GlaxoSmithKline’s new chairman has his work cut out for him. The British drugmaker has sluggish sales in the U.S. and revenue growth that falls behind that of its Big Pharma rivals. It also recently made some moves in its asset swap with Novartis that left some investors scratching their heads.
But all of this has left some industry watchers thinking more change at the top may be necessary, and they’ve called for the scalp of CEO Andrew Witty.
“Mr. Witty is running out of time,” said Stephen Bailey, a fund manager at Liontrust Asset Management Plc in London, which holds Glaxo shares. “He’s either got to deliver in the next 12 months or step aside.”
Hampton will assume the chairman position Thursday, overseeing Glaxo’s reorganization after its multibillion-dollar asset swap with Novartis and reviewing the performance of several of the company’s executives, Bloomberg reports. In March, Glaxo closed its deal with Novartis, handing its oncology portfolio to the Swiss drugmaker in return for most of Novartis’ vaccines unit and forming a consumer health joint venture. Witty’s idea was to move away from heavy reliance on patented drugs that can be hard hit when generics come along, but it has also moved the drugmaker away from oncology, where many competitors are making strides. The CEO has also made cuts in R&D that have raised worries.
“There needs to be some sort of change–whether that’s under a new management team or not,” Laura Foll, a fund manager at London’s Henderson Global Investors, told Bloomberg, adding that at the very least Hampton needs to re-examine the company’s strategy. She thinks he needs to be investing in R&D. “Phil Hampton may be able to lead the change from the top.”
Hampton, who replaces current chairman Christopher Gent, will also be tasked with revamping Glaxo’s board, evaluating senior executives and finding new directors. At least three directors will leave the company in the next 18 months, Bloomberg reports, and investors are putting the heat on CEO Witty to shape up Glaxo or step out.
But the 61-year-old Hampton seems poised for the challenges that lie ahead, bringing a track record of management overhauls to the table. He previously led the Royal Bank of Scotland Group, overseeing about 90,000 job cuts and a partial dismantling of the firm after the U.K.’s biggest bank bailout, Bloomberg notes. And Hampton also took the reins during the turnaround of retailer J Sainsbury, ushering in change through his role as chairman.
Still, the veteran has a lot to do to regain some lost ground. The company is counting on its vaccines business to boost its numbers, contributing 14% of sales as the market continues to expand. And Glaxo is looking to its new respiratory meds to help replace revenue it is losing from blockbuster Advair. It has recently pointed to increased market share for Breo and Anoro and also snagged an FDA nod for Breo in asthma patients, a blessing that could help Glaxo build the share further.
By Emily Wasserman