GW Pharmaceuticals Plc (NASDAQ: GWPH) Case Study
Prepared for:
Dr. Judith Hunt
Prepared On:
February 22, 2015
Brion Williams
SIC/NAICS
The SIC codes for GW Pharmaceuticals plc are listed below (RESEARCH; SIC):

2834 – Pharmaceuticals preparation
The NAICS codes for GW Pharmaceuticals are listed below (NAICS):

325412 – Pharmaceutical Preparation Manufacturing
Vision/Mission Statement
Vision Statement:
“Our vision is to be the global leaders in prescription cannabinoid medicines, through the
rapid cost-effective development of pharmaceutical products which address clear unmet
need.” (GW Pharmaceuticals plc).
Mission Statement:
“The group’s lead programme is the development of a product portfolio of cannabinoid
prescription medicines to meet patient needs in a wide range of therapeutic indications,
including Sativex Oromucosal Spray and Epidiolex for childhood epilepsy.” (GW
Pharmaceuticals plc).
Corporate Strategy:
Attitude towards Growth
GW Pharmaceuticals’ focus is to bring novel prescription medicines to market
which provide patients with serious conditions with valuable medicines. Through
rapid cost-effective product development, addressing market needs, and
establishing commercial partnership, GW seeks to maximize the value of its
products and shareholders returns. (GW pharmaceuticals)
Strategic Posture
GW Pharmaceuticals strategy is to maintain a world leading position in the field
of cannabinoid science and in the research, development and commercialization
of cannabinoid molecules as novel prescription pharmaceutical therapeutic
candidates. (GW Pharmaceuticals)
Strategies In use
GW Pharmaceuticals is applying a cooperative strategy. GW pharm is in
partnership with Otsuka, Novartis, Almirall, Bayer, Ipsen, and Neopharm. They
have extended exclusive licenses with these companies where GW Pharm will
supply and manufacture Sativex for the companies. In return the companies will
pay the cost for these actions and has exclusive commercialization rights to
Sativex within their region. (GW Pharmaceuticals)
GW Pharmaceutical is also using a global strategy by using these companies.
Granting the companies the right to their products guarantees their products will
be marketed on a global scale. Companies such as Bayer will market Sativex in
the UK and Canada. Likewise the other companies will market Sativex in their
region giving GW Pharm a global presence. (GW Pharmaceuticals)
Structure:
Board of
Directors
Global
Marketing
Clinical
Operations
Director
R&D Director
Botanical
Research
GW Pharmaceuticals uses a functional structure. The board of directors has overall
responsibility for the group. Its aim is to provide leadership and control in order to ensure
the growth and development of a successful business. Under the Board of Directors is the
company’s management team, which is comprised of 15 department heads. This setup
allows each department head the ability to focus on their area and activities and leaving it
to the Board of Directors to provide direction. (GW Pharmaceuticals)
Business Level Strategies
GW Pharmaceuticals seeks to enter into license agreements with major pharmaceutical
companies with a view to those companies undertaking the sales and marketing of GW’s
products. (GW Pharmaceuticals) While these companies promote GW’s products, GW
will retain control over their products developments. GW Supplies finished packaged and
labelled product to its pharmaceutical partners for the purposes of commercial
distribution and sale. (GW Pharmaceuticals)
Pricing Strategy
GW Pharmaceuticals products are priced on the higher end of the product range.
Compared to similar products on the market GW Pharm products such as Sativex are
overpriced.
