Why Glaxo's chief chose to keep the drugmaker in the region

GlaxoSmithKline chief executive Andrew Witty at the drugmaker's new home at the Navy Yard.
GlaxoSmithKline chief executive Andrew Witty at the drugmaker's new home at the Navy Yard. (AKIRA SUWA / Staff Photographer)
Posted: March 28, 2013

After his regular morning run of four miles, Andrew Witty had flown into Philadelphia from North Carolina and would soon fly out to London. In between all that moving, the chief executive officer of GlaxoSmithKline sat for a few minutes Thursday in the lobby of the newest building at the Navy Yard and explained why one of the world's biggest pharmaceutical companies is still in this region.

A week earlier, Glaxo announced plans to consolidate researchers from two facilities in Upper Merion, with 1,900 moving and most landing in a larger shop in Upper Providence.

"The obvious question when we are thinking about what to do with Franklin Plaza is, 'Do we really need to be in Philadelphia?' " said Witty, a native-born Englishman. He quickly added that he chose the Navy Yard site as the company's new home, despite less-than-universal employee approval at the time.

Franklin Plaza was the company's previous facility in Center City.

"We already had this big thing in North Carolina. We've got London. But the conclusion of that was we really need to be here because this is where we have an extremely strong talent base," Witty said. "We've got a lot of expertise in commercial, regulatory, legal, and R&D arenas.

"Once we answered yes to that, there were key things we had to do. We had to get out of Franklin Plaza. We needed to create a modern, energetic environment for our commercial-legal organization."

The pharmaceutical industry, which employs thousands of people in this region, is in a tumultuous period. But Witty is not afraid of tumult. He is proud of having reduced Glaxo's laboratory space 50 percent while claiming, "We've never done more experiments than we do today."

The company has six new drugs that await approval by the FDA. Two drugs to treat melanoma were developed in a third to half the time of past products.

Witty and his wife, Caroline, have a daughter, Sarah, 16, and a son, Jack, 20, who is a student at the University of North Carolina. Leading a global company, Witty is on the road 60 percent of the year.

He is trying to help the Glaxo employees use technology to be more efficient, trying to find new medicine through outside partnerships and trying new methods. Maybe the collaboration with Formula 1 racing team McLaren won't improve factory efficiency, but perhaps enzymes can replace solvents and save cash.

"We can connect with anybody in the world," Witty said, pointing to the new offices off the lobby. "Almost every room has a desktop panorama videoconferencing unit."

Witty, who will be 49 in August, was a bit of a surprise choice when he was picked to be CEO in 2007. As revealed in court files released in 2012, his predecessor, J.P. Garnier, and the two other candidates were mentioned as contributors to the corporate-cultural push to promote drugs off-label. No individuals were charged, but the company eventually pleaded guilty to three criminal counts and paid a record penalty of $3 billion.

Witty worked in South Africa, Singapore, and then Europe, so he was away from the U.S. problems. Since he took over, the company has led the industry in increasing transparency of payments to doctors, revamping the compensation plan for sales reps - to lessen the incentive to promote drugs illegally - and contributing research, medication, and funds to help people in the developing world.

"As a CEO, you have a couple choices at the very beginning," Witty said. "You can choose to say, 'I'm going to look after only one stakeholder.' Let's say the shareholders. It's money, money, money.

"Or you can take a responsibility that is much broader than that. I'm proud we've led the way in so many of these initiatives. On the way through to doing the right thing for shareholders, we can do the right thing for villages in Africa, we can move forward on a transparency agenda, we can challenge the business model of our industry, that things people believed could never be changed can be changed."

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