Transcript
Corporate Leaders Series
Sir Andrew Witty
Chief Executive Officer, GlaxoSmithKline
Chair: Evan Davis
Presenter, Newsnight, BBC
22 October 2015
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2 Corporate Leaders Series
Evan Davis
Good evening, everybody. I'm Evan Davis, presenter of Newsnight. It's good to be here for the latest in our Chatham House Corporate Leaders Series. Remember, you can tweet during the event, #CHEvents. This is on the record, as you would expect with a crowd of this size.
Sir Andrew Witty is our corporate leader today. Been with GSK, or its various configurations, for 30 years, which is extraordinary. Now, my memory of Glaxo was, as a research fellow at the London Business School, not really having thought much about it, working out or being told that Glaxo was Britain's most profitable company – indeed, one of the world's most profitable companies – because it had the world's best-selling drug. Can anyone remember what that was? Zantac, yeah. At that stage, I had never needed or taken Zantac. (I have since, but let's not go there.) It was the most phenomenal story, and Glaxo went on to be Glaxo Wellcome and SmithKline merged with Beecham to be SmithKline Beecham, and then we had GlaxoSmithKline.
But since then, there's been quite a big tale of what one might call reversion to the mean, in which you have the world's best-selling drug, you can't keep that up, and companies in all sorts of areas have discovered recreating that hit is very difficult. Glaxo has done, in fact, pretty well. Zantac obviously went off-patent and was overtaken by proton-pump inhibitors. Along came Advair, an asthma medicine which has been GSK's best-selling product, launched 14 years ago. It's still GSK's best-selling product, but it's not going to last forever.
So GSK has had a slightly difficult time in the last year or two, as it thinks about what it is going to do and what it is for, against a background of austerity in Western countries, desire not to pay so much, growth in emerging markets and such like. Sir Andrew – basically the company has not really grown since he took over, maybe marginally, but it's basically the same size it was. Its shares have underperformed since he took over. But I detect a great deal of goodwill to Sir Andrew. His reputation withstood the crisis in China, which we may come to talk about. He's still there, even though Philip Hampton has taken over as chairman – sometimes likened to the Grim Reaper: standing there over your shoulder is this guy who goes into big companies and often makes difficult decisions at them.
But Sir Andrew is a man with a plan, and who is making a bet. This will be the start of our conversation. It is that GSK does not just want to be a pharmaceutical company in high-price markets; it's also a consumer business. Andrew will tell us about that. So it's now in consumer products – with products like Horlicks in its portfolio – in vaccines, and it's in pharmaceuticals. It specializes in one or two areas there. It famously earlier this year swapped its cancer business with Novartis, to take on more consumer products.
Andrew Witty
We actually sold it for $16 billion. We swapped some other things.
Evan Davis
Right, right. Let's start on that plan. Isn't it a bit defeatist to think you can't be a bigger force in pharma?
Andrew Witty
Oh no, I think we'll be a big force in pharma. The difference here is we're talking about 'and' rather than 'or'. So it's not an issue of one or the other, it's a question of how to create a more balanced, sustainable 3 Corporate Leaders Series
approach, so that you can do both. So the issue you described around Zantac to Advair to the next thing, to the next thing – those are remarkably difficult things to do. I don't know if anyone here can remember who the biggest company in the world was in the drug sector when I joined the industry in 1985. Does anybody know what the world's biggest drug company was? Hoechst. Hoechst doesn't even exist as a brand name within any drug company now. It's disappeared because of the massive pressure and the risk that takes place.
So we've done very well in that pharmaceutical story. It continues to be a huge business. It's a very important business for us.
Evan Davis
Where are you ranked, in pharma?
Andrew Witty
We're about five or six in pharma, globally.
Evan Davis
So you're not counting the consumer products.
Andrew Witty
Correct. If you look, for example, in the emerging markets – let's go east of here and south of here. We sell 50 per cent more volume in those markets than any other company in the world in pharmaceuticals.
Evan Davis
In pharmaceuticals.
