Jean Pierre Garnier, head of Glaxo

He will drop the prices of his drugs to the poorest countries, as long as GSK does not make a loss. If they are still unaffordable, the UN should pay

It was tough enough negotiating the security guards at the gates of the glass fortress in west London that is the global headquarters of GlaxoSmithKline, even though they had names and the car registration number. But then came the encounter with the receptionist at her computer.

"Step two paces back please and look up at the camera." High above her back, in the wall of the vast glass atrium of Glaxo SmithKline's £150m headquarters in Brentford, was a small, dark, round hole. She pressed the return key, gave a polite smile of dismissal, and within moments a thick plastic visitor's pass suspended on a chain, with integral photo, slid across the desk.

It was more than mere thousands of land miles from Malawi. This was wealth and the fear of losing it beyond the imaginings of Lilongwe's citizens. The 12th floor of GSK's huge boardroom has vast windows looking out as far as the Post Office tower in central London. To the south, you can follow the flightpath as one jet pursues another to land at Heathrow. After September 11, GSK's employees used to watch in fear that their glass tower would be the target for a copycat UK attack.

It takes a big man to run the second largest pharmaceutical company in the world - one of the richest and most powerful commercial entities on the planet. Jean Pierre Garnier, who years ago lost some of his French identity, if not his accent, to the ubiquitous American initialising and became universally known in the pharmaceutical world as JP, doesn't wear a tie. Why would he?

Within his own parameters - within the affluent world order of wealth, power and influence - JP is not only a big man but a good man. Some call him a humanitarian. He has been awarded the Legion d'Honneur by the French government. He has indisputably taken GSK several rungs higher on the ladder of altruism than any other drug company. But at the end of the day, he says, he runs a for-profit company. And if people are still dying of Aids in Africa, it is because their governments are ineffective or do not care. It is not to do with the greed or indifference of the pharmaceutical companies.

He agrees that drug prices must come down, but not at a loss to his company. JP's vision is clear. He is willing to supply not just antiretrovirals but other medicines poor countries need for epidemics, such as malaria, at cost, he says.

In the case of Combivir, GSK's dual combination Aids drug, he sells at $1.70 a day. For a Malawian woman like Grace on wages of 50 cents a day, it might as well be the price of a flight on Concorde. But he knows that.

His answer is twofold: order from GSK in bulk, perhaps for the whole of sub-Saharan Africa, and the price will drop and, secondly, persuade the rich countries to support the Global Fund so that poor countries will have the money to buy GSK's drugs. It's win-win for Glaxo. It need do nothing that is incompatible with the capitalist ideology of the marketplace or would upset the shareholders, even if it may seem ironic - to those who were baying for JP's blood over the recent offer from the GSK board to boost his pay to £20m - that he should be asking effectively for government subsidies. (Garnier, for the record, says he was 11th out of 12 drug company CEOs and he did not ask for the pay rise - the board offered it and later withdrew it because of the scale of the protest from British shareholder groups.)

But the reality in distant Africa where people live on less than $1 a day is that GSK's drugs are far more expensive than the cheap versions made by generics companies like Cipla. And in South Africa, where Glaxo has patents that keep Cipla out and sells only to the private sector because the government says Aids drugs are too expensive, the prices are higher still. Combivir costs $2.50 a day instead of $1.70 - which is $927 a year, instead of $620. The difference for individual men and women trying to raise the money for the drugs themselves can mean life or death. So why, ask campaigning organisations like Medecins sans Frontieres and Oxfam, should the Global Fund's hard-won and limited money be spent on Glaxo?

Cipla in India sells a copy of Combivir called Duovir for $292. Glaxo's three-drug combination Trizivir costs $1,602 in Africa, but Malawi is buying Cipla's three-in-one pill, Triomune, for $304 a year. The World Health Organisation has endorsed the quality of many generic Aids drugs. The Global Fund has now said it will require countries receiving its grants to buy the cheapest.

JP waves it all away as an irrelevance. Cipla only has the capacity to produce small quantities of the drugs, he says. With the very low manufacturing overheads in India, they offer cheap prices for thousands of tablets that would have to soar if they needed to produce millions. The overheads for producing Combivir in GSK's Kent factory, on the other hand, go down as the bulk goes up.

