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

May 21, 2022

As monkeypox cases emerge in US and Europe, Bavarian Nordic inks vaccine order

Life sciences

A monkeypox outbreak is emerging in the U.S. and Europe, and at least one country is amping up countermeasure preparedness. Bavarian Nordic has secured a contract with an unnamed European country to supply its smallpox vaccine, called Imvanex in Europe, in response to the emergence of monkeypox cases, the Danish company said Thursday.

May 21, 2022

Moderna chairman Afeyan defends hiring practices after CFO debacle: report

Life sciences

Moderna’s recent chief financial officer debacle—in which Jorge Gomez departed on his second day on the job—raised questions about the company’s hiring process given its rush to global biopharma prominence. The most obvious one: How was it possible for Gomez to be hired when he was under investigation by his previous employer, Dentsply Sirona of Charlotte, N.C.

May 21, 2022

Merck to pay up to $1.4B in cancer deal with Kelun, but details are scarce

Life sciences

Merck & Co. is plucking a cancer project from the branch of Chinese-based Kelun Pharmaceutical for up to $1.4 billion, but details from the New Jersey-based Big Pharma have been hard to come by. The deal, first disclosed Monday on the Shenzhen stock exchange, has Merck handing over $47 million in upfront cash in exchange for ex-China rights to a “macromolecular tumor project.”