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Squalls and choppy waters at drug firm don't faze sailor with steady hand on the tiller


Aidan Lynch

Aidan Lynch

Jason Clarke Photography

Aidan Lynch

A keen sailor, Aidan Lynch got a chance a couple of years ago to crew, along with his son, one of the large Volvo ocean-going yachts from Lisbon to Dublin.

"That was like a Formula 1 fan getting into a Formula 1 car. Not comfortable and not pleasant," he says. "I see pictures of me now and I looked miserable but it was just one of those experiences that I thoroughly enjoyed and I'd jump at the chance to do it again."

As the boss of GlaxoSmithKline's pharma business in Ireland, Lynch's favourite pastime would provide useful material to draw analogies with the world's fourth-largest drug company, which has found itself in squall after squall over the past couple of years.

UK-based GSK has, according to one investor, become a "whipping boy" for the pharma sector, with its stock down 8.5pc in the past year while rivals have enjoyed gains.

It has been tarred with scandals and corruption allegations in countries from the US to China and Syria, while last weekend calls mounted for GSK chairman Chris Gent (the former Vodafone boss), to leave sooner than planned. His pledge to go at the end of next year, it seems, just isn't quick enough.

GSK, which cut its profit forecast last July for the second time in three years, is also trying to convince shareholders that a pipeline of drugs will help to replace revenue that will be lost when generic versions of its best-selling asthma treatment - Advair (also called Seretide) - hit pharmacy shelves (Indian firm Cipla just launched one in Germany and Sweden).

Advair is one of the worlds top 10 prescription drugs by revenue, with sales in 2013 of $8.2bn (€6.2bn). That was a fifth of GSK's revenues last year.

Lynch (50) admits that the events in China (GSK's former boss there was charged with having bribed doctors and hospitals to the tune of €350m to boost sales), as well as the boardroom ructions and other events do have some impact on the 1,600 staff GSK has in Ireland, but mostly they just get on with their jobs.

"Of course it impacts people. I think people are very proud to work for GSK, so anything that taints that feeling is not good," he says. "What we read about in terms of what might be happening in China or other countries, it's a million miles away from the company that we have here in Ireland. So in one sense we're insulated from that and how we do our business is very different to what's being reported."

"People care deeply about GSK's reputation so it's not nice to see that, but it's not the company they recognise locally."

GSK has four sites in Ireland.

In Dungarvan, Co Waterford it has its single biggest concentration of staff, with about 750 people working at a consumer plant that makes a whopping 7.5bn Panadol tablets every year that are exported to over 70 countries, as well as smoking cessation aid NiQuitin.

In Cork, the company has an active ingredient manufacturing facility where it makes the core elements of a number of drugs in the GSK stable, including treatments for depression, cancer, HIV, Parkinson's Disease and heart failure.

In Sligo, its Stiefel subsidiary manufactures skincare products, while GSK's country HQ is in Dublin (the premises is currently up for sale as the company has too much space as staff moved out following the £1.3bn sale last year of GSK's Ribena and Lucozade products to Japan's Suntory).

The pharma sector has a whole as seen a wave of mega mergers over the past couple of years. GSK (itself the offspring of a 2000 mega merger between Glaxo Wellcome and Smithkline Beecham) has done things a bit differently.

It inked a deal with Swiss giant Novartis that will see GSK pay $7.1bn (€5.4bn) for ownership of the Swiss firm's vaccine suite, except for a flu treatment, while Novartis will acquire GSK's oncology products for $14.5bn (€11bn). They'll also create a joint venture in consumer healthcare.

The active ingredient for one of those oncology products - a breast cancer treatments - is made in Cork, which is one of GSK's two global strategic manufacturing sites, the other being in Singapore.

"Part of the deal (with Novartis) as I understand it is that the molecule for that drug will continue to be made in Cork by GSK for a number of years," says Lynch, who adds that the Novartis transaction will probably have no noticeable impact for some time on the plant in Cork.

That plant in Cork received an unfavourable audit last year from the US Food and Drug Administration (FDA) watchdog - a big black mark on the copybook.

It highlighted some concerns it had about the GSK plant having found that an active ingredient used to make two antidepressant drugs was contaminated with materials from the pharmaceutical waste tank at the factory. Contaminated batches were still shipped, but GSK said there was no risk to patients.

The FDA wrote to GSK in March this year saying that the company still hadn't taken sufficient action to resolve the issue.

"We had to go into remediation and change some of our processes," explains Lynch, who spent 14 years in Australia before returning to Ireland in 1999. "It did impact us. We've been working with the FDA over the past number of months and we're now back in full production. We were actually over cautious - we took many more steps than the FDA required us to. We put ourselves into a place where we wanted to be 100pc happy that everything is as it should be."

Meanwhile, as with other multinationals, GSK's Irish arm has to compete with Singapore and other sites for investment from the group.

GSK acquired Stiefel in 2009 and the group later announced it would shut the Sligo Stiefel plant by 2013. That decision was reversed in 2012 by GSK after the plant's workers delivered significant productivity gains (although the numbers working there have been reduced).

Competing with group units in other countries "keeps you sharp", says Lynch.

"It reinforces why a company such as GSK makes investment decisions in different markets. There are reasons why you go to Singapore, there are reasons why you come to Ireland. Not only are we competing with the outside world, but management is competing internally because you want to have the best chance to get the next wave of investment."

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