Promotion Strategy
GW pharmaceuticals aligns themselves with many different pharmaceutical companies
such as Otsuka, Novartis, Almirall, Bayer, Ipsen, and Neopharm. These companies are in
charge of promotion with in their region. Otsuka has an exclusive right to market Sativex
in the US. Novartis has the rights to commercialize in Australia and New Zealand, Asia
(excluding Japan, China and Honk Kong), Middle East (excluding Israel/Palestine) and
Africa. Almirall is granted an exclusive license to market in the European Union
(excluding the UK), EU accession countries as well as Switzerland, Norway and Turkey.
Bayer has an exclusive license to market in the UK and Canada. Ipsen has the rights to
promote and distribute in Latin America (excluding Mexico and the Islands of the
Caribbean). Finally Neopharm has commercial rights in Israel/Palestine. (GW
Pharmaceuticals)
Placement Strategies
GW Pharmaceuticals uses a third party to deliver their products to the public. Their
headquarters is located in the United Kingdom. Their product can be found wherever
prescriptions drugs can be purchased.
Product Strategy
Currently GW Pharmaceuticals offer Sativex, an oral mucosal spray with two principal
cannabinoid components, cannabidiol (CBD) and Delta-9 Tetrahydrocannabinol (THC).
This drug is used in treatments in the field of MS and pain. In 2013 GW commenced an
orphan clinical program in pediatric epilepsy and was granted orphan drug designation by
the FDA. The drug used it called Epidiolex and has reported significant anti-epileptiform
and anticonvulsant activity. The drug is used in treatment of both Dravet Syndrome and
Lennox-Gastaut Syndrome.
Functional Strategies
Clinical Science
GW Pharmaceuticals clinical sector is a key part to their business strategy. The clinical
department helps develop drugs and process them through clinical trials. GW
Pharmaceuticals does a good job at hiring for this department. They hired Dr.
Sommerville, a proven board-certified neurologists and has over twenty years of
experience in the pharmaceutical industry. (GE Pharmaceutical)
Global Marketing
GW Pharmaceuticals has built a unique global marketing network. The department is led
by Mr. Haynes a veteran in of the pharmaceutical industry with experience in product
pre-launch, launch and lifecycle management. He also has experience in sales, market
research, medical affairs, and marketing. Their marketing network covers many
continents and has companies promoting for them around the world.
Investor Relations
In such a controversial market it is important to have a powerful team to attract investors.
Investor relations fund the whole business strategy. GW Pharmaceuticals Vice president
of Investor Relations has 25 years of experience in investor relations, financial
communications and media relations. His expertise helps keep investors happy by
providing detailed information.
Industry Analysis
Growth Rate
Since 2009 to 2014, the growth rate of the Global Pharmaceuticals industry is 6.5%
annually. (IBIS World, 2014)
Competitors
Companies in this industry manufacture and process pharmaceutical products. Major
companies include Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck & Co,
and Pfizer (all based in the US), as well as AstraZeneca, Bayer, GlaxoSmithKline,
Novartis, Roche Holding, and Sanofi. (Ranker)
Driving Forces
Demand for Pharmaceuticals is driven by the desire to cure illness and disease. The
profitability of individual companies depends on their ability to discover and market new
drugs. Small companies can compete effectively by specializing in drugs that target one
or two specific ailments and by partnering with larger drug makers.
Key Success Factors

