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GlaxoSmithKline boss Emma Walmsley seeking to defy critics

GlaxoSmithKline boss Emma Walmsley seeking to defy critics as she sets out vision for British drugs giant’s future

  • Walmsley will spell out plans to separate the firm’s consumer division and talk up the strength of medicines being developed by the remaining pharmaceutical and vaccines business
  • Elliott Management – one of Wall Street’s most feared activists – has built a stake in GSK 
  • The chief executive has faced questions over whether she is the right leader for the company after its consumer division is spun off 
  • Aviva, a top investor, has also warned that the ‘jury is out’ on Walmsley’s leadership since she took over in 2017 

GlaxoSmithKline boss Emma Walmsley will seek to defy critics this week as she sets out a vision for the British drugs giant’s future. 

Speaking to investors this Wednesday, she will spell out plans to separate the firm’s consumer division and talk up the strength of medicines being developed by the remaining pharmaceutical and vaccines business. 

The event – a capital markets day – could be a critical moment for the chief executive after a difficult two months. 

Looking for inspiration: GlaxoSmithKline boss Emma Walmsley has endured a difficult two months

Following revelations that Elliott Management – one of Wall Street’s most feared activists – had built a stake in GSK, Walmsley has faced questions over whether she is the right leader for the company after its consumer division is spun off. 

Elliott’s intentions remain unknown. But analysts have speculated that the raider could push for the chief executive’s removal, more ruthless cost cuts, a speedier break-up of the business or even a sale. 

Aviva, a top investor, has also warned that the ‘jury is out’ on Walmsley’s leadership since she took over in 2017, although others including Blackrock, Dodge & Cox and Royal London are said to back her. 

Questions about Walmsley’s decision to lead the pharma and vaccines-focused ‘New GSK’ stem from her lack of scientific background, although allies dismiss this criticism as ‘lazy’ and she has rejected suggestions that this holds her back.

‘I am not a scientist, I am a business leader,’ Walmsley told journalists last month. 

‘The chief executive should be held accountable for results.’ 

On top of this, the company is seeking to allay concerns that its pharmaceutical and vaccine divisions do not have strong enough drug pipelines to stand alone without the help of the consumer business.

This is because the patents for a host of GSK’s ‘blockbuster’ medicines – those that bring in annual revenues of more than $1billion – are due to expire in the coming years. 

And GSK has been left red-faced after failing to develop a coronavirus vaccine – despite being the world’s biggest vaccines producer before the crisis. 

The company insists it has as many as ten potential blockbusters in the works, including possible breakthrough drugs to treat cancers, HIV and blood conditions. 

But Elliott’s arrival has focused attention on the concerns and piled extra pressure on Walmsley. 

Analysts have speculated that one rabbit she could pull out of the hat would be plans to float the consumer business – which has been formed through the creation of a joint venture with rival Pfizer – after separating it. This, or a partial listing, could help raise more cash for Walmsley that could be spent on research, acquisitions of new medicines or used to pay down debts, Liberum said. 

‘It’s also worth noting the arrival of an activist shareholder on the GSK register who may be pressing for a faster balance sheet fix for the business,’ the broker told clients in a note. 

‘Thus, an element of IPO feels increasingly likely.’ 

Liberum estimates that the consumer business is worth around £30billion, meaning the firm’s 68 per cent stake is worth about £20billion. 

A spokesman for GlaxoSmithKline declined to comment.

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