GSK stands by Emma Walmsley after activist attack
Pharmaceutical giant GlaxoSmithKline has rejected calls to bring in a new chief executive as it tackles an assault from activist investor Elliott Management.
GSK said it would not be asking Dame Emma Walmsley to reapply for the chief executive position after it has spun out its consumer health division, which makes household brands such as Sensodyne, Aquafresh and Panadol.
It launched a fierce defence of her leadership and insisted she was the right person to lead so-called 'New GSK', the drug-making company that will be left after the split, just hours after shareholder Elliott issued a public call for change at the top.
GSK said: "The board strongly believes Emma Walmsley is the right leader of New GSK and fully supports the actions being taken by her and the management team, all of whom are subject to rigorous assessments of performance.
"Under Emma's leadership, the board fully expects this team to deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond."
This week Elliott Management had issued a 17-page letter to GSK's board in which it suggested that the company kick off a process to assess who would be best to lead the remaining GSK business and its consumer health business. It follows weeks of talks with other shareholders in which Elliott is understood to have questioned her lack of scientific background.
In the letter, Elliott, which took a multibillion-pound stake earlier this year, attacked the "poor record of execution and value creation" at the business, which is one of Britain's most valuable companies but has struggled to keep pace with its rivals.
Responding to the call to consider other candidates after the spin-out, GSK said: "With New GSK representing the majority of GSK's existing business, the board is not conducting a selection process post-separation."
GSK has been plotting the spin-out of its consumer health business for some time; it told investors last month that it would float the majority of its stake in the division on the London Stock Exchange.
Elliott had urged the GSK board to "remain open to the possibility of diverting from its base case plan [to list the consumer health business]".
The Telegraph reported earlier this week that the Wall Street hedge fund was pushing for GSK to sell the £40bn consumer health business to a private equity consortium, instead of being floated. Elliott is understood to believe it could lead this consortium.
GSK said on Friday that it would "evaluate any alternative options for consumer healthcare that may arise".
However it reiterated its preference for listing the business on the stock market. It said a number of its shareholders had expressed a preference for this option, which would allow them to remain invested in the consumer health business.
The push for change comes after years of GSK underperforming rivals, with its share price having slumped by 13pc since Dame Emma was named as its chief executive in September 2016.
In the period since Dame Emma last unveiled a strategy shake-up for the business, in April 2017, the company has achieved a total shareholder return of 0.2pc, compared to 67.8pc at rival Abbvie, 58.2pc at AstraZeneca, and 40.5pc at Roche.
Over the past year, it has been hammered further by its failure to produce a Covid-19 jab, despite being a leader in the vaccine field.
In an effort to revitalise the pharmaceuticals work, GSK recently said it would be hiking spend on research & development at the company, and on Friday GSK announced it had entered into a $2.2bn (£1.6bn) tie-up with US biotech firm Alector to develop new drugs for Alzheimer's and Parkinson's diseases.
It said it would be making a $700m upfront payment, and then $1.5bn in milestone payments if the drugs were successful in clinical trials and then approved for use.
It said this deal would provide it with "access to a promising clinical programme in immuno-neurology".
Read more: Ben Wright – GSK’s Emma Walmsley is almost defenceless in her fight against Wall Street raider