Understand the Business: It is important to have a holistic view of the business
and the considerations necessary to innovate (Burger)

Innovation: Companies often strive to acquire the latest tools and technologies
but it these are not effectively integrated into business processes then the
investment is essentially wasted (Burger)

Implementation: Executing a successful implementation of tools/solutions.
Think realistically, Prepare Carefully Be Flexible, Be Adaptive Secure Funding,
and Provide Exposure (Burger)

Future Opportunities: many disjoint products can be implemented across early
R&D, but a comprehensive workbench is what is needed. (Burger)

Integrate Enabling Technologies: Scientific Discovery, Genetics, Drug
development (Burger)
Porter’s Five Forces Model

Supplier Power: the supplier power is limited as GW Pharmaceuticals grows
their own crops for the development of their medicine.

Buyer Power: After the legalization of marijuana in certain states the buyer
power has increased. There is still a market for their Sativex but many will argue
that marijuana has the same healing effects as Sativex.

Competitive Rivalry: There are no competitors selling a product claiming to do
the same as Sativex.

Threat of Substitution: Close substitutes for Sativex are marijuana and edibles.
The effects of marijuana are said to be the same a Sativex. Since the legalization
of marijuana and the affordability consumers are more likely to purchase the
substitutes.

Threat of New Entry: Legalization of marijuana in some states in the US more
companies are entering the marijuana growing field increasing the amount of
substitutes on the market.
SWOT
Strengths:

Strong expertise in the industry

Partnerships with multiple companies gives them a global marketing network

Expanding uses of their cannabinoids
Weakness:

Health issues due to use of marijuana

Legal issues from cultivating

Legal issues from selling marijuana

Products require high quality medical marijuana
Opportunity:

Hospitals use their products as key medications

Releasing new products (Epidiolex)

Entering different divisions of Pharmaceuticals

Legalization of marijuana in the US

Only one drug offered to the public (Sativex)

Need for more innovation

Marijuana is not legal on the federal level
Threats
Appendix
Income Statement
Period Ending
Total Revenue
Sep 30, 2014
Sep 30, 2013
Sep 30, 2012
48,708
44,202
53,482
3,340
2,066
1,355
45,368
42,135
52,128
Research Development
70,480
52,950
44,533
Selling General and Administrative
11,894
5,757
5,846
Non Recurring
-
-
-
Others
-
-
-
Total Operating Expenses
-
-
-
Cost of Revenue
Gross Profit
Operating Expenses
Operating Income or Loss
(31,838)
(16,955)
1,684
(96)
258
(16,667)
2,008
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest And Taxes
Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
Net Income From Continuing Ops
5,379
(31,627)
99
104
2
(31,726)
(16,771)
2,006
(7,962)
(9,404)
(2,015)
-
(23,765)
-
(7,367)
-
4,021
Non-recurring Events
Discontinued Operations
-
-
-
Extraordinary Items
-
-
-
Effect Of Accounting Changes
-
-
-
Other Items
-
-
-
Net Income
(23,765)
Preferred Stock And Other Adjustments
(7,367)
-
Net Income Applicable To Common Shares
(23,765)
-
(7,367)
4,021
-
4,021
Balance Sheet
Period Ending
Sep 30, 2014
Sep 30, 2013
Sep 30, 2012
Assets
Current Assets
Cash And Cash Equivalents
266,667
61,649
47,370
-
-
-
11,523
7,503
3,888
7,744
7,548
5,712
-
-
-
285,935
76,700
56,970
-
-
-
18,869
8,868
3,927
8,446
8,437
8,413
Intangible Assets
-
-
-
Accumulated Amortization
-
-
-
Other Assets
-
-
-
449
1,449
-
313,699
95,454
69,311
Short Term Investments
Net Receivables
Inventory
Other Current Assets
Total Current Assets
Long Term Investments
Property Plant and Equipment
Goodwill
Deferred Long Term Asset Charges
Total Assets
Liabilities
Current Liabilities
Accounts Payable
20,064
15,287
14,717
204
162
-
7,825
5,151
3,955
Total Current Liabilities
28,093
20,600
18,672
Long Term Debt
15,738
3,085
-
-
-
-
12,776
14,439
16,353
Minority Interest
-
-
-
Negative Goodwill
-
-
-
56,608
38,124
35,025
Misc Stocks Options Warrants
-
-
-
Redeemable Preferred Stock
-
-
-
Preferred Stock
-
-
-
Common Stock
384
288
215
Short/Current Long Term Debt
Other Current Liabilities
Other Liabilities
Deferred Long Term Liability Charges
Total Liabilities
Stockholders' Equity
Retained Earnings
(132,067)
(111,682)
(105,014)
Treasury Stock
-
-
-
Capital Surplus
357,550
136,038
106,492
31,224
32,686
32,593
Total Stockholder Equity
257,091
57,330
34,286
Net Tangible Assets
248,645
48,893
25,873
Other Stockholder Equity
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