentin, Seretide, Amoxil, Velosef, Zantac andCalpol and prominent vaccines include Synflorix, Infanrix Hexa,Rotarix, Engerix-B, Havrix and Cervarix.GSK012

F-268 SITE, KarachiKorangi, KarachiThe F-268 site is located in theLocated in the Korangi IndustrialSindh Industrial Trading Estate andArea, this manufacturing site has ais the biggest GMS site in Pakistan.dedicated block for Cephalosporin,It has three manufacturing blocksboth orals and injectables, as well– Liquid Block, Tablets Block, andas a small unit for tablets. Majora dedicated Penicillin Block. Thisproducts manufactured at thissite also has a small dedicated unitsite are Velosef, Capotin, Fortum,for Iodex Cream. Major productsCeporex and Theragran.manufactured at this site areWest Wharf, KarachiThis manufacturing facility islocated on the sea shore closeto the Karachi Port and citycentre. The major manufacturingoperations at this site areDermatological products, Ointmentsand Creams, including a sterilefacility for liquid ampoules. TheWest Wharf site also has a smallunit for maunfacturing aerosolsAugmentin, Amoxil, Calpol, Zantac,and spansules. Major productsand Actified.manufactured at this site includeBetnovate, Dermovate, Polyfax, andFefol Vit.147 SKUs76 SKUs72 SKUs208 million packs29.7 million packs129.9 million packsmanufactured at this siteannual volumemanufactured at this siteannual volume013manufactured at this siteannual volumeannual report 2016

Our BehaviourAt GSK Our behaviour and Our values underpin everything we do - fromensuring rigorous safety standards in the development and manufactureof new medicines to interacting ethically with healthcare professionals,patient groups and political stakeholders.By adopting an industry leading approach to working with healthcare professionals, we have fundamentally changed our commercialpractices to ensure our sales and marketing is underpinned by the values in which we operate. Since January 2016, we havestopped paying healthcare professionals to speak on our behalf to other prescribers about our medicines and vaccines.Commitment on our behaviour:Ethical ConductContinue to strengthen our values-based culture by training our people on the standardsexpected, encouraging the reporting of any concerns and embedding our values into the way wemeasure employee performance.Promoting Values inSales and MarketingPracticesContinue to drive a values-based approach to sales and marketing practices across the world,with the interests of consumers and patients at its core.Transparency in ClinicalTrial DataTo be as transparent as possible with our clinical trial data, including publishing clinical studyreports (without patient-level data) for all outcome trials of medicines conducted by GSK and,within an appropriate process, making available to researchers’ access to anonymised patientlevel data to further scientific enquiry.Rigorous Patient andConsumer SafetyContinue to ensure the interests and safety of patients and consumers are of paramountimportance in the way we design and undertake our clinical trials, our product quality assuranceand our monitoring and reporting of adverse events in ongoing product usage.Minimising AnimalTestingRigorously challenge the need for animal studies and work to minimise the impact on animalwelfare, by investing in the development of alternative studies and sharing animal-based data.Ensuring EthicalInteractionsDemonstrate that all GSK interactions with patient advocacy groups and political stakeholdersare conducted appropriately, ethically and transparently.Promoting Human RightsAddress the UN Guiding Principles on Business and Human Rights across our own operationsand our supplier relationships.Working with ThirdPartiesWe seek to work with third parties that share our commitment to high ethical standards andoperate in a responsible way. If performance gaps are identified, where appropriate we commit toworking with the third party to improve performance.GSK014

OrganogramCEO /Vice President & General Manager(Global Reporting)Business Unit Director– Primary careChief Financial OfficerBusiness Unit Director– Dermatology and VaccinesDirector MedicalPakistan & IranDirector RegulatoryAffairs PakistanDirector Commercial Excellenceand Specialty Business UnitsCluster Legal Director– Pakistan and Iran/ Company SecretaryDirector CommercialTrade ChannelHR Cluster HeadPakistan and IranHead of Corporate Affairs andAdministrationHead of Information Technology– Pakistan and IranSecurity ManagerCountry Compliance OfficerGlobal Manufacturing and SupplySite Director (F-268)Site Director (Korangi)Site Director (West Wharf)015annual report 2016

GeographicalPresenceBiologicalsCorporateConsumer HealthcareGMSPharmaceuticalsResearch and DevelopmentGSK016

SWOT AnalysisSTRENGTHSWEAKNESSOPPORTUNITIESTHREATS GSK is globally one of the 5 largest pharmaceutical companies. GSK is one of the world’s largest investors in R&D and the UK’s biggestprivate sector funder of R&D. Winner of chemical industry’s Manufacturing and Resource Efficiencyaward. Strong R&D focus and exploring new markets. GSK’s global presence is in over 100 countries. Controversies regarding issue of safety of drugs affects company’simage. Patent expiry for a number of block-buster products. Strategic agreements with other pharmaceutical companies andorganizations to boost research. Increasing awareness regarding healthcare needs. Global penetration through mergers and acquisitions. Increasing demand for quality healthcare solutions. Risk of unsuccessful new Products. Economic slowdown in European markets.017annual report 2016

FinanceFinance at GSK is a key strategic function that supports the organizationby providing business partnering and transaction services to thecommercial organization and manufacturing sites. Our businesspartnering team collaborates actively with business functions to providefinancial insights for strategic and tactical decisions, while our sharedservice team is responsible for financial reporting, transaction processingand governance.In 2016, the Finance team achieved several importantmiles

Our Vision, Mission and Values Our Vision: GSK’s vision is inspiring: “The opportunity to make a difference to millions of lives every day” At GSK we perform in unison by following our strong value system and ethical guidelines as a source of direction and inspiration

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