GSK Investors Await Results From GSK’s Emma Walmsley

Emma Walmsley

Since taking over the helm of GlaxoSmithKline in 2017, Chief Executive Officer Emma Walmsley has made some significant moves to redefine the company as one focused on the development of pharmaceuticals.

Walmsley has reshaped her executive leadership team to support her plan, including bring on industry stalwarts such as Hal Barron and Luke Miels, and eyed deals that will support long-term growth, while divesting product lines that are not central to her mission.

Walmsley has carefully selected deals that have the potential to grow its drug offerings, particularly in the high-growth areas of oncology. As an example, in December, the company put down $5.1 billion to acquire Tesaro and its PARP inhibitor, Zejula, which is used as maintenance treatment for ovarian cancer. When GSK struck the deal for Tesaro, Hal Barron, head of R&D at GlaxoSmithKline, said the company has a strong belief that PARP inhibitors are “important medicines that have been underappreciated in terms of the impact they can have on cancer patients.” That acquisition was finalized this morning.

Last summer Barron unveiled a long-term plan for R&D at GSK that is focused on the immune system and genetics. Since that plan was formally announced, Walmsley has maneuvered the company in that direction – including the planned spinoff of its consumer health business in a partnership with Pfizer. GSK’s decision to spin off the consumer healthcare business into a separate entity was a bold plan for Walmsley. In early 2018 there had been rumors that GSK was intending to acquire Pfizer’s consumer healthcare business. However, in March, the company walked away from the deal. Days later though, GSK plunked down $13 billion to buy out Novartis’ share of its joint consumer health business unit that markets products such as Sensodyne toothpaste and Panadol headache tablets.

There has been a method to Walmsley’s maneuverings. In an interview with STAT News, she said that the company had no real “definition of what GSK pharma stood for.” By placing the company’s focus on pharmaceuticals, Walmsley said it will allow the company to become a leaner operation that can benefit from significant growth due to its products based in pharma and vaccines.

While Walmsley has been making big moves, in her interview with STAT, she said the company will have to prove itself to investors and show them that the moves will yield profitable growth. She said the company aims to do so “quarter-by-quarter,” which she said they have so far done.  Shares of GSK are down slightly this morning to $38.37 as of 9:45 a.m. That price is down slightly from its high-mark of $41.87 per share back in November.

Last week, another change came to the company. Chairman Sir Philip Hampton announced his intentions to step down from his role head of the company’s plan to split into two separate business units. The next chairman, as Hampton said, will be responsible with overseeing the process of GSK’s split and potential delivery of new revenues from drug development – something that GSK executives are banking on, given the recent moves. Some of the company’s recent drug bets are paying off. Last year, the company saw sales of Shingrix, its shingles vaccine, begin to yield strong returns. STAT noted that sales of Shingrix for 2018 are expected to be about $772 million in 2018 and peak at $4 billion. Another drug that is expected to do well is COPD drug Trelegy Ellipta. Sales are expected to hit about $2.2 billion.

For GSK investors, a lot is riding on Walmsley’s moves. Time will tell, as Walmsley said in her interview.