Some of GlaxoSmithKline's ($GSK) prominent investors may be pushing for a four-way breakup of the company. But others are just fine preserving the status quo--and keeping CEO Andrew Witty at the helm to do it.
As one top-20 shareholder told the Telegraph, there are benefits to having four disparate units--pharma, vaccines, consumer health and ViiV Healthcare, the company's HIV drugs division--in tow. For one, consumer revenues have helped buoy the company through its "slightly more lumpy drug discovery."
"This is a supertanker, Andrew Witty's feet are fully to the fire and we should give the guy a chance," he told the publication.
"If he's fundamentally doing the wrong things, maybe there's a reason [to change the chief executive], but if things are going slower than expected but are moving in the right direction why should that matter?" another top-10 shareholder asked.
Amid pressure to split--plenty of it coming from prominent U.K. investor Neil Woodford--those sentiments echo those of Glaxo's execs. Last month, vaccines chief Moncef Slaoui told FiercePharma that there are "enormous synergies" between the company's pharma and vaccines business--meaning splitting them up would lead to "a very, very significant loss of opportunity and a much, much higher cost structure."
And as Witty has told investors and analysts, jettisoning any assets right now--even the company's consumer health joint venture with Novartis ($NVS), which he's acknowledged has the scale to one day potentially fly solo--wouldn't be a good idea.
"I think sometimes people think, 'Oh, let's just put together these two massive companies … on Monday, and on Tuesday, let's do something completely different with them,'" Witty said on last week's Q4 conference call, noting that "if I had to make that call today, I'd stick to what we have," he said.Philip Hampton
But that's one reason some antsy investors would like to see Witty get the boot--and some of them have turned to new chairman Philip Hampton to see it accomplished. So far, though, since stepping into his role last May, Hampton has yet to make any major changes, and if any are coming, it may still be awhile.
"If you had a blank piece of paper you would have never design a drugs company like this," Richard Marwood, a fund manager at top-20 GSK investor Axa Investments, told the Telegraph. "It is something we have spoken to Hampton about in the past year and he is aware it is a structural issue. He said it is strategically something that needs to be looked at, but they are not close to sorting it."
- read the Telegraph story
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