GlaxoSmithKline shoots for $46B in 2031 sales. But will 'change agent' Walmsley be around to lead the new company?

Emma Walmsley
In her first long-term forecast for GlaxoSmithKline, CEO Emma Walmsley said the company could reach over £33 billion in sales by 2031. (GlaxoSmithKline)

With a transformation underway aimed at focusing GlaxoSmithKline around vaccines and specialty medicines, CEO Emma Walmsley has laid out an ambitious goal in her first long-term forecast for the British pharma.

By 2031, GSK expects product sales to reach £33 billion ($46 billion), Walmsley said Wednesday ahead of a much-anticipated investor event.

That’s actually lower than the £34 billion haul GSK posted last year. But the projection only includes pharma and vaccine sales as GSK is shedding its consumer health unit, which generated £10 billion last year. And Walmsley offered new details on that process Wednesday.

From here, GSK’s path starts with a 5% average sales growth rate in the next five years, Walmsley said. Still, the company’s transformation push comes at a time when the firm’s stock has been underperforming thanks to lackluster commercial turnover and R&D setbacks, which has put Walmsley’s leadership into question.

RELATED: Tension builds at GlaxoSmithKline as activist investor Elliott plots CEO Walmsley's removal, vaccine split: FT

GSK management reached the new blueprint after “four years of extremely ambitious, unprecedented, comprehensive change,” Walmsley said during a press call Wednesday.

When the drugmaker first unveiled its consumer joint venture with Pfizer in late 2018, the company knew then it wanted to spin off the franchise. Wednesday, GSK finally detailed the consumer spinoff plan, saying it aims to separate the business through a demerger by mid-2022.

GSK will shed at least 80% of its 68% holding in the JV to shareholders. The new standalone consumer health giant will list on the London Stock Exchange and have American depository shares available in the U.S. While GSK will initially retain up to a 20% holding in the new entity as “a short-term financial investment,” it intends to cash out those shares “in a timely manner” to strengthen its balance sheet and support pension funds, the company said.

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The spinoff will give GSK up to £8 billion ($11 billion) immediately in the form of a dividend. The money will support R&D and deal-making efforts in four key therapeutic areas—infectious diseases, HIV, oncology and immunology—at what Walmsley called the “new GSK.”

In business development, GSK will make some “opportunity-driven” moves and will follow “the science of the immune system and human genetic validation,” Walmsley added.

Within GSK’s existing pipeline, Walmsley outlined a potential £20 billion in peak sales from its late-stage programs. These include long-acting HIV drug cabotegravir, which is in FDA rolling submission for PrEP; anemia drug Duvroq, which has been approved in Japan; multiple myeloma antibody-drug conjugate Blenrep; as well as potential combination of PAPR inhibitor Zejula and PD-1 inhibitor Jemperli in ovarian cancer, among others.

Together, these drugs can more than offset the expected loss of exclusivity of Tivicay—the cornerstone of GSK’s blockbuster HIV business—in 2028, Walmsley said.

RELATED: GSK, Bayer stand by CureVac following 'disappointing' COVID-19 vaccine trial flop

Walmsley has been working to transform GSK for four years since she