Andrew Witty
Correct. But our average price is not necessarily as high. So the bet that we're exploring here is twin-fold actually. One is a very big investment on R&D innovation. People have kind of slightly said, frankly in a reasonably simplistic way: it's either innovation or it's volume. That's not what we're saying. What we're saying is innovation – big bet there, we're still spending £3 billion to £3.5 billion a year on research in vaccines and pharmaceuticals – but we also want to find ways to ensure that we're building a volume platform across the world: A) for that innovation to be deployed against, and B) within that volume platform, clearly opportunities to grow businesses. Vaccines, where typically we sell products at $5 to $10 per patient. Consumer health care products, where perhaps the price point is similar. What that allows us to do is to make a contribution to health care on a very broad basis, allows us to build a volume-driven business, decent margin, decent opportunity, great growth – alongside, and in addition to, the innovation business.
Actually, today's innovation is tomorrow's established product. Again, people in the sector often talk about: why don't you get rid of your established products? We've looked at those sorts of ideas. But when it really boils down to it, everything is a continuum. 4 Corporate Leaders Series
Evan Davis
But what the puzzle has been for some people is, what connection there is, or what synergy there is – what GSK is for. If you literally are getting volume with Horlicks, how does that benefit the vaccine business or the pharma business?
Andrew Witty
You pick a good example at the extreme perimeter. I'm not going to try to defend that Horlicks is intimately critical for us to discover the world's fastest-growing HIV drug, which we've just launched. Clearly. However, even for Horlicks, the fact that GSK has an outlet in every village in India – 500,000 outlets distributing Horlicks; the second-most-consumed beverage in India after tea is Horlicks – creates a tremendous brand name presence across India. Alongside that business, we have a pharmaceutical business which again, prices for India. A third of everything we sell in the world, we sell in India. Can you believe that? A third of everything we sell in the world, we sell in India, because we've identified the volume-price sweet spot. Those two things sit together. You need distribution, you need presence.
Evan Davis
What is the synergy? Because people are not buying your pharma because they like the name GSK. They're buying the pharma because it suits the condition they –
Andrew Witty
No, in emerging markets, where there are many choices, dozens of generics, very little intellectual property protection, what people look for is a brand they can trust.
Evan Davis
So brand matters.
Andrew Witty
Brand matters. People get a prescription, they go to the pharmacy, the pharmacy says: do you want the local generic, do you want an international brand, what do you want? When you say GSK in those countries, people will say: I want the GSK product. Why? Because they've seen GSK brands elsewhere.
By the way, it works the other way. If you watch TV commercials here in Britain for Sensodyne, you'll see GSK referenced on those ads. Why? Because we know that people who buy consumer health care products are impressed.
Evan Davis
Right, they want to feel like it's a medical product.
Andrew Witty
Correct. Also, it's not coincidental that almost all – in fact, the five or six biggest OTC consumer health care companies are part of drug companies. The norm is the structure. This isn't the aberration. I'm not saying it would never change, but the norm – and why is that? Because most of the OTC products were 5 Corporate Leaders Series
once innovative products. Believe it or not, paracetamol was once an innovative pharmaceutical. It was the Zantac of its day. It's now an OTC product but it started off there.
Evan Davis
Is Sensodyne an innovative product or is Sensodyne a toothpaste?
Andrew Witty
Sensodyne is a category-creating consumer brand. It's a phenomenal product. I use it, many people use it. It's a billion-pound product. It's defined sensitivity as the premium part of toothpaste. What's fascinating about Sensodyne is it's come from a pharmaceutical company, it's got in it a whole series of new technologies which allow it to operate the way it does. The competition, the established players, continuously keep launching their sensitive toothpaste against Sensodyne. All it does is grow Sensodyne, because Sensodyne is so synonymous with the category. It is really a phenomenal product.
Evan Davis
The reason I was trying to get at the synergy was that there are people who think this company doesn't need to exist, basically. A big American company – Pfizer is sometimes mentioned, others are mentioned – to take over the pharma business and you hive off the – you might keep vaccines separate or you might put them into pharma. But you'd hive off the consumer products into something separate. Give us the sort of elevated pitch as to why you don't think that should happen. Is it branding, basically?
Andrew Witty
First of all, you have to look at all three pieces. The pharmaceutical business and the vaccine business share completely the same global distribution. So when you say we could just hive off or add on, it's not that easy. You would end up with the recreation of a completely duplicated distribution, global distribution capability, which today is totally integrated and shared. I think that would be, frankly, a very suspect set of decisions to lead you in that direction.
