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Joseph Edward Nathan GLAXO FOUNDER |
 Glaxo
SmithKline, the largest pharmaceutical group in the world, had its origins
in a place far removed from the centres of world commerce: a dairy
creamery in Bunnythorpe, near Palmerston North, and a general trading
company started in Wellington, New Zealand in 1873.
To many, the town may seem an ode to nothing in particular but, as is often the New Zealand way, the ordinary masks the extraordinary. For amid the tattered buildings lies a mark of early history. High on the broken-windowed, former dairy factory - with its peeling paint, rusted roof, creeping moss, and broken-down, nailed-up doorways - is a plastered edifice carrying the name, Glaxo, and it is here the famous brand was born. It is a mark of innovation that grew from nineteenth century, pioneering New Zealand under the auspices of the profoundly Jewish, Joseph Edward Nathan, a mercantiler and entrepreneur, reputed to have been a man of "extraordinary foresight". He was to found a brand name that would win wide acclaim, nurture the national ego and become central to the impulse of a colony in its formative years. Now, beyond the edge of the true millennial change, Nathan's commercial legacy, Glaxo, has extended his original vision. On December 27, 2000, the name born in a frontier New Zealand town was, in an age of globalisation and corporate dominance, hoist by merger to the masthead of one of the largest pharmaceutical behemoths the world has known: the UK-based chemical kingdom of GlaxoSmithKline (GSK). By today's standards, it is enormous. Based on 2001 figures, their revenue stands at $US27.4 billion; and is second in the world to Merck in terms of profit (GSK = US$6.38 billion at last report). GSK holds a seven per cent share of the global pharmaceutical market; it has the largest R&D budget at $US3.7 billion. Put another way, doctors world-wide write some 1,100 scripts for GlaxoSmithKline products every minute. Such is the legacy, and Nathan rightly takes his place as a man who has stood at, and peered out from, the New Zealand Edge. He became an iconic figure who showed the way for genuine entrepreneurship and helped steer New Zealand's development. From the East-End of London to the Colonies From birth, Nathan suffered from asthma and keenly felt the tyranny of the damp and polluted London air. Even so, he would show commercial acumen and entrepreneurial zeal by age 12. He persuaded his father to don a tailcoat and silk hat and travel by horse and gig to boost sales. He also saw export potential but his father was disinterested, so the boy languished with a poor education and limited expectations. Poor health and poverty may have fuelled Nathan's desire to escape the
stale rigidity of industrial England, where opportunity was reserved for the
privileged few and class discrimination was a life sentence. His early days
led also to a belief in a greater, collectivist social good, egalitarianism
and "selfless and dignified citizenship" - themes to become admired
in colonial New Zealand and part of the national character. |
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Nathan's opportunity arose when gold fever struck Ballarat, Victoria, in 1851. His mother died in 1852 and Nathan left for Melbourne on the William Akers in 1853, amid others dreaming of fortune and a new order. But he was soon apprised of his immediate ambition. An Australian policeman, observing his lack of physique and general well-being, advised him to instead set up shop to the fortune seekers. |
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Across the Tasman and into Business Nathan started a miners' store in Melbourne but lacked sufficient capital for growth. Frustrated and with family connections in Wellington, he wasted little time leaving for New Zealand. He arrived in the port of Lyttelton, December 20, 1856, aged 21, and set north for the then small commercial centre of Wellington. If he thought Victoria harsh, New Zealand was a step beyond. Immigrant ships had begun arriving just ten years earlier, the country lacked transport and suffered extreme isolation. Wellington itself was a rugged town of just 3,200 people, 13 hotels, two theatres, two newspapers and three fire-engines. The country depended upon a few merchant ships each year, which took three to five months to arrive. Although the Treaty of Waitangi had been signed in 1840, the New
Zealand Wars of the 1860's awaited. Skirmishes would yet force the
abandonment of business and towns. As one historian of the time said:
Maori "watch as pakeha usurp the lands and insult their laws and
leaders … [They prepare for a] brave and bloody last attempt to save
their old ways of life." These were not easy times; even
many merchant ships would stay away. |
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On January 1, 1861, after marrying Dinah Marks, "according to the
rites and ceremonies of the Jewish faith", he partnered
his sister's husband, Jacob Joseph, in business. That would dissolve in
1873 and within days of dissolution Joseph Nathan and Co. was established:
a mercantiling company that would spawn Glaxo and enter the pharmaceutical
world on a pathway to world leadership.