"I'll take on any generic company in the world on Combivir pricing on large quantities," he says, "because I think we are very efficient producers and because we don't take any profit, while the generic companies do. I am confident that we are going to be the lower cost producer but that's going to be far more visible when we deal with large quantities, so it is a bit of a Catch 22 here. Give me a big order and I'll be able to cut my prices even further."

Then why not slash them now, to encourage African governments to buy? "The only problem with making a loss is that, to be fair, we are a for-profit organisation," he says. "You could say commercially that it is astute to do this, but we don't want to play games. We just want to say look - we are not for profit - we are committed to that. This is a lot to do for a multinational company. To take that model as a business model is not without risks."

But while GSK is keeping its books in order, there are 29.4 million mostly very poor people set to die of Aids in sub-Saharan Africa and drug company profits, at 18.5% in 2001, are the highest of any industry on the planet.

JP acknowledges that there is an image difficulty. "I think the public has much higher expectations of multinational companies than they did 10 years ago or 15 years ago," he says. "I think they have lost their confidence in the ability of the governments and the large international institutions to solve the world's problems. I think that they feel that now that the multinationals have become so powerful, frankly they should take on those problems and they should contribute more to the communities and the like and rebalance a little bit the equation with employees, shareholders, communities - and I totally agree with this.

"I think fundamentally the public needs to be reassured that multinational companies and globalisation are not bad - quite the reverse. We have the power to do an awful lot of good but we have to use it. We have to use it."

He is mostly talking about old-fashioned philanthropy - about Glaxo's very creditable $1bn programme to eradicate lymphatic filiariasis and Merck's campaign to stamp out river blindness.

Aids is a much bigger and more complex problem, with political, social and economic dimensions. The industry as a whole has shown few signs yet of leading the charge where governments hang back. Where is the transparent global policy, for instance, to ensure that all the badly-needed Aids drugs are sold at the lowest possible prices? Others are less eager to discount than GSK.

For ten months, the Swiss company Roche ignored pleas from the doctors at Medecins sans Frontieres to cut the price of nelfinavir, a WHO approved drug that is much easier to use and take than Merck's cheaper equivalent indinavir. Last Friday the company finally announced a price cut for the poorest countries from $3,100 a year to around $900.

"While our policy has significantly reduced prices and removed patent issues as barriers to HIV therapy, it would be wrong to suggest that we can solve the problem through these steps alone," said William M. Burns, head of Roche Pharma. "Affordability is only one of many barriers to care in developing countries."

MSF, though pleased at the result, is unimpressed. "The long struggle to reduce the price of this Roche drug is proof of the limitations of a fully voluntary system," says Daniel Berman. "For new drugs, there needs to be an internationally- supported enforceable system that reduces prices to affordable levels in developing countries."

These sorts of cuts will not make the patent issue go away. Campaigners like Oxfam and MSF say only competition from the generic companies can force prices down further. They must be allowed to export whatever drugs are needed to all developing countries - south America and Asia as well as Africa.

The drug giants, whose interests are invariably represented at world trade talks by the US, Switzerland and Germany, where much of Big Pharma is based, will concede that Africa can set aside certain patents in the interests of public health. But they insist there can be no exemption for middle income countries like Brazil, India and China, which currently make and export most of the generics. And they also insist that patents can be waived only for Aids and certain tropical diseases.

The matter should have been sorted at the World Trade Organisation by the end of last year. The battle is still raging.

Garnier, like all the drug company bosses, sees the generic pirates as a threat to the future of Big Pharma, stealing their ideas and their profits. He gets heated. "Why is there a disagreement here?" he asks. "The disagreement is because there is an economic war going on. This is a great opportunity for the Indian and Brazilian generic companies to conquer the world. If they could just get rid of our patents then the whole developing world would open up to them.

"So this is an economic war. There are a couple of pirate companies who want to undermine the patent system and they have found the best horse of Troy - whatever it's called in English - to come in against the patent. This is the first time there is a genuine risk that intellectual property would disappear in the developing world. I'm saying in the poorest countries of the world - and there is a list prepared by WHO - they should be able to disregard patents. That's what I'm for, in all the diseases that constitute healthcare crises for those countries. So it's HIV, and malaria and TB and infectious diseases and so forth.

"What I don't agree is that patents would be disregarded in China, in India, and so forth and those companies would be able to prosper by pirating our discoveries made in Europe and the US and therefore we'd be shut out of 80% of the world population. That is not fair. If the patents go away in those countries it's the end of the pharmaceutical industry as we know it."

