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Emma Walmsley, the CEO of GlaxoSmithKline, dismissed concerns about its leadership, calling her a “change agent” committed to following the spin-off of its consumer health department Change this British drugmaker.
Under pressure from the American hedge fund Elliott Management, Walmsley formulated her vision for the group, with the goal of reaching 33 billion pounds in sales by 2031 and overcoming the issue of key HIV drug patent expiration by the end of the decade.
In the next five years, the company expects annual sales to grow by more than 5% and adjusted operating profit to grow by more than 10%.
Walmsley declined to comment on whether Elliott had seen the plan, saying that GlaxoSmithKline “always remains open to short-term and long-term shareholders.” Elliott holds billions of pounds in the company this year. Won some support Worried that she might not be the right CEO of GlaxoSmithKline.
When asked if she should lead GlaxoSmithKline after the spin-off, despite her background in the consumer business, she said: “I don’t spend time talking about everything I shouldn’t do. I’m a change agent. I’m a business leader. I’m very excited about GlaxoSmithKline’s new plan.”
The streamlined GlaxoSmithKline will retain shares in its spin-off consumer health department, which can then be sold to promote investment in its pharmaceutical pipeline. GlaxoSmithKline will be listed on the London Stock Exchange next year, splitting at least four-fifths of its 68% of the consumer health joint venture with Pfizer, but plans to retain as much as 20%. The shares can be sold on the open market in a “timely manner”. Before the spin-off, the company had already received up to £8 billion in dividends from the division.
Wormsley said the proposal was “very, very beneficial to shareholders.”
The measure is a compromise because some shareholders are reluctant to buy shares again in the IPO, while others urge GlaxoSmithKline to raise more funds for mergers and acquisitions or internal drug development to strengthen its product line.
The company warned that due to the loss of the cash-generating consumer sector, it will cut dividends after the spin-off next year to preserve investment funds.
The group will pay total dividends from GlaxoSmithKline and consumer healthcare, which are expected to reach 55 pence next year. The new drugmaker will pay a dividend of 45p in 2023 and promises to implement a gradual dividend policy.
GlaxoSmithKline’s stock price fell 6% last year, but rose 3% to 1,439 pence at lunchtime in London.
“I am very aware that GlaxoSmithKline’s stock has been underperforming for a long time,” Walmsley said. “The transformation achieved in the past four years has created a completely different growth platform.”
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