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However, due to a shortage of new products in the pipeline, the firm began to experience dangerously low profit margins. Thus it can be argued that Glaxo Wellcome sought a cost cutting and rationalisation strategy in order to increase efficiency and to focus on those activities which add value.
Although the bargaining power of suppliers of `organic chemicals' in the pharmaceutical industry is relatively low as so many suppliers of the commodities used in the manufacture of pharmaceuticals exist, horizontal integration by Glaxo Wellcome would have strengthened the company's position as a buyer of these supplies as the firm could benefit from purchasing
economies, and possibly negotiate better trade agreements with its suppliers...
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