GSK Annual Report 2002

Competition – Consumer Healthcare
The main competitors in the Group’s Consumer Healthcare markets
include the major international companies Colgate-Palmolive,
Johnson & Johnson, Pfizer, Procter & Gamble, Unilever and Wyeth.
In addition, there are many other companies that compete with
GlaxoSmithKline in selected markets.
The major competitor products in over-the-counter (OTC)
medicines are:
• in the USA: Metamucil (laxative), Clearasil (acne treatment),
Pepcid (indigestion) and private label smoking control
products.
• in the UK: Lemsip (cold remedy), Nurofen and Anadin
(analgesics), and Nicorette and Nicotinell (smoking control
remedies).
In Nutritional healthcare the major competitors to Horlicks are
Ovaltine and Milo malted food and chocolate drinks. The
competitors to Ribena are primarily local fruit juice products while
Lucozade competes with other energy drinks.
GlaxoSmithKline holds leading global positions in all its key
consumer product areas. Worldwide it is the second largest in Oral
care and the third largest in OTC medicines. In Nutritional
healthcare it holds the leading position in the UK, India and
Ireland.
Regulation – Pharmaceuticals
The international pharmaceutical industry is highly regulated.
National regulatory authorities administer a panoply of laws
and regulations governing the testing, approval, manufacturing,
labelling and marketing of drugs and also review the safety
and efficacy of pharmaceutical products. These regulatory
requirements are a major factor in determining whether a
substance can be developed into a marketable product and the
amount of time and expense associated with such development.
Of particular importance is the requirement in many countries that
products be authorised or registered prior to marketing and that
such authorisation or registration be maintained subsequently.
The national regulatory authorities in many jurisdictions, including
the USA, the European Union, Japan and Australia, have high
standards of technical appraisal and consequently the introduction
of new pharmaceutical products generally entails a lengthy
approval process.
In the European Union, there are two procedures for obtaining
marketing authorisations for medicinal products:
• The Centralised Procedure, with applications made direct to
the European Medicines Evaluation Agency and leading to an
authorisation valid in all member states, is compulsory for
products derived from biotechnology and optional for new
active substances and other innovative medicinal products.
• The Mutual Recognition Procedure, which is applicable to the
majority of conventional medicinal products, operates by mutual
recognition of national marketing authorisations; where
agreement cannot be reached, it is resolved by procedure of
binding arbitration.
Description of business GlaxoSmithKline 11
Grant of a marketing authorisation affords the Group a protection
period during which a competitor cannot rely on confidential data
in the regulatory file as a basis for its own marketing authorisation.
The data protection period begins on the date an authorisation is
first granted in the European Union and expires after ten years for
authorisations granted via the Centralised Procedure, or ten or six
years for authorisations granted via the Mutual Recognition
procedure, depending on the country concerned.
In the USA, the Drug Price Competition and Patent Term
Restoration Act of 1984 (Hatch-Waxman) established the current
framework for approval of generic drugs, including related patent
and data protection provisions. Under Hatch-Waxman, the sponsor
of an Abbreviated New Drug Application (ANDA) can receive
marketing approval without submitting any safety or efficacy data.
It can rely on the pioneer company’s extensive pre-clinical and
clinical development data, provided the proposed generic drug has
been demonstrated to be bioequivalent to the pioneer product.
However, generic drug approvals are subject to data protection
periods of five years for new chemical entities and three years for
any modifications supported by new clinical studies. Moreover,
under the provisions of Hatch-Waxman, the filing of an ANDA can
trigger procedures that may allow patent holders to initiate patent
infringement litigation with the significant procedural advantage of
being assured that the FDA’s approval of the proposed generic
product will be stayed for up to 30 months, pending resolution of
the litigation. These procedures have generated litigation and
controversy, particularly because, as currently applied, they have
resulted in multiple, non-concurrent 30-month stays for some
proposed generic products. The FDA has proposed changes to its
regulations to address certain aspects of the procedures that have
generated litigation and controversy, and reform legislation has
also been proposed in the US Congress.
In the USA, the second reauthorisation of the Prescription Drug
User Fee Act came into effect on 1st October 2002 (PDUFA III).
A recent General Accounting Office report to the Senate
Committee on Health, Education, Labor and Pensions, has noted a
gradual increase in the median time to gain approval for drugs
with a standard review designation. Since 1995, the approval time
for priority review drugs, judged by the FDA to represent a
significant therapeutic advance, has remained constant, with a
median time for approval of six months.
There has been an increasing gap between the approval times for
priority and standard applications. The approval time for drugs
designated as a standard review reached a low of about
13 months in 1998 before rising to about 20 months in 2000
and 2001.
It remains to be seen if the substantial additional resources funded
under PDUFA III will result in a reduction of overall approval times
for all drugs and biologics. The review times for certain biologics,
other than vaccines, may be substantially impacted by a recently
announced consolidation of the review activities to the Center for
Drug Evaluation and Research. These activities had previously been
carried out by the Center for Biologics Evaluation and Research.