The wide list of diseases now up for discussion proves the generic pirates are up to no good. "This is the proof of the pudding. They say no - we want asthma, we want diabetes. I mean excuse me - what has it got to do with helping Malawi with HIV?"

So should children in Malawi die of asthma? "I don't care. Malawi can violate my patent on asthma. I don't have a problem with Malawi. I have a problem with Brazil and China - and Chile and Argentina and everything. It isn't fair. It isn't fair to people who have discovered those drugs."

Garnier says he cares deeply about neglected diseases and is proud of GSK's record. It is developing lapdap (a new malaria drug), investigating leishmaniasis and hunting for an Aids vaccine. "I think it's a tremendous contradiction for me and for our scientists to have a disease sitting there and say this one we can't go after because there's no profit in it. We can't have that. If we see a scientific opportunity that happens to apply to a not for profit, we'll go after it. It's just that we've got to be street smart about the funding. We can't use our shareholders' money excessively so let's use the public money. There's plenty of money in the world to fund those initiatives and we've never been turned down. I talk to Bill Gates all the time - I knock on his door all the time for funding and I get it," he says.

Should it work that way? Ellen t'Hoen of MSF has doubts. "If you put money in, you will get your drugs, but whether it is the most effective way to have it done by Glaxo is the question," she says.

She cites the pharmaceutical industry claim that it costs $800m to develop a new drug. The Global TB Alliance, devoted to fostering new TB drugs, puts it at around $40m, up to $115m if you cost in the failures and at most $240m including the initial discovery (which often comes out of a state-funded university) as well as the development.

But Glaxo is doing more for neglected diseases than most drug companies. Garnier also believes Glaxo has behaved well over Aids. "I think that the people who know give us kudos. We broke the camel's back. Without GSK we would still be arguing about how to price Aids drugs in Africa and we wouldn't have 40-50,000 patients being treated. Now you could say 50,000 is not that many but it's a lot better than zero. And remember, we started on the wrong foot. I inherited the problem two years ago (when he became chief executive of the merged company). Two years ago was the time we were suing the South African government."

The court case in March 2001 was a public relations disaster. There was uproar over the attempt by 39 drug companies to block legislation by the South African government to allow it to import cheap medicines at a time when millions were dying of Aids.

"The South African government was using this as an excuse not to treat their population," says JP. "Once the lawsuit was over South Africa did not look too good because they turned round and told the Aids patients 'We are still not going to do anything'. So it proved the industry wasn't exactly the guilty party, was it?"

But although he believes the companies were in the right, he concedes that the case - which was in fact about all kinds of medicines and not just antiretrovirals - should not have been brought because of the Aids pandemic.

"That's why I was convinced on the first day I inherited this problem we had to get out of the case and I negotiated with the South African government with the help of Kofi Annan and we started on a better foot.

"It's tough. We can do a lot more and we will, but everything comes progressively. We still have to balance running a business and discovering drugs, but I think we have made tremendous progress. I think we're a model for philanthropy. In the words of a very famous person in Washington, GSK is a company with a soul. I love it. I love it. When I heard that I knew I was on the right track."

Maybe, in time, that track will lead to Grace's humble wooden door in Lilongwe. Whether she will still be there - listening to her radio, laughing with her neighbours and walking in the cool early hours of the morning to the Central Market to open up the shoe shop is another matter entirely.

How much is Garnier paid?

The thread linking Grace with Glaxo ends in fabulous wealth. Jean Pierre Garnier has been chief executive of GlaxoSmithKline since Glaxo Wellcome and SmithKline Beecham merged in 2000 to become the leading drug company in Europe and one of the biggest in the world.

The board's recent proposal to boost his total remuneration package to £20m was overturned after an outcry from British shareholders in the context of a plummeting share price. Garnier says he did not seek a rise, but that the board wanted to improve all the top executives' pay to prevent them being poached by rivals.

GSK's annual report for 2001 gives Garnier's final pay as £3,509,000 This is made up of £991,000 basic salary, £101,000 "other emoluments and benefits", £2,417,000 annual bonus and special deferred bonus for his work on the merger.

Garnier's actual reimbursement is nearer to £7,000,000 but hard to calculate exactly because it depends on complex performance bonuses, share options and "career performance shares".


Sarah Boseley

The GuardianTramp

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