INDIAN INSTITUTE OF MANAGEMENT

BODH GAYA

Individual Report
On

GlaxoSmithKline Pharmaceuticals Ltd

Submitted to

Prof. Raveesh Krishnankutty

Submitted by

Dhritiraj Misra
(MBA/1119/07)

On

21/12/2021
Objective: -
 To analyze the impact of the pandemic on risk, return and expected return
of the stocks of GSK in individual and the pharmaceuticals sector.
 To get the basic understanding of the concepts of financial market, finance
functions and financial management.
 To Understand the concepts of risk and return, bonds, stock, and their
valuation

History:-
GSK was started on 1715 in London. It started going global on 1894 by starting
a laboratory in Sudan. It expanded during the time of the First World War,
diversifying to various sectors like dentistry and making penicillin, while
investing more in R&D. In the later part of the 1900s, GSK was tackling diseases
such as flu, ulcers and asthma, its scientists winning Nobel Prize for developing
cure for ulcers. With the advent of 21st century, GSK had partnered with Pfizer to
focus on advanced treatment on HIV, while acquiring the vaccine-producing
segment of Novartis focusing mostly on influenza.
Leadership:-
 Dame Emma Walmsley
Chief Executive Officer
 Iain Mackay
Chief Financial Officer
 Dr Hal Barron
Chief Scientific Officer and President, R&D
 Roger Connor
President, Vaccines & Global Health
 Diana Conrad
Senior Vice President, Human Resources
 James Ford
Senior Vice President and General Counsel
 Sally Jackson
Senior Vice President, Global Communications and CEO Office
 Brian McNamara
CEO, GSK Consumer Healthcare
 Luke Miels
Chief Commercial Officer
 David Redfern
Chief Strategy Officer
 Regis Simard
President, Pharmaceuticals Supply Chain
 Phil Thomson
President, Global Affairs
 Deborah Waterhouse
Chief Executive Officer of ViiV Healthcare
Research Methodology: -
 Data has been collected from CMIE website.
 Research has to be done qualitative, rather than quantitative.
 Exploratory research design would be used in the study. Data is secondary
as, it is not taken primarily for the purpose of the study.
 Risk would be calculated through standard deviation (SD), return is
calculated from the closing price of each month, and expected return is
calculated through CAPM model.
 Hence, we need risk free rate, beta and market rate. Hence, we would need
the indices as well. Indices are used in calculation of beta.
Analysis: -
 From the data, it can be seen that post-COVID risk has decreased for GSK.
 Annual Returns also have increased by almost 50 times ever since the
pandemic has hit.
 Returns for the data are calculated through the percentage change from the
preceding month.
 Then the average of the returns are calculated, giving the monthly return.
 From the monthly return, effective annual return could also be calculated.
 The risk is calculated through the standard deviation of the population. This
risk is the unsystematic risk.
 Annual risk has decreased by 43.12% for the post-COVID time, compared
to pre-COVID. While for monthly risk has decreased by 43.15%.
 Systematic risk is the beta of the data. This is calculated by determining
the covariance of the return of the stock with respect to the market return,
and dividing it with the variance of the market return.
 Expected return is calculated by using CAPM.
 Risk free rate is the average of the monthly risk free rate provided by the
government.

Pre Covid Post Covid

Return (Monthly) -0.8624% 1.4690%
Return (Anually) -9.8714% 19.1246%
Risk( Monthly) 12.56% 7.14%
Risk(Annually) 43.5003% 24.7414%
Beta 0.8754 0.9345
Risk Free Rate 7.11% 6.00%
Market Return (Anually) 1.4250% 70.8149%
CAPM 2.1327% 66.5716%

Conclusion: -
 GSK Pharmaceuticals has seen a rise in the return and expected return
due to the pandemic.
 Although its sensitivity has increased, the risk has still lowered.
 Expected market return has also increased by 33 times.