But for now even the name Glaxo belonged to an unknown future and Nathan dealt in simple stock including colonial produce, fancy goods, clocks, jewellery, ironmongery and patent medicines, fore-runners to latter-day vitamins and drugs. Perhaps as a foretaste of things to come, he sold the general tonics and cure-alls of the day, such potions with exotic European names as Wolfe's Romantic Schiedan Schnapps. |
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A Matter of Religion Orthodox Judaism permeated Nathan's world. It was inseparable from the man and his life, shaping his personal, community and business values. Strict and pious, he was to host weekly synagogue at home until one could be built, would become the first president and a leader until 1895. Finding an employee working at his office on the Sabbath, he was said to have sharply evicted him, warning of future dismissal. Ethical and honest dealings were at the Nathan core. He developed a strong social conscience, caring for the less privileged in society and contributed to charities in time and money. Such values were attributed in the New Zealand Mail, in 1907: |
A letter he wrote to his sons after writing his final will in 1903 - demonstrating either failing eyesight or a lack of interest in grammar - also gives insight to his views. |
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A Crystal Vision But if the values were to be based on deep Jewish principles, without doubt Nathan's commercial growth depended upon his actions. He sought to expand. Technology, shipping, transport, land acquisition and finance were to become key interests. In this expansion much of his reputation for colonial and business vision was built. His first technological revelation was refrigerated shipping and in 1882 the Dunedin made its first journey, delivering near perfect product to the UK. Two years later, seeing advantage, Nathan helped pioneer frozen meat exporting, so vital to the colony's fortunes, and became chairman of the Wellington Meat Export Company. |
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He then moved to secure leadership in shipping. He helped begin a company that chartered sailing ships for freight delivery, proposed a Wellington Harbour Board and became its director, and set up a shipping repair company, the Wellington Patent Slip Company. He also headed the influential Chamber of Commerce. Next was the Nathan bid to free himself from financial constraint, at least in the short term. He visited London in the mid-1880's and secured financial backing from the big London banks, sums that were then unavailable in New Zealand. He opened a London office and an entrée to the all-important London-based markets of the UK. But the effort was not without struggle. In 1880 a Royal Commission opposed the Manawatu railway. The government shelved the development, citing expense in a decade of depression. But too much was at stake. Nathan helped to finance the then private project and in November 1886, the first train rattled into Palmerston North. The elements for the dynamic expansion of Joseph Nathan and Co. were in place. In a speech at the opening of the Manawatu Railway in 1886 Nathan spoke of the benefits of "well directed energy and perseverance" - saying this would always lead to success - and of "united action for the common good". Left unsaid was that these works for "public good" were also very much for the good of Nathan and his interests. Nathan's reputation had now solidified and he was pressed to enter politics. He cited poor health and was perhaps mindful of anti-Semitic attitudes in colonial society. Nathan had limited respect for the day-to-day machinations of politics and did not believe politics was, for him, a forum for the effective advancement of New Zealand. |
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To Bunnythorpe and Glaxo - the Birth of a Brand The company then became interested in dried milk. By 1904, it was to secure a drying process that proved flawed, but refined it. This was a masterstroke for, although dried milk was far from exclusively Nathan's idea, it was soon seen as a counter to growing concern at fresh milk: bacterial disease, particularly "the liquid scourge", Tuberculosis. It was to Bunnythorpe that Nathan turned to build his first dried milk
factory under the brand name Defiance, but this step was not without a hitch. A milk
factory competitor is believed to have set the first factory alight and
blow up the second by gelignite. Suppliers and consumers too would
initially resist the product - Defiance was not an appealing name for
infant food. To ease the way and propel market impact, a
new name was proposed. The Nathan directors settled on Lacto but
(thankfully) this could not be registered because several similar names
were already in the market. By adding and changing letters, the name
Glaxo evolved and was registered on October 27,
1906. |
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Infant Health, Ad Campaigns and a World Famous Food But any advance was precariously won. Indeed, Glaxo competed with 300 other brands of dried milk in the UK. To build market share, a front-page London Daily Mail ad was tried in 1908. Its slogan - " the food that builds bonny babies" - later became famous, but the ad generated just 57 responses. Consumers appeared to have shunned Glaxo and the company fingers were considered burnt. The future of Glaxo was now questioned. In hindsight, the one-off ad-campaign was unlikely to create market penetration and the 57 responses were perhaps a good response given the lack of supporting communications. Indeed, there was no back up campaign, no support material, no repeat ads and such a dense market was unlikely to react, even though the ad was placed on the front page of a popular daily. If Glaxo was to continue, competition and consumer resistance were the
major obstacles that had to be overcome. In the face of such stern
competition, and total sales in the seven months of trading in 1908
reaching just 1900-pounds with a loss of almost 3,000 pounds, it is not
surprising some managers became gun shy. One of Nathan's sons, Alec,
stepped into the breach, carrying the argument step-by-step to continue
Glaxo. |
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His persistence would ultimately pay off but from 1908 to 1910 Glaxo
failed to make a profit. In 1911 it pocketed just 500 pounds on a
turnover of 10,000 pounds and during this time Glaxo could easily have
disappeared. But the product was kept going, and by 1918, it dominated the
sales of Nathan and Co Ltd with a turnover of 550,000 pounds. There would be no looking back. Ironically, it was Alec's
strategic approach to promotion that had effectively held the key.
In time, his strategies would be considered ground-breaking. The Glaxo Baby Book was created in 1908 after nurses employed by Nathan found it difficult to answer the flood of mothers' inquiries. By 1922 a million copies of the baby welfare books were published, Glaxo was a household name and the book would endure for 60-years. Individual contact became important. Person-specific mail was sent to doctors, personal visits made and birth notices used to mail mothers. "Direct marketing" was unheard of then.
The Advertising World magazine was to say this work was the "most successful form of advertising of the present day". In 1913, they said: "seven years ago Glaxo was known among a very small section of the community - today it is not an exaggeration to say every mother at least knows about Glaxo". Perhaps conclusive evidence of Glaxo's acceptance was its appearance in Virginia Woolf's 1925 novel, Mrs Dalloway. |
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COPYRIGHT NZEDGE.COM IP HOLDINGS LIMITED
1998-2007. |
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