Wall Street Journal - Monday, 3 February 1997.
Stephen D. Moore, Special to The Wall Street Journal

Sir Colin served as a non-executive, or part-time chairman, but Sir Richard has no plans to relinquish his full-time executive role at Glaxo for the foreseeable future. However the 55-year-old microbiologist will hold the twin titles of chairman and chief executive for only about a year.

Glaxo also promoted Sean Lance, a 49-year-old native of South Africa, to the vacant post of chief operating officer. It said Mr. Lance would succeed Sir Richard as chief executive officer at the 1998 annual meeting. Mr. Lance is Glaxo's top marketing strategist and has been a company director since 1993.

A third Glaxo director, Sir Roger Hurn, will become deputy chairman at this year's shareholders meeting.

The departure of Sir Colin, a 65-year-old British executive, had been expected. At the time of his appointment in 1994, he was widely viewed as a interim figure, bridging the acrimonious departure of Glaxo's longtime chairman Sir Paul Girolami, and the emergence of Sir Richard as the company's unchallenged leader.

However Sir Colin's ties with London's financial establishment proved an unexpected windfall during Glaxo's hostile pursuit of Wellcome. Subsequently, he deftly supervised the exit of seven senior non-executive directors, and their replacement with younger, more commercially oriented successors. If proposed changes among directors are approved by shareholders at this year's annual meeting, the average age of Glaxo's board will drop to 57 years from 66 years currently.

Still, the allocation of management turf between Sir Richard and Mr. Lance will have a much greater impact on company operations. Sir Richard plans to retain primary management responsibility for global strategy, research and development plus finance and other staff functions. That's a natural choice: he is widely respected for his scientific prowess and was Glaxo's research director before becoming chief executive in March 1993.

Mr. Lance, meanwhile, has risen rapidly through the ranks during slightly more than a decade with Glaxo, but he remains little known outside the pharmaceutical industry. Born in Pretoria, South Africa, his first job in the late 1960s was with a local drug company but in 1982 he was named head of the South African unit of British drugmaker Boots Co. In 1985, Mr. Lance joined Glaxo as president of the South African unit, before moving to the United Kingdom two years later as regional director for Australia, and Asian markets, excluding Japan.

In September, Mr. Lance was promoted to a new post of managing director, with overall group responsibility for technical activities and commercial development as well as the area of non-prescription medicines. In his new post as chief operating officer, he'll also assume responsibility for Glaxo's operations in North America and South America.

That globetrotting background will be useful in plotting Glaxo's future through difficult times. Like many pharmaceutical giants, Glaxo is scrambling to expand its business in fast-growing, emerging markets of South America, Africa and the Far East. In his new post, Mr. Lance will have even greater scope to test some fairly unorthodox marketing strategies which he believes will be key to long-term success.

Drug makers' newfound interest in emerging markets reflects the cost-containment squeeze that is slowing drug sales in previously buoyant markets in Europe and North America, while at the same time stimulating prosperity and economic clout in countries such as Asia's so-called tiger economies.

In an interview last year, Mr. Lance insisted that "major shifts in thinking are taking place throughout the pharmaceutical industry. The old American and European model of a multinational company with a head office dictating how products should be marketed uniformly everywhere just doesn't work any more," he said. "You have to devolve some of the power, and smart companies are going to have to be very, very flexible."

That probably will mean developing as well as pricing new drugs differently in different parts of the world. It's a vital concern to Glaxo, which has a spate of new medicines under development to combat diseases such as hepatitis B, malaria and AIDS that are endemic in the developing world. And Mr. Lance is convinced that flexible marketing strategies will be crucial to success.

The vast majority of potential AIDS victims live in Africa, he mused, "but when governments can't afford to give every citizen a glass of pure water, how are they going to afford these expensive medicines and even combination therapies. As we move further into the globalization mode, companies are going to have to pick up some of the altruistic factors implicated in these places."

Glaxo got a late start because of its focus on innovative, expensive drugs, "but we're planning a strategy that would allow us to break the old mold," Mr. Lance said. "I don't want to say too much about specific strategies. But a multi-layered price structure is one possibility. And in controlled economies such as China, India or Indonesia, you can't just walk in and start selling medicines."

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