Tomahawk, WI 10/11/2013 (BasicsMedia) – When many corporations are thinking twice about their relationships and activities in emerging markets, I would be the first to state that GlaxoSmithKline plc (ADR) (NYSE:GSK) cannot afford to abandon this strategy as well. GSK remains one of the largest pharmaceutical firms in the world with market cap of more than $121 billion. It is ranked by Barron’s as the world’s fifty-sixth most respected company, in addition to being ranked as the 88th Top brand corporation by  European Brand Institute-Vienna. But it can’t afford to ignore emerging markets any more.

 GSK Must Place More Focus on China

There may be justifiable reasons why some analysts say that GSK has to abandon its focus on some of the emerging markets. Some have even said that GSK has to focus less on countries such as China. But in my view, this is wrong. A global brand such as GSK cannot limit its activities or operations only to a few markets,. It must spread its wings to even emerging markets. China remains one of the most important revenue sources for GSK, and accounted for 3% of its total revenue in 2012. It can still achieve more despite the recent controversies.

Pharmaceutical sales in China are expected to grow by between 15% and 18% in China by 2016. This is already a leading percentage and you would struggle to find similar figures anywhere else in the world. But things seem to be very bad for GSK in China after the recent allegations of bribery and kickbacks which were unearthed in July 2013. The Chinese government is now carrying out investigations to try to get to the bottom of these allegations. At this stage, one can only hope that GSK is not guilty lest it finds itself in serious problem with China’s government.

Other Options for Investors Interested in the China Pharmaceutical Industry

 Due to the ongoing investigations, GSK is not being looked as a viable stock for anyone interested in investing in pharmaceutical countries which have interest or presence in China.  The three other stocks which are being considered as better than GSK include Stryker, Accuray and Intuitive Surgical. However, I still believe that GSK cannot afford to give up on China. This is a country with an aging population, whose middle class is on the increase. The dynamics in  China point to a market which is ripe and carries tremendous potential for a pharmaceutical firm.

 China remains Attractive to GSK and Other Pharmaceutical Companies

 By 2050, the number of people aged 60 years and above in China will have doubled to around 440 million from the current levels of slightly less than 200 million. China’s emerging middle class is projected to be able to afford premium health care services and products in the nest few years. The middle class in China will have comparable purchasing power to other countries such as Italy and Brazil. These dynamics are quite appealing to a company of GSK’s stature and are  reasons I feel it must work harder to retain its share of the Chinese and other emerging markets.

 China is one of the most attractive emerging markets to GSK. It has to resolve its situation with the Chinese government as soon as possible for the long term benefits are worth it.

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