The consumer business – there are real synergies in terms of products which switch. This year, we launched Flonase OTC. Flonase is a product that was discovered by Glaxo scientists in the mid-1980s. It was launched in 1990. I was the product manager when it was launched. We launched it, it became a billion-dollar pharmaceutical product in the US. It went off-patent four years ago and we launched it OTC this year. We put 26 miles of shelving into the pharmacies across America. It was the number-one and number-two best-selling product in health for the first part of this year, and we sold £150 million of OTC Flonase. That was all because the consumer business belongs to GSK.
So you have a direct synergy there. You have the branding synergy that I just described, which is very important internationally. And we also have opportunities where we've been able to bring our pharmaceutical pharmacy – because remember, pharmacists are a key customer audience for the pharmaceutical business. Every time you take a prescription, you go to a pharmacy. Our OTC business, number-one customer is the pharmacist. So you have tremendous integration of the channel.
Now, those are the areas of synergy. The last one I should say actually: OTC manufacturing is pharmaceutical manufacturing. So the factories that make the pharmaceutical products are very likely 6 Corporate Leaders Series
making the OTC products, and they're certainly making them to the same quality standards, which is again an important aspect.
Now, could you envision it being separate? Of course you could envision it being separate. The question is: what creates the maximum value?
Evan Davis
You made a good case. The manufacturing synergies, the brand synergies, and some of the distribution.
Andrew Witty
Yes, and I've made it very clear: this isn't a religious fact, right? You don't have to be religious about it. But we believe at this point in time that the opportunities for growth in these businesses, the synergies we're extracting and the margin we're building – particularly after the transaction with Novartis – creates tremendous medium-term shareholder value opportunity.
Once you go through that phase, who knows? Maybe then you look again and you say, okay, maybe there's some other way you can do it. But certainly for the next couple of years, you would certainly take the view that while we've got these opportunities, we're the right owners to take advantage of them.
Evan Davis
One of the premises underlying what I called your bet on the consumer business is pressure on pricing in advanced economies.
Andrew Witty
Yes.
Evan Davis
Tell me what's going on there. Is this NICE in the UK, and equivalent initiatives everywhere – is it Obamacare? What do you see as the driver there?
Andrew Witty
We're just back to first principles. You've got a situation where on a global basis, the one thing we're not short of – and it's an unfortunate fact of humankind – but we're not short of demand for medicine. Every day there are more people on the planet. Every day they get older, every day their expectations for health care go up. That is essentially an exponential explosion in volume, demand. As more countries become, if you will, engaged in health care, it accelerates. So that's a huge aspect.
There is a tradition of the industry – and not just the drug industry but the medical tech industry, and frankly, most of health care – to be completely focused on the rich developed countries (the US and Western Europe). Price has been a very big part of that. There has been a very strong reliance on price, especially in the US, over that period. That is creating great tension.
This tension broke in Europe – or began to break in Europe – about eight years ago. In the last eight years, European prices have gone only downwards. You've got to remember, when you launch a new 7 Corporate Leaders Series
product in Europe in the pharmaceutical sector, you have up to a two-year negotiating period before you're allowed to launch. I can't remember the last time a price was increased in Europe. They always go down. There are all sorts of interesting side effects of that but that's what happens. They always go down in Europe.
What we've seen in America is they've typically gone up, at least at the gross level. There's a very interesting lack of transparency in the US marketplace which means actually what may be happening in reality, the net level, is not what's reflected in the headlines.
Evan Davis
You mean through discounts.
Andrew Witty
Through discounts. But clearly, as health care has grown to 17 per cent of GDP in America, as you have the Affordable Care Act brought in, as you see the shift in accountability to the provider networks – so the hospitals are taking more responsibility for outcome – you've got an enormous number of new dynamic pressures opening up. Some are political, some are legislative, but a lot is about market behaviour. Actually, the market in the US is the biggest driver of change. That is very dynamic right now. It began about a year and a half ago. We got hurt in the first waves of that – one of the problems we had last year. But it's now beginning to move, I think, in a much more, almost industrial approach. I think we're going to see some dramatic changes over the next several years in the US.
