GSK unveils Dragons' Den-style development board

Scientists at GlaxoSmithKline will have to pitch their ideas to a "Dragons' Den"-style development board with a $1bn (£500m) annual budget, including two venture capital bosses, a former NHS executive and the chief of a biotechnology firm, as part of an effort to improve the flow of new treatments emerging from the world's second largest drug company.

The board is part of a series of measures unveiled today by chief executive Andrew Witty during his maiden results presentation, aimed at restoring GSK to "predictable growth" amid the toughest business environment for the drugs industry in many years. The overhaul, he said, would lessen GSK's reliance on a handful of blockbuster drugs, diversify the business geographically, particularly into emerging markets, and further cut costs.

"Today about 60% of our sales are accounted for by 10 drugs," he said. "What we want to do over time is broaden that concentration of our assets. I want to make sure this company doesn't have periods of boom and bust in R&D output. I want this company to be a sustained deliverer of product flow."

Additional investment will be directed toward the higher growth areas such as vaccines and consumer healthcare and over-the-counter medicines. He said potential customers, such as the NHS, would be brought in earlier in the drug development process to ensure that GSK's money was being invested in the right place.

In an effort to fire up innovation at the company, scientists will be based in smaller teams and will pitch three year business plans to secure backing, in the same way that a start-up might approach a venture capital firm. "We are looking to release energy and empower our scientists," Witty said.

The Drug Discovery Investment Board, led by Patrick Vallance, the company's head of drug discovery and including another six executives from inside the company, would provide a "very objective, disciplined decision-making" process. GSK would not reveal the identity of the four outsiders on the board.

It is also establishing a corporate venture fund, which will invest in start-ups that can be spun out of GSK and in early stage healthcare companies outside of the business.

The company reported a 2% decline in revenue for the second quarter to £5.87bn and a 3% drop in profits to £1.84bn; it expects a single digit decline in earnings over the full year. Sales of Avandia, its diabetes drug, fell 46% to £194m after GSK warned that the drug could increase the risk of heart attacks. A number of drugs were hit by generic competition, including the antidepressant Wellbutrin, down 27% and anti-nausea drug Zofran, down 49%.

In a demonstration of the company's strategy to expand its footprint around the world, it announced an alliance with South African pharmaceuticals firm Aspen. Witty said as much as 50% of its new drugs could come from outside the business in the future, up from around 30% today, from investing in outside assets.

Witty said he understood the frustrations of shareholders in the business - GSK has been one of the worst performers in the FTSE 100 in recent years.

"There is a concern in the sector that this has become a low growth, high risk sector. So I believe a company like GSK has to face that head-on. There is absolutely no point dreaming about the 1990s - we've got to focus on what the world is going to be like in the next few years and that's really what we are starting to address. Let's take control of our own destiny and make sure we drive more growth and lower risk profile than perhaps is being perceived up to now."

GSK is pushing back its £12bn share buyback programme beyond its former deadline of July next year in order to ensure it has the flexibility to invest in the business.