Sector News

GSK chief Witty hopes his strategy sticks around

March 24, 2016
Life sciences

GlaxoSmithKline CEO Andrew Witty may be heading for the door next year–but he’s still touting the strategy he put in place there, and he believes it won’t be following him out.

“The board of GSK feels very strongly that the strategy is right for the environment we perceive to be developing around us,” he said last week, as quoted by Bloomberg.

That strategy involves hanging onto Glaxo’s component parts, despite pressure from high-profile investors–such as the U.K.’s Neil Woodford–to split apart. Witty has advocated for waiting, particularly with the company’s recently expanded OTC unit, whose operating margin he believes is primed for a turnaround.

“We’re talking about a big, big business, with a significant capacity to produce value for shareholders,” Witty told the news service. “And what I’ve shown–and what I think the company has shown–is that we’ve got a terrific track record of passing that value directly to shareholders in dividend payments.”

Witty’s critics haven’t been thrilled with the OTC focus in general, and they’ve been vocal ever since Glaxo swapped its cancer assets to Novartis to home in on less pricey products, such as vaccines, that wouldn’t face the kind of payer pressure that’s hammered lead med Advair. Many, including Woodford, would be happy to see the scaled-up consumer unit jettisoned, arguing that there’s value at the company that hasn’t yet been unlocked.

Businesses like the OTC division “go for very high multiples, simply because they offer steady growth almost into perpetuity,” Royal London Asset Management fund manager Joe Walters told Bloomberg.

But so far, it looks as if those split-minded investors may not get their wish–even after the departure of Witty, who revealed last week that he’d be stepping down early next year. With that announcement, Chairman Philip Hampton said in a statement that the company would “[ensure] the group remains focused on execution of its strategy.”

And as Deutsche Bank analysts recently noted, without consumer health, the British drugmaker would be more dependent than ever on its floundering pharma business–unless, of course, it pulled off a “transformational deal” to help patch up the Advair wound.

“It seems to us more likely that any new strategy will represent an evolution on the company’s current direction rather than a major change,” they said.

By Carly Helfand

Source: Fierce Pharma

comments closed

Related News

September 25, 2022

Rise of the machines: Novo Nordisk pledges $200M to create first quantum computer for life sciences

Life sciences

Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.

September 25, 2022

Mount Sinai AI uncovers new brain analysis method to predict dementia, Alzheimer’s disease

Life sciences

Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.

September 25, 2022

New AstraZeneca-backed report finds big money behind diverse owners and entrepreneurs in Europe

Life sciences

There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.