What does that mean? It doesn't mean the US prices are going to collapse. It doesn't mean the US is going to become a terrible market. But it does mean that it's going to be harder to get the prices we've had in the past. It does mean the market is going to be more selective and it will require more innovation to win.
What's the strategic response? We've got to think through our pricing strategy for that market. We need to commit to innovation. So on November 3rd in New York, we're going to update the Street on our R&D pipeline, and they're going to see that 80 per cent of the drugs in the labs at GSK are first-in-class drugs. We've decided to take the development risk, the innovation risk, because if we don't, we don't think you will be able to get a decent price in the US by coming along with a product that's fourth or fifth to market. We really have to go for the first in class. You're going to see a lot of that stuff on November 3rd. That’s one part of the response.
The second part of the response is to say we need to not be so dependent on the US as the only driver of growth. Frankly, you read the first five pages of the newspaper, and you get one impression about what the world's doing in terms of anxieties about affordability, anxieties about price – and then you get to the stock market page and it's like another world. Eventually, these two worlds come together. I think since the beginning of the summer, it's become increasingly clear that what I indicated was a real cause for reason to think is beginning to play out. You're seeing it politically. You're seeing it in some of the criticism of some of the more extreme behaviours in the marketplace. I think we will continue to see this story develop. It's not over in the next three months. It's not a snap thing. This is a tidal shift that's going to start to happen. Companies, I believe, need to have a fundamental strategy which gets ready for that risk and needs to be engaging with a pricing philosophy which is, frankly, more empathetic about the various balances which different stakeholders need to have. 8 Corporate Leaders Series
Evan Davis
One of the debates that's absolutely fascinated me, and I just don't think it's had enough attention – couldn't we price pharmaceuticals more sensibly? It seems very odd that you have someone going along to NICE and saying, this is the price; NICE considers it and says, frankly, we're not going to buy it at that price, and that seems to be the end of the discussion. Maybe they do have another discussion. But let's work out what the value of this drug is. Maybe let's distinguish between when it works and when it doesn’t work, and then we don't have to have an argument about how often it works, we can just tell when it's worked. We'll have one price for when it works and a different price for when it doesn't work. We could just have a better outcome.
Andrew Witty
I think it's important not to be just obsessed with the UK or NICE.
Evan Davis
No, but as a model of a kind of –
Andrew Witty
The UK actually is a very weak adopter of innovation. It's always been pretty slow. It's particularly slow over the last decade. So actually this debate is being played out in other countries, in the US. Actually places like France, where for years we've had models exactly like that. So we've had products in France where at the end of every year, you figure out how many people used your drug, what kind of patient were they, and we essentially get paid by the French government a different price according to which type of patient it was, because they valued it differently. For some patients they got big benefits, some are middle and some not very much. It's just a law of averages. You can structure price deals that way. For a long time, I've been an advocate of flexible pricing approaches, to create sweeter mechanisms which would allow us, together with the payer, to figure out ways to give the patient the benefit of the doubt on the drug.
The problem with these very, almost monopsonistic price negotiations is it's binary. Either everybody gets access or nobody gets access. We need a price mechanism which is titrated much more to where the benefit curve is, because some people will benefit enormously, some won't. So we can do those things. In the US, it's a bit more challenging because there's a bit of a lack of transparency. There are a lot of cross- cutting regulations which make it quite difficult to innovate in the space. But you've got to believe that over time, the notion if – and it's a big if, actually, but I think people would agree with it broadly – if you want to continue to incentivize shareholders to put capital at risk to discover new technologies, then the logical thing to do is to put in place mechanisms which incent that innovation. You need to have a mechanism to protect the reward. But we need to put that into a much greater context of affordability.
Evan Davis
You need to price-discriminate, essentially, between the people who can pay and the ones who can't pay. 9 Corporate Leaders Series
Andrew Witty
Or at least have a mechanism – whether you price-discriminate or you have a mechanism which allows that to be modulated at the end of the day, I think is a reasonable thing to do. What we need to do though is we need to have a conversation about innovation, value and affordability, not just two of the three. Because if we do two of the three, either it becomes too industry-centric and it alienates the stakeholder and it's going to break the system, or it becomes too payer-centric and it's going to kill the innovation engine. We need to get these balances right. How do we take the pressure off this? We have to take the pressure off the US being the only engine for innovation. How do you do that? By investing in emerging markets, by essentially beginning – slowly but surely – to spread the return curve across the world.
