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GSK chief shrugs off concerns over leadership as she outlines plans

GSK chief executive Emma Walmsley has pushed back against concerns over her leadership, saying she is a “change agent” committed to transforming the UK drugmaker after the spin-off of its consumer health division.

Under pressure from US hedge fund Elliott Management, Walmsley set out her vision for the group, targeting £33bn in sales by 2031 and overcoming the expiry of patents on key HIV drugs towards the end of the decade.

In the next five years, the company expects to deliver annual sales growth of more than 5 per cent and adjusted operating profit growth of more than 10 per cent.

Walmsley refused to comment on whether Elliott had seen the plan, saying that GSK “always keeps an open ear” to recent and long-term shareholders. Elliott took a multibillion-pound stake in the company this year and won some support over its concerns that she may not be the right chief executive for GSK.

When asked if she should lead GSK after the spin-off, despite her background running the consumer business, she said: “I’m not going to spend time talking about all the things I’m not. I am a change agent. I am a business leader. And I am very excited about the new plans for GSK.”

The slimmed-down GlaxoSmithKline will retain a stake in its spun-off consumer health division that it could then sell to fuel investment in its drugs pipeline. GSK will demerge at least four-fifths of its 68 per cent stake in its consumer health joint venture with Pfizer next year in a listing on the London Stock Exchange, but plans to keep as much as 20 per cent to monetise it in “a timely manner” by selling it in the open market. The company will have already received a dividend of up to £8bn from the division before the demerger.

Walmsley said the proposal was “very, very shareholder-friendly”.

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The measure is a compromise, as some shareholders were reluctant to buy shares again in an initial public offering, while others urged GSK to raise more money for mergers and acquisitions or internal drug development to bolster its pipeline.

The company has warned that it will cut its dividend after next year’s spin-off to preserve funds for investment, as it loses the cash-generative consumer unit.

The group will pay an aggregate dividend from GSK and consumer healthcare expected to be 55p together next year. The new drugmaker will pay a dividend of 45p in 2023 and committed to a progressive dividend policy.

Shares in GSK, which fell 6 per cent in the last year, rose 3 per cent to 1,439p at lunchtime in London.

“I am very aware that GSK’s shares have underperformed for a long period,” said Walmsley. “The transformation achieved over the past four years creates a completely different platform for growth.”

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