The news that Emma Walmsley, President of GSK’s Consumer Healthcare division, will take over the CEO role from Sir Andrew Witty in March 2017 is intriguing for at least three reasons: Ms Walmsley becomes the first female CEO of a major drug company; she has a Consumer Health background and she is an insider. Those investors who have disparaged the strategy of a diverse healthcare business and called for a break up of GSK may fear that the last two of these characteristics favour a continuation of the same “unsuccessful” strategy as her predecessor. This blogger has argued before ( GSK Break Up - no thanks )that a break up of GSK would not be appropriate simply because it is diverse; there are other successful diversified pharma companies. The issue seems to boil down to whether diversification has been at the expense of building a successful pharmaceutical business. Detractors will say that GSK has eschewed the opportunity to build pharma via M&A and is being left behind in the race for franchise building in potentially important areas such as immune-oncology. Supporters will argue that deliberate avoidance of product areas dependent on high prices and price increases has rendered GSK far less vulnerable to future societal insistence on value for money. However, while we cannot backtest such assumptions, we can speculate that there are many future opportunities for which GSK under new leadership may be uniquely suited. The blurring of the edges between pharmaceutical and some consumer products in emerging markets, via common sales channels, could be one such opportunity for franchise areas like modern nutritional products, while the new commercial model at GSK lends itself to the patient-centric approach that is the subject of countless industry conferences.
The author was a Pharmaceutical Analyst at Lehman Brothers for 23 years as well as being involved with the PharmaFutures projects www.pharmafutures.org but is now writing independently. Stewart Adkins is a Director of Pharmaforensic Limited www.pharmaforensic.co.uk
Stewart Adkins was a Pharmaceutical Analyst at Lehman Brothers for 23 years and was involved with the Pharmafutures projects.