GlaxoSmithKline Tracks R&D Performance

Feb 09, 2012

GlaxoSmithKline (GSK) released its fourth quarter and full year 2011 earnings report on Feb. 7, 2012. In the report, the company tracks its R&D performance, and calculated the return on R&D to be 12%, up from 11% in 2010, and closing in on the company’s goal of a 14% return.

In 2008, GSK reorganized its basic research effort to make it more focused and more competitive, mimicking the environment in the biotechnology industry. At that time, GSK created Discovery Performance Units (DPUs) within its Centers of Excellence for Drug Discovery. These units are small, comprising between 5–70 scientists, with each group focusing on one particular disease or pathway. Funding for the groups is competitive, with reviews every three years by a panel containing senior GSK R&D leaders and individuals from outside of the company operating in venture-capital, biotechnology, or pharmaceutical investment. The panel allocates funding according to assessments of potential returns on investment, scientific quality, and opportunity.

This year marks the first of the three-year review cycles for the DPUs. According to the earnings report, four new DPUs have been created and three have been closed. Of the remaining DPUs, six have received increased investment, and five have had investment decreased. Information about exactly which DPUs were affected was not included in the report. More information on the DPUs will be provided in an in-depth meeting for investors and analysts on Mar. 29, 2012.

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