GSK's silence sets tongues wagging

GlaxoSmithKline CEO Andrew Witty said two things yesterday that analysts are still parsing today. One: "There is no way we will be distracted by large-scale M&A going on in the sector--that's not for GlaxoSmithKline. Nothing that has happened in the past month has changed my view. You will see us make acquisitions but they will be small to medium-size and will not be a mega-merger."

Two: No 2009 sales forecast, no 2009 earnings guidance.

In both instances, Witty personified a headline in The Telegraph: "GlaxoSmithKline boss outlines go-it-alone policy." The company plans to forge ahead without hooking up with a big rival. And no other drugmaker is likely to have the guts--or foolishness, depending upon the point of view--to forego financial predictions for the coming year.

The Financial Times takes the long view. Short-term financial indicators are of limited use in the drugs business, because R&D is such a long, drawn-out process. Opening up to analysts about strategic objectives and benchmarks--that's more revelatory, it says, citing Witty's argument. But the paper also thinks there's a bit of "short-term pragmatism" in the move, because GSK's peers saw their shares drop when they issued less-than-encouraging forecasts. And other market-watchers figure the "no forecast" policy won't last long because the predictions have become such a fixture on the financial landscape.

Meanwhile, some analysts upgraded Glaxo stock on the strength of its cost-cutting plans--and its pledge to forego big-time M&A. Such deals "turn out to be nothing but expensive," The Independent says. Derek Lowe at In the Pipeline agrees, as you know; "GSK's at least not going to merge," he says. We'll see how that strategy plays out.

 - read the story in the Telegraph
- check out the FT's take
- see the article in the Independent
- find In the Pipeline's post