GlaxoSmithKline joint venture to vaccinate Japan

This week’s reading was another opportunity to acquire more knowledge about a subject, in this case International Alliances. After the awareness you then realize how often you see these types of business transactions and alliances around you all the time but now you have an idea of how it all happens. After analyzing the Wal-Mart/Bharti joint venture, I started searching for other organizations, in 2012, going through similar alliances. Good solid companies in the US joint venturing with solid companies abroad are actually all too common. My most recent finding was through an article in the International Business Times by Bhaskar Prasad, regarding the joint venture between the world’s second largest pharmaceutical firm *GlaxoSmithKline and Japan’s third largest pharmaceutical firm **Daiichi Sankyo (March, 2012).

This article shows similarities to the Wal-Mart Bharti venture. GlaxoSmithKline, a $27 Billion global firm creates a 50-50 joint venture with a $1.6 Billion firm in Japan “to build their presence in a key growth market, creating the first and largest company dedicated solely to vaccines in Japan” stated Christophe Weber, president designate of GlaxoSmithKline Vaccines. The objective of the joint venture will be to bring together the products and technologies of the two companies (Prasad, March, 2012). This joint venture host the three important components that make up the best agreements described by (Kanter,1994): First, they incorporate a specific joint activity – GlaxoSmithKline/Daiichi Sankyo will together develop vaccines in Japan through the joint venture. Second, a commitment to expand the relationship – both companies in the GSK/DS alliance will make a capital investment in the joint venture in preparation for future discoveries and developments, and Third, incorporate clear signs of continuing independence for all partners – in addition to the joint venture both firms in the GSK/DS alliance maintain their own operations and product lines globally.

GlaxoSmithKline and Daiichi Sanko have worked together before but solidifying this joint venture proves that both parties are strong form trustworthy firms (Barney & Hansen, 1994) confident that any vulnerabilities that may exist will not be exploited by either one. Representing the equity ownership concept (Gomes-Casseres, 1993) both firms decided to name the new joint venture Japan Vaccine Co. (Prasad, 2012) splitting the joint venture profits 50/50 with a portion going toward funding ongoing capital needs of the venture and expanding the venture as new vaccines in the JV development pipeline are approved (GSK press, 2012).

I believe the joint venture with GSK/DS will be a good one. They are two good companies committed to improving the quality of human life and growing their model by one growth market at a time and if nothing else, the world will benefit from the venture.

*GlaxoSmithKline is headquartered in England with a large presence in the US.

**Daiichi Sanko is based in the UK with a large presence in China.

Prasad, (March, 2012). Daiichi Sankyo, GlaxoSmithKline agree on joint venture in Japan, International Business Times.com, http://www.ibtimes.com/articles/307811/20120301/daiichi-sankyo-glaxosmithkline-agree-joint-venture-japan.htm

Joyce & Schroter, (March, 2012). Daiichi Sankyo, GSK sign vaccine pact, Wall Street Journal.com, http://online.wsj.com/article/SB10001424052970203753704577256904175147144.html

Gomes-Casseres, (1993). "Managing International Alliances: A Conceptual

Framework." Harvard Business School. pp. 1-20.

Barney & Hansen, (1994). "Trustworthiness as a Source of Competitive Advantage." Strategic Management Journal, Vol. 15, pp. 175-190.

Kanter, R. (2010). "Collaborative Advantage: The Art of Alliances."Harvard Business Review. p.106.