Garnier finds the formula for success at GSK

Jean-Pierre Garnier talks to Muiris Houston, Medical Correspondent, about pay rises, parachutes and his forthcoming trip to Dublin to open GlaxoSmithKline's new headquarters

Jean-Pierre Garnier must have had enough questions about platinum parachutes and excessive executive pay to do him a lifetime. GlaxoSmithKline has experienced saturation coverage in the business pages following a shareholder revolt at its recent annual general meeting over an improved package for Mr Garnier. City institutions voted against the company's pay policy for senior executives, signalling a new era in talking tough with corporate managers.

To his credit, Mr Garnier took an opening question about the controversy without rancour.

"The controversy has caused a lot of embarrassment but it is time to move on," he says.

"Clearly, we must listen to what investors have to say. Most executives are on two-year contracts, but really platinum parachutes are a non-issue for me. I will never collect one as I have no intention of getting fired."

But he does acknowledge that good governance has become a major issue since the publication of the Higgs report in Britain.

Mr Garnier accepts that one- year service contracts will become the norm and that certain elements of executive contracts are no longer acceptable. "But you must pay competitively to attract the top people. A company like GlaxoSmithKline, which generates most of its revenues outside Britain, is a global player and must compete like one."

Mr Garnier says he is looking forward to his trip to the Republic to open GlaxoSmithKline's new headquarters here.

Following the merger of Smith Kline Beecham and Glaxo Welcome in 2000, the company now employs 1,400 people in the Republic. It has manufacturing and R&D sites in Dungarvan, Co Waterford, and Cork, while its sales, marketing and regulatory affairs functions are based in Rathfarnham, Dublin.

The pharmaceutical sector is one of Ireland Inc's success stories. It is estimated to account for about 15 per cent of our national GDP. More than one-third of our exports are pharmaceutical products. Many of the big global players have manufacturing capacity here.

Mr Garnier says only two countries - Ireland and Singapore - can boast of such a broad base for big pharma, although GlaxoSmithKline itself has 99 manufacturing sites in 44 countries.

"Ireland has been very smart in attracting pharmaceutical industry. Successive governments have been good at drawing in the industry with its highly paid jobs and clean manufacturing environment," he says, pointing out also that pharmaceuticals are resilient in time of recession because "people are not going to cut down on health".

What about the seemingly never-ending consolidation in the pharmaceutical sector. Will this process not affect the industry here?

"As long as the Government is providing a good environment, consolidation won't change the attractiveness of locating here."

What about waste management controversies? "This is not an issue. Pharmaceutical manufacturing does not use a lot of raw materials. It is a different industry from others, so waste management is not a particular concern to a company like ours that operates to the highest standards."

GlaxoSmithKline is a major player in the treatment of HIV/AIDS. Two of its products - Combivir and Retrovir - are among the key drugs credited with turning AIDS from a terminal condition to a chronic disease in the western world. But with 42 million victims worldwide and an ever-growing AIDS crisis in developing countries, can GlaxoSmithKline do anything to improve the lot of the average sufferer in sub-Saharan Africa or the Caribbean?

Mr Garnier is proud of his company's initiative in the area of global HIV. "Our aim is to provide access to HIV drugs to as many people as possible. We have selected 63 countries, defined as the poorest by UNAID, and made a commitment to provide our drugs at cost to these nations."

While this may be a fraction of that paid by developed countries, surely even cost price AIDS drugs are beyond the reach of most people in sub-Saharan Africa? Why not donate free of charge to charge to charities?

"Unfortunately, charities, at a local level, are not immune to corruption," is Mr Garnier's reply. He says GlaxoSmithKline will continually lower unit cost as the volume of production of HIV drugs increases. "Our volumes have risen 300-400 per cent in the last year and a half," he adds reassuringly.

Mr Garnier says attitudes to HIV in South Africa remain a problem. "There is a great need to improve the provision of healthcare information. We work directly with large South African employers - Coca-Cola and Anglo American for example - to ensure that our HIV drugs are administered to their employees. But there is also a need for improved infrastructure in the form of dispensaries and laboratories if the AIDS crisis is to be tackled."

Back in the developed world, there is continuing debate about relaxing controls to allow the direct marketing of medication to the public.

Direct-to-consumer advertising is accepted marketing practice in the United States. Would Glaxo's chief executive like to see regulatory change in the European Union to allow the unrestricted television and radio advertising of prescribed drugs?

"It has good features and bad ones also. Direct-to-consumer advertising is not a panacea but one example of its potential benefit is in the treatment of conditions like social phobia."

He maintains that before direct-to-consumer advertising, people with the disabling condition remained "at home and miserable". But with the help of direct-to-consumer advertising, GlaxoSmithKline raised awareness of the condition as well as the possibility of treatment with one of its products, Seroxat.

"So in my view, direct-to-consumer advertising can be good for patients and good for the healthcare system. But it is not something to be pursued at all costs and I think it is good that EU governments are thinking twice about a direct-to-consumer approach."

Speaking of Seroxat, how has he reacted to the sustained campaign against the anti-depressant, alleging a link with suicide and suggesting the possibility of addiction?

Mr Garnier is highly critical of two BBC Panorama programmes on the subject - "they were based on junk science, frankly" - but strongly defends GlaxoSmithKline's brand. "Seroxat is second to none, with less suicide in patients taking the drug."

On addiction, he says: "Some people won't be pleased with their response and will stop taking the anti-depressant which they must taper off. This does not mean they are dependent on Seroxat."

Mr Garnier feels the issue is less about Seroxat and more about "the extraction of money by lawyers who take advantage of people to get money from pharmaceutical companies".

As the interview draws to a close, Mr Garnier returns to the role of the Republic in the global affairs of big pharma.

"Do you know that Ireland had the vision to attract the pharmaceutical industry and they executed that plan to perfection?" he asks rhetorically. That will no doubt be music to Tánaiste Ms Harney's ears when she joins the GlaxoSmithKline chief in opening the company's new premises next Thursday.