Everybody is fixated on 'the drug industry depends on price'. It's not true. The drug industry depends on returns. Returns are a function obviously of price, volume and time – because we're an IP-fenced industry, it's time as well. Those are the dynamics of a more interesting pricing conversation. I think we need to move there.
Evan Davis
What do you say though to those who say, look, if you had stuck with innovation as the key driver of growth and you had expected high price, there are drugs out there – the Hep C drugs, for example – that are achieving phenomenally high prices. Are they sustainable – $80,000 treatment, $90,000?
Andrew Witty
A product like that, those things come along – I can't remember the last time somebody invented a pill that cured a virus. Those guys deserve a tremendous – the scientists who came up with that deserve a tremendous accolade. It just never happens. Good for them. For everybody in the world who has hepatitis C –
Evan Davis
Basically, there's a cure.
Andrew Witty
Lucky for them they lived in this era where somebody came up with a pill which in 12 weeks – I mean, it's phenomenal. I think from where we would sit, first of all, you can't predict what you're going to discover, when you're going to discover it. That's why it's called discovery, right? If it was so predictable, it would be called development. It's not development, it's discovery. These things require a whole set of circumstances, difficult to manage.
To give you an idea of that, we're very pleased with some progress we've made at GSK around genetic target profiling. We've spent a lot of time working with people at the Sanger Institute, Wellcome Institute and others, to really innovate our thinking around genetic profiling.
Evan Davis
This is personalized medicines? 10 Corporate Leaders Series
Andrew Witty
This is trying to understand what target drives a disease. Not necessarily personalized, but really trying to get under the skin of what drives the disease. We've made some great progress. What we've figured out is if we can use that technology to spot the target, we have a high chance of progressing. You know what that's done to our failure rate? Or success rate, I'll say – it's doubled our success rate from the very beginning to the very end, from 2 to 4 per cent. Actually, from an economic point of view, doubling your success rate is gigantic, but from 2 to 4 just tells you what the risk profile is here.
So the sensible thing to do is to have a big bet. Again, just to put the facts on the table, we have more drugs in development than we've ever had in the history of the company. We have more vaccines in development than we've ever had. We're spending as much as most people would sensibly expect you to spend. What we aren't doing is we aren't spending as much on buildings. We don't have as much lab square footage, because we just don't need any.
Evan Davis
We should talk about antibiotics. I know there are one or two health people here. It does seem to me very strange that we haven't managed – we face what we're told is one of the most incredible crises, a backward step, a regressive step in health care. We haven't worked out a mechanism through pricing or direct payments in which we've incentivized people like your company to invent new antibiotics. What has gone wrong there? There must be either a political dysfunction, a corporate dysfunction, a shareholder dysfunction.
Andrew Witty
Just to update you on where we're at, and people are going to see some of this on November 3rd, there have only been two new classes of antibiotics discovered and launched. Every week you read in the newspaper that somebody has invented – but you know what, they quite often fail. In fact, they've all failed, except for two. Only two classes have made it all the way through post-registration onto the marketplace in 40 years. You're going to hear on November 3rd, we have a third one. We've been highly active on antibiotic research, all the way through this period. You're going to see something called a Type II topoisomerase inhibitor, or a gyrase inhibitor (a much easier way to describe this thing) – highly effective, developed against plague. You might know that there isn't, thank goodness, a lot of plague in the world. But we've developed it particularly in that space. First of all, I think it's a fantastic example of the scientific achievement at GSK, discovered by GSK researchers in collaboration with Bader [phonetic] in the US, but by GSK researchers. Developed, and we now know we have a highly effective new class of antibiotics, and it's shortly going to go into development for a series of more widely but difficult to treat antibiotics. This will be a classic case of an antibiotic which will be reserved for use. It's not going to be widely used, because people are going to want to keep it just in case there's an outbreak of these very difficult to treat conditions.
