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GSK CEO Emma Walmsley has dismissed concerns about her leadership, saying she is an “agent of change” committed to transforming the UK drug maker following the split of its consumer health division.
Under pressure from US hedge fund Elliott Management, Walmsley set out its vision for the group, targeting £ 33bn in sales in 2031 and exceeding the expiry of patents on key HIV drugs by the end of the decade.
Over the next five years, the company expects to produce annual sales growth of more than 5% and adjusted operating profit growth of more than 10%.
Walmsley declined to comment on whether Elliott had seen the plan, saying GSK “always keeps its ears open” to recent and long-term shareholders. Elliott acquired a £ 1 billion stake in the company this year and gained some support for her concern that she may not be the right CEO of GSK.
When asked if he should lead GSK after the referral, despite his background in the consumer business, he said, “I won’t spend time talking about all the things I’m not. I’m a change agent. I’m a business leader. “And I’m very excited about the new plans for GSK.”
The reduced GlaxoSmithKline will maintain a stake in its consumer health division that it could sell to fuel investment in its drug pipeline. GSK will clear at least four-fifths of its 68% stake in its consumer health joint venture with Pfizer next year on a listing on the London Stock Exchange, but plans to hold up to 20% to monetize it “in a timely manner” by selling it on the open market. The company will have already received a dividend of up to £ 8 billion from the division before the separation.
Walmsley said the proposal was “very, very favorable to shareholders.”
The move 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 the dividend after next year’s derivation to preserve investment funds as it loses the cash-generating consumption unit.
The group will pay an aggregate GSK dividend and health care to the consumer which is expected to be 55 per cent. The new drug maker will pay a $ 45 million dividend in 2023 and commit to a progressive dividend policy.
GSK shares, which fell 6% last year, rose 3% to 1,439pa at lunchtime in London.
“I am well aware that GSK shares have performed poorly over a long period of time,” Walmsley said. “The transformation achieved in the last four years creates a completely different growth platform.”
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