The drugmaker GlaxoSmithKline has issued a firm rejection of the main demands made by the activist investor Elliott Management, en dring daarop aan op die uitvoerende hoof daarvan, Emma Walmsley, would lead the new pharmaceuticals and vaccines company after a corporate split next year.
A day after the New York hedge fund published a 17-page letter , in effect demanding Walmsley reapply for her job before the demerger of its consumer healthcare division next year, GSK hit back witha three-page statement defending the company’s strategy.
Elliott demanded GSK appoint new board directors with deep pharmaceutical and consumer health expertise to launch a process to select “the best executive leadership” for the two new companies, in effect forcing Walmsley to reapply for her job.
The drugmaker firmly rejected this demand: “With New GSK representing the majority of GSK’s existing business, the board is not conducting a selection process post-separation. The board strongly believes Emma Walmsley is the right leader of New GSK and fully supports the actions being taken by her and the management team, all of whom are subject to rigorous assessments of performance.
“Under Emma’s leadership, the board fully expects this team to deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond.”
The GSK chair, Sir Jonathan Symonds, had already publicly backed Walmsley, who has come under pressure from Elliott since it took a sizeable stake in GSK in April.
“The board and the executive team believe that focus and stability are now critical to deliver a successful separation,” GSK added.
It said that after a six-month search, it was close to appointing a chief executive for GSK consumer healthcare, which is currently run by Brian McNamara. The process to appoint a chair and form a board of directors for the new consumer healthcare company is well under way.
It will also appoint more directors to the GSK board prior to the demerger of consumer health to boost biopharmaceuticals and scientific expertise.
GSK rejected Elliott’s demand to keep pharmaceuticals and vaccines separate after the shake-up, saying the vaccines business had benefited from operational integration with pharmaceuticals in key areas for many years. The firm’s statement did not mention executive bonuses – Elliott had demanded that they be linked to more ambitious targets and the achievement of research and development milestones.
GSK set out ambitious sales targets and a 10-year strategy at an investor day last week, which were broadly welcomed by analysts. Royal London Asset Management, a top 30 shareholder, also came out publicly in support.