- Walmsley to join board on Jan. 1, take helm on March 31
- Glaxo becomes biggest FTSE 100 company to be led by a woman
GlaxoSmithKline Plc promoted Emma Walmsley to succeed Andrew Witty as chief executive officer when he retires, singling out the U.K.’s largest drugmaker as the only major global pharmaceutical company led by a woman.
Walmsley currently leads Glaxo’s consumer health business. She will join the board on Jan. 1 and take the helm of the London-based company on March 31, Glaxo said in a statement on Tuesday.
The 47-year-old Oxford graduate, whose background is in marketing rather than science, will be tasked with piloting cutting edge treatments for cancer and infectious diseases through clinical tests and onto pharmacy shelves to boost earnings and revive Glaxo’s shares. Chairman Phil Hampton had said he was looking outside as well as within the company for a new leader.
“I think it’s actually better to have somebody who’s more familiar with Glaxo, from working on the inside, rather than an external candidate,” said Stephen Bailey, a fund manager at Liontrust Investment Partners LLP in London with 800 million pounds ($1 billion) under management, including Glaxo shares. “I would assume in the long term the likelihood is that the consumer division is split away.”
As was the case for Joe Jimenez when he took over at rival Novartis AG, Walmsley’s background isn’t rooted in pharmaceuticals. She joined the British drugmaker in 2010 from French cosmetics giant L’Oreal SA where she spent 17 years, holding marketing and general management roles in China and the U.S.
While living in Shanghai with her husband David and four children, Walmsley attended a networking lunch with Witty, she wrote in an online blog posting for Sheryl Sandberg’s Lean In website.
“An inspiring conversation ended up spiraling into a job offer alarmingly fast,” Walmsley said. The opportunity to run a business with operations in 100 countries, 5 billion pounds in sales and thousands of employees seemed overwhelming. She was plagued with concerns that she was being disloyal to L’Oreal, and unfair to her family. Accepting Witty’s offer felt like a “bungee jump” -- but one she took with her husband’s support.
At Glaxo, Walmsley joined the over-the-counter products business, first as president and then as CEO in 2015, following a three-part transaction with Novartis AG. She holds a degree in classics and modern languages from Oxford University.
Glaxo’s shares fell 0.5 percent to 1,637 pence at 9:46 a.m. in London trading. The stock has climbed about 40 percent during Witty’s tenure at the helm. That’s in line with Novartis’s performance, though it lags behind local rival AstraZeneca Plc’s 140 percent advance.
Under Walmsley’s leadership, core operating margins at the consumer unit doubled to 14 percent in the quarter ended June from a year earlier, bringing Glaxo closer to its aim of 20 percent operating profit margin for the division by 2020.
Picking Walmsley means Glaxo probably will retain its consumer business rather than split it off, analysts at Liberum Capital said in a note to clients. Witty has described a view of the industry in which companies must move away from single blockbuster medicines and instead build a broad stable of solid earners such as vaccines and consumer products. In a March interview, Witty said the consumer health business -- known for its Sensodyne toothpaste and Tums antacids -- could in a few years generate enough cash to cover half the dividend Glaxo pays to investors.
Walmsley will join a small pool of women leaders in the pharmaceutical world. Among them are Heather Bresch, who heads the much smaller Mylan NV. Her promotion also makes her the first female chief among the FTSE100’s biggest companies. Others include Imperial Brands Plc’s Alison Cooper, Royal Mail Plc’s Moya Greene, Severn Trent Plc’s Olivia Garfield, Kingfisher Plc’s Veronique Laury-Deroubaix, EasyJet Plc’s Carolyn Julia McCall and Whitbread Plc’s Alison Brittain.
That may be one reason why even some investors who’d called for a very different person to replace Witty -- someone from outside the company with science experience -- rallied behind her.
“While Emma doesn’t have a lot of drug development experience, I think the drug world is changing,” said Daniel Mahony, a fund manager at Polar Capital LLP in London, which owns shares of Glaxo. “It’s not just about getting data to get drugs approved. It’s also about getting data to get drugs reimbursed and paid for -- and that’s all about generating value and effectiveness and real-world data. That’s what consumer products are about.”
Witty has run Glaxo for almost a decade. Once hailed as one of the pharmaceutical industry’s most visionary managers, the 52-year-old has faced criticism for Glaxo’s lagging share performance and sluggish sales. A bribery scandal in China that led to a $489 million fine last year also tarnished his image, which he had built with initiatives to develop the world’s first malaria vaccine and reform the way medicines are marketed to doctors.