Introduction PESTLE analysis focuses on political, economic, sociological, technological, legal and environmental factors that may impinge upon the existence and performance of an organization. As an organization grows in size and scale it is generally observed that it reaps economies of scale and improves its bottom line. In fact, some organizations resorted to growth option with the sole objective of reaping such economies of scale. In the case of pharma majors like the Glaxo Smith Kline, all such factors come into play; however, the major and core factor is elated to the core realities of the pharmaceutical trade. This relates to technological and legal aspects and it is the R&D activities of the company. An exception to the principle of economies of scale has been presented recently in the R&D activities of large-sized pharmaceutical companies where a large and growing size did not result in economies of scale and forced the concerned corporates to restructure their R&D operations. Case of Glaxo Smith Kline Glaxo Smith Kline is a pharmaceutical major which has operations worldwide through its network of franchisees and collaborations. It has political and legal factors affecting its working as it has to seek permissions and approvals to set up its operations and to seek patents in varying jurisdictions. The sociological factors work directly into the day to day operations of the pharma giant as it affects the lives of people which it employs directly or indirectly as well the lives of patients who get treated through its drug formulations. (GSK) has the strongest pipeline in the pharmaceutical industry the globe over. Needless to emphasize that this employment generation, GSK sales in each jurisdiction contribute to the economies of the respective jurisdictions as well. In order to widen its socio-economic and political sphere of influence, GSK has pursued since the 1980s a strategy of vertical integration of its operations. This strategy instead of focusing on one particular segment of the value chain focus instead on expanding the span of operations within the value chain by merger amalgamations, collaborations, acquisitions and tie-ups for manufacturing, distribution and R&D. Technological and legal issues come to the forefront when the most important constrain to GSK expansion i.e. its R&D activities are examined. This R&D pipeline is achieved when out of millions of compounds screened about 250 make it to pre-clinical testing, 10 make it to clinical testing and only one gets approved for patient use. With these astronomical trial efforts involved, R&D activity needs to be brisk and fast at all stages to keep the pipeline growing. GSK’s recent robust performance is threatened substantially by this very patent and pipeline uncertainties. Therefore the period 2004-06 will require the company to devise methods to emerge out of these uncertainties as competition mounts pressure throughout this period. In order to resolve its diseconomies of scale on formal innovation(each commercially released drug is equivalent to an innovation), GSK has restructured the company’s R&D functions into strategic business units, styled Centre of Excellence for D