In response to a 17-page letter from activist hedge fund Elliott Management last week, GlaxoSmithKline (GSK) has thrown its support firmly behind chief executive officer Emma Walmsley (pictured above).
In Elliott’s letter, the hedge fund highlighted ‘leadership failures’ regarding the company’s plans for the consumer health/biopharma separation as well as ‘years of underperformance’.
In particular, Elliott said that GSK should ensure the right leadership through the right process – in particular, Elliott said the right leadership should be chosen for each of the newly separated businesses.
This would involve increasing biopharma and scientific experience for the board of ‘new GSK’, prior to executing the separation and launch the process of selecting the executive leadership for both divisions.
In response, GSK’s board said that it ‘strongly believes’ that Walmsley is the ‘right leader’ for the new biopharma business.
It added that it supports Walmsely and her management team’s actions and expects the team to “deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond”.
GSK has come under increasing pressure from Elliott since the company accumulated a multibillion-pound stake in the British drugmaker in April.
Other major GSK shareholders have also issued their support for Walmsely, including M&G Investments and Royal London Asset Management, which backed GSK’s strategy.
During an investor day held in on 23 June, GSK said it is aiming to deliver sales growth of more than 5% and adjusted operating profit growth of more than 10% over the next five-year period.
By 2031, GSK is expecting product sales to reach £33bn ($46bn) – almost the same as the £34bn the company brought in last year, although the ten-year target will not have any contributions from the consumer healthcare business following the planned split this year.
Since then, the pharma company announced its first deal following the reveal of its ten-year strategy – a $2.2bn monoclonal antibody (mAb) deal with US biotech Alector in the neurodegenerative disease space.
The focus of the deal is two clinical-stage monoclonal antibodies – AL001 and AL101 – that are designed to bolster progranulin (PGRN) levels. PGRN regulates immune activity within the brain and has genetic links to multiple neurodegenerative disorders.