What are the real issues in this? People get very fixated on the financial incentivization. Developing antibiotics is difficult. You've got to start there first. Most of the classes that failed, failed either because the in vitro predictions weren't true or they were toxic, i.e., they hurt the human. They killed the bug but they didn't do you any good either. So that really, the technical challenge should not be underestimated. We need to have – and this is where the US have been phenomenal, in the way in which NIH, Bader [phonetic] and others have deployed their energies to try and encourage the base academic research that's 11 Corporate Leaders Series
needed to move it forward. We have a great partnership with them in this particular field. It's very important. That's the first part.
The second part is, frankly, we all need to stop talking about the theoretical and take real examples to solve. So what we're going to do with this drug, we haven't wasted a lot of time talking to people about how we're going to pay for it and all of that. Let's develop the drug. If we can develop the drug, once we know what it is, let's then go talk to people and say, now how are we going to manage this? So we have a real case.
So actually, I think it's entirely logical that the GSK gyrase inhibitor may have a particular funding mechanism, a particular way of being dealt with, which might be very different from Company X's new ABC inhibitor. But let's build responses to the opportunities we have instead of wasting all this time talking about theory.
Evan Davis
But just to cut to the chase, you're not saying, 'We can't invest in antibiotics unless you pay us'.
Andrew Witty
No, we will invest. We will back –
Evan Davis
I'd heard that this has just never made commercial sense, antibiotic research. It is difficult, it's expensive, it lasts for three days and then people stop taking it. Much better to [indiscernible] thinking about diabetes because it lasts a lifetime.
Andrew Witty
Antibiotics is a very heterogeneous group. I've just told you about the brand-new plague drug, initially for plague. It won't make very much money, at least not initially, but we're doing what we think we should do, which is we're deploying our scientific knowledge to make a breakthrough in this space.
Evan Davis
So you're not doing it for the shareholders. This one's for the team.
Andrew Witty
No, this is for the shareholders. Why? Yes, it starts with plague, but it will potentially be used elsewhere. Because we're collaborating with people like Bader [phonetic] and others, we're able to move it through much more quickly. So the cost of development is much lower than you would anticipate. This is going to be good for everybody involved here. I think a lot of people care not just about what the earnings per share is of the company, they care about what the company does beyond that. I think there is a much broader set of conversations about what drug companies should or shouldn't be doing. So that's the first part. 12 Corporate Leaders Series
But let me take you to the other end of the spectrum. We also make another antibiotic called Augmentin. In 2004, the patent expired on Augmentin. We've made 400 metric tonnes of Augmentin in Irvine, in Scotland; last year, 2014, we made 1,000 tonnes of that antibiotic. We sold £1 billion worth worldwide. Honestly, if you said to me: Andrew, would you like to get rid of the Augmentin business? Not on your life. I love that business, fantastic business. You can see from within it, we feel that the antibiotic space is a good one for us to work in. We continue to innovate the Augmentin process just as much as we research the breakthrough products.
Evan Davis
I'm going to open it to the floor in a second, because we do want to leave half the session for the audience to ask questions. I'll just finish with kind of a general reflection, because it is interesting, and it's nice when you talk about the drugs and what they cure, what the treatments are. Don't you find it very interesting that the pharmaceutical industry has a bad reputation? We read about the China corruption, we read about profits, we read about profiteering. It is an industry that saves lives, no one can dispute that. It's an industry that produces pills that are completely transforming for people's welfare. Yet, it's actually not a terribly popular industry. I just wonder if you can explain that paradox. Is it that you've done bad things and that's been recognized, or is there somehow something the public don't understand about the industry that makes them feel negative about it? Or am I wrong in thinking there's a slight [indiscernible] around it?
Andrew Witty
No, clearly – first of all, I think we are, slightly alongside any big industry, or any big institution, there is a bit of that. We are big companies, we're global. Again, like any big organization, you're vulnerable to your weakest link in the organization. So if something goes wrong, particularly in today's social media world – I often think about what it must have been like to run a global company in the 1970s, where you had to wait for the ship to arrive to find out what happened on the other side of the world. Today, the Wall Street Journal calls you before you've even heard about something inside your own company. So I do think there is a certain phenomena where – and you see that across many, you look at it in politics, you look at it in newspapers. The hacking stories, all things like that. So I think it's a bit of that.
