RE: Pipeline pressure and Elliott’s stake have GSK in a spin17 Apr 2021 02:02
Early successes
Walmsley was an unexpected choice to lead the company. As the process of finding a successor to former chief executive Sir Andrew Witty began, then-chair Sir Philip Hampton assured shareholders he was looking for “an external candidate steeped in pharma”, said one person briefed on the conversations.
Walmsley, appointed in September 2016, had no background in that area — and was already on the GSK payroll as chief executive of the consumer health division, having joined the company after a long stint at L’Oréal.
One person familiar with the search said the strongest of three external candidates who all had solid pharma experience was excluded over a $25m golden handcuff payment that would have been met with “substantial shareholder resistance”.
Walmsley, one of three internal candidates shortlisted, had in any case been the preferred choice of all directors on her merits, the person emphasised.
A senior portfolio manager in the City of London, who holds GSK shares, said Walmsley had made a good early impression. She won praise for surrounding herself with experienced scientists, such as Hal Barron, the president of R&D who also sits on the board and has done innovative deals, investing in new ways to find drugs; and Luke Miels, a former AstraZeneca executive who leads pharmaceuticals.
“When she first came in, she hired some very good people around her, the ex-HSBC chief financial officer, a new head of pharma, a new head of R&D. She didn’t overpay for the Pfizer consumer assets — and ended up doing the joint venture which was good for both parties,” he said.
Another top-30 shareholder said the decision to split the company, ending the diversified model that Witty had assiduously defended, was a “brave move”. “It also shines a light on pharma, which has to be strong enough to prosper on its own,” the shareholder said.
But now some shareholders worry that the fresh attention could expose GSK’s failure to refill the drugs pipeline. Investors sometimes compare Walmsley to rival AstraZeneca’s Pascal Soriot, who had a career in pharma including leading Genentech before taking the helm of the Anglo-Swedish company and turning it into a scientific leader.
“The best people in the pharma industry tend to have deep roots in science and can really fully contribute to the strategic decisions on R&D direction,” said Jo Walton, an analyst at Credit Suisse.
Before Elliott’s approach, shares in GSK had fallen 14 per cent since Walmsley took up the post in 2017, compared with a rise of 49 per cent at AstraZeneca over the same time, and a 16 per cent increase at US-based Pfizer.
Out of the vaccine race
Concerns over GSK’s pipeline have been brought into sharper focus during the pandemic.
The company is notably absent from the frontrunners that have a Covid-19 vaccine on the market. It decided to focus on supplying an adjuvant to boost the efficacy of vaccines made by others — including in a partnership with
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