Having once described herself as a “change agent”, Dame Emma Walmsley announced her departure as chief executive of GSK having completed a major restructuring of one of Britain’s big pharmaceutical companies and advanced a rebuild of its drugs pipeline.
In an announcement on Monday which was not unexpected in the City, Walmsley, 56, will hand over to Luke Miels, GSK’s chief commercial officer, from January amid some scepticism in the market that the FTSE 100 group can hit a key sales growth target of more than £40 billion by 2031.
Signs that Walmsley, one of the UK’s most senior business leaders, could be preparing to hand over leadership included her declining in March to commit to leading GSK to those targets, instead saying: “I am absolutely sure that those targets will be realised.”
Luke Meils has a strong pharma focus
Since she formally took charge of GSK in the spring of 2017, Walmsley has overseen the separation of Haleon, the consumer healthcare business she previously led, in one of the biggest strategic changes since the group’s beginnings in 1715.
The break-up in 2022 has focused GSK, which employs more than 65,000 people and operates in about 75 markets, as a “pureplay” biopharma company and put its resources behind reviving its long under-performing drugs pipeline.
The 2031 sales target has been upgraded twice since the separation of Haleon, most recently in February to £7 billion more than initially set out. That was done alongside a £2 billion share buyback in a sign of confidence in the revival of its drugs pipeline.
The Haleon restructuring was achieved in the face of a public activist campaign from Elliott Advisors, the renowned US activist hedge fund, which had called for an overhaul of GSK’s board and a possible sale of its consumer healthcare business.
Walmsley also steered GSK through significant market volatility soon after the separation when potential liabilities from Zantac litigation in America, where its old heartburn blockbuster was alleged to have caused cancer, created a long-running overhang on the stock.
Speaking to The Times on Monday after the succession announcement, Walmsley said: “It is hard to innovate in pharma and when I began in this job we had a locked-up balance sheet, no capacity to invest and that was the challenge I was given and that’s why we reset the group structure.”
The dividends from spinning off Haleon have helped GSK almost double investment in R&D to £6 billion and cut its net debt from £20 billion in 2021, before the Haleon separation, to £13 billion last year.
GSK now has 15 major pipeline opportunities set to launch between 2025 and 2031 and Walmsley said that making the succession in 2026 was the right time as it was a “pivotal year” when GSK “really decides how to chart the decade ahead and … deliver on our 2031 target”.
She added: “I really do believe that it should be the CEO that is accountable for delivering that, that is given the time and space to define it.”
This key period will also involve GSK seeking to bridge the loss of exclusivity to dolutegravir, the most-used HIV medicine in the world, before which the group has also faced a slowdown in its vaccines business, a key part of its recent growth.
GSK has almost double investment in R&D to £6 billion
ANNA GORDON/REUTERS
Investor unease over the commercial impact on GSK’s growth outlook has weighed on its share price on the London Stock Exchange.
Walmsley said preparing to change leaders now also meant Miels, 50, could work closely with Tony Wood, GSK’s chief scientific officer, to help show the market that the company’s drug launches and pipeline progress meant it was “well placed” heading beyond 2030.
Shares in GSK are down about 16 per cent since July 2022, when Haleon was listed as a standalone company, despite last year settling most of the Zantac litigation in America.
There is a continued “mismatch” between GSK’s £40 billion 2031 target and consensus forecasts among industry analysts of just £33.9 billion.
Walmsley has previously said the industry tends to “have a gap … and we’re not that much of an outlier for it. What matters is the numbers are steadily going up, particularly in our two core areas.”
GSK raised its financial forecasts twice in 2024, despite downgrades to its vaccines business “because of the strength of the overall portfolio”, and had 13 positive late-stage, phase-III trial readouts last year across therapeutic areas spanning respiratory, immunology and inflammation; oncology; and HIV and infectious diseases.
To help manage the feared dolutegravir “patent cliff”, GSK has been building a new long-acting HIV portfolio as both a treatment and prevention.
It also re-entered the cancer drug market in 2019 via the $5 billion acquisition of Tesaro, the US oncology specialist, in 2019. It was another of Walmsley’s big strategic decisions, after Sir Andrew Witty, her predecessor, sold GSK’s marketed oncology drugs in 2015.
The spectacular commercial and scientific success in oncology over the past decade has been a key driver of AstraZeneca overtaking GSK to become Britain’s biggest pharmaceutical company.
Asked about GSK’s share price performance on Monday during her tenure, she said: “I try and avoid spending much time talking about the share price but you’ve obviously seen some volatility across the whole sector more recently and I’m sure that that will settle in due course.” She was referring to pressure from the Trump administration on international pharma companies over drug pricing and the threat of import tariffs.
Shares in GSK rose following the leadership announcement, closing up by 32p or 2.2 per cent at £15.18 on Monday, with analysts at Bank of America telling clients: “While Walmsley has achieved a lot with R&D progress and separation of consumer, change to Miels is likely to be viewed positively given Miels has a strong pharma focus at a time where business is shifting to specialty drivers.”
Reflecting on her departure, Walmsley, whose total package for 2024 was £10.6 million, said: “You know when you do this kind of job what you really hope for is that when you walk out the door at the end the company is much stronger than you found it and that you’re able to prepare for seamless succession and so it’s just wonderful to feel that we’ve done both.”