I do think – let's be honest, nobody wakes up in the morning hoping that they're going to need a drug from GSK. You don't wake up in the morning thinking, actually, if it's a really good day, I might be diagnosed to be ill and I might need a drug. So we're not aspirational in that sense. So you start by saying, actually, I've got some bad news, because I've been told I'm not very well. They then said: we might have some good news, because there's something we can help you with. Then in some countries, I have to pay for it. Or in Britain, you might go to the doctor and they say: actually, I'd like to give you this, but NICE have said I can't. So then there's a whole series of reasonably negative concepts around pricing. So there's a bit of that.
Then you've got – actually, we do occasionally make mistakes. Things go wrong. We have inevitably – of course, we go through all the processes with the regulators to get a drug to be as safe and effective as it can possibly be. But the reality is, every time a human takes a drug, it's like a clinical trial. You don't really know what's going to happen. Everybody can react a different way.
So on the one hand, what is the story of the drug industry? The story of the drug industry is wonder drugs. On the other hand, it's danger drugs. Those are the two extremes that we have. It's kind of unavoidable. 13 Corporate Leaders Series
Evan Davis
But you're saying there are bad apples, and it goes wrong. Is that right, or is it – for example, in the China case. Was it that there was a bad apple and it went wrong, or was it that that was normal behaviour in certain markets, and it just got called out in that particular case?
Andrew Witty
For obvious reasons, I'm not going to get into all the details of that.
Evan Davis
Was that behaviour actually something, or was it just a slight extension of behaviour that is normal?
Andrew Witty
I think the bigger question is, where do you want to go forward?
Evan Davis
No, but just answer that one.
Andrew Witty
There's no doubt, if you ask the more general question – so there have been concerns over the years of, is the drug industry transparent enough? What's the relationship of the drug industry with doctors? All of those are kind of concerns – let's call them concerns or reasons for anxiety, whatever they are. Sometimes they've spiked up into real issues.
What we've really tried to do, and we're beginning to see some other companies, I think, following a similar direction, is we've said: you know what? We get that. We get that transparency is a cause of concern. People are worried that something is being hidden. We didn't think there was but people – perception is everything, right?
So what did we do? We came out and said: we will publish every single bit of clinical data we have in the company. We are the only company to do that at this point. Every single thing. If a researcher wants to know exactly what the data was on patient number – all anonymized, but on Patient 1002, in Clinical Trial 87, from 2002, we will give them that information. All the way through, we'll do that. We've said we will stop all payments to physicians to speak on behalf of the company. It's a perfectly legal practice, everything the company has done – but we stopped it all.
Evan Davis
But this is a recognition – there is a lot you've done to present these things differently. But it is a recognition that it was pretty dysfunctional before, isn't it? Because publishing data, to me, honestly, doesn't seem like a great achievement. It just seems to me that that's what you should be doing with data. Not bribing doctors seems like a thing you would do. 14 Corporate Leaders Series
Andrew Witty
I wouldn't say it's bribing doctors – it's perfectly legal to pay. If you went to a physician and said, would you expect to be paid for speaking on behalf of somebody, they will probably say yes. Actually, in most countries in the world, it's perfectly legal. However, there are risks it can be abused. People can make mistakes. And there are risks that there is a misperception.
Just to your point on publication, do you think academics are mandated to publish their data? Do you think universities publish all their failed studies? They don't, but we do.
Evan Davis
No, I know, and I think there's a huge issue around universities and replicability and all these issues.
Andrew Witty
So your observation is not really on the money. I think the point is there is a general sense in the world that not everything historically has been published. Academia doesn't work to that standard. We've taken the view that time has changed. It's time to look forward. It's time to fundamentally do things differently. That's why we made those commitments several years ago. It's why we've liberalized our approach to intellectual property in the emerging markets, for a very similar but different set of reasons – because there was a concern that IP was somehow getting in the way of access. That's why we liberalized our approach in the emerging markets. It's why we've changed our approach to the way we interact with physicians. It's why we've changed our approach to how we pay our representatives.
Actually, I'm very proud of a company that's prepared to try and move forward – quite brave actually – and fundamentally engage in a different business model from not just how the rest of my peers operate but how almost everybody in this health care industry operates.
Evan Davis
Let's take some questions from the floor.