By Denise Roland and Joann S. Lublin
LONDON -- GlaxoSmithKline PLC said its head of consumer health
care, Emma Walmsley, will succeed Andrew Witty as chief executive,
a move that punctuates the company's growing emphasis on
higher-volume, lower-margin drugstore staples such as toothpaste
and painkillers.
Ms. Walmsley, 47 years old, will take up the post when Mr. Witty
steps down March 31, making Glaxo the first top-tier pharmaceutical
company to be led by a woman. Ms. Walmsley takes up the top job
lacking the direct pharmaceutical experience that some investors
had sought amid Glaxo's checkered record for developing new
blockbuster drugs.
Instead, Ms. Walmsley spent most of her career at cosmetics
company L'Oréal SA before joining Glaxo six years ago. Still,
analysts and investors saw her as a strong internal contender for
the job, given her experience in the sort of consumer-focused
products that, under Mr. Witty, have become an increasingly
important part of the company. Mr. Witty became CEO in 2008, and
Glaxo in March announced his planned departure.
The board voted unanimously to elevate Ms. Walmsley, according
to a Glaxo spokesman. She is well respected within the company, he
said, having presided over a period of rapid expansion at the
consumer unit after the formation of a joint venture with Novartis
AG.
Glaxo declined to make Ms. Walmsley and Mr. Witty available for
interviews.
Shares in Glaxo initially moved lower on the announcement, but
settled flat in London on Tuesday.
"I would have preferred a pharmaceutical person and she clearly
lacks that," said one investor. "The positive is anybody coming
from outside of pharmaceuticals brings a fresh set of eyes." The
investor said Ms. Walmsley's strong record for margin improvement
made her a "good person" for the job, and that she could apply her
brand-building experience to the pharmaceutical side of the
business.
Andrew Baum, an analyst at Citi, said Ms. Walmsley's lack of
pharmaceuticals experience wouldn't preclude her from improving
Glaxo's research productivity, but said she would need to bring in
some senior hires for that business.
Ms. Walmsley's consumer experience, however, lines up well with
Glaxo's strategic shift engineered by Mr. Witty. While other major
drug companies have increasingly focused on expensive new therapies
for cancer and other diseases, Mr. Witty, 52, has put increasing
emphasis on consumer-health-care products and vaccines.
He achieved that largely through a three-part, $20 billion deal
with Novartis that involved swapping Glaxo's cancer-drug portfolio
for the Swiss company's vaccines business and pooling their
consumer-health-care businesses into a joint venture controlled by
Glaxo.
Mr. Witty pushed the transaction as a way to reduce Glaxo's
dependence on the risk-laden drug-discovery part of the business,
which succeeds or fails on the outcomes of lengthy and expensive
clinical trials, patent life cycles and the willingness of
governments and health insurers to spend ever-tighter budgets on
medicines. By contrast, vaccines and consumer health care are
considered more stable businesses.
Since the Novartis deal closed last year, the consumer business
has been an important source of growth for the company as its
prescription-drug business struggles with the decline of its old
blockbuster drug Advair.
Ms. Walmsley held marketing and general management roles at
L'Oréal over 17 years in various regions, including Europe, the
U.S. and China.
People familiar with the matter said Ms. Walmsley regularly
weighs in on other parts of the business during executive team
meetings.
Glaxo directors also liked the fact that Ms. Walmsley worked in
a senior post in China during her time at L'Oréal, said another
person familiar with the matter. In 2014, a Chinese court found a
local subsidiary of Glaxo and five of its executives guilty of
bribery, handing out suspended prison sentences, fining the company
nearly $500 million and capping a high-profile scandal for the
company there. Her prior China stint represented "another
advantage," this person said.
The spokesman for Glaxo said "her experience in China was
relevant," but added that Ms. Walmsley also worked in the U.S. and
elsewhere in Europe. "Her international experience is what the
board was recognizing," he said.
Other internal candidates considered for the job were Abbas
Hussain, global head of pharmaceuticals, Roger Connor, head of
manufacturing, and Jack Bailey, head of Glaxo's U.S.
pharmaceuticals business, according to people familiar with the
matter.
Ms. Walmsley's strategy at Glaxo's consumer business has been to
champion a selection of so-called power brands, such as Sensodyne
toothpaste.
The shift is starting to bear fruit across the company as a
whole. Glaxo has posted solid revenue and earnings growth for the
past few quarters. Still, Mr. Witty has had to defend the tack.
Neil Woodford, a U.K. fund manager and one of Glaxo's biggest
investors, has pushed for breaking up the company into its
pharmaceutical, vaccines and consumer-health constituents.
A spokesman for Mr. Woodford declined to comment Tuesday.
Joe Walters, senior portfolio manager at Royal London Asset
Management, said the appointment "suggests a strategy of evolution
rather than revolution" and meant the company was unlikely to
undergo any big structural changes.
Write to Denise Roland at Denise.Roland@wsj.com and Joann S.
Lublin at joann.lublin@wsj.com
(END) Dow Jones Newswires
September 20, 2016 21:09 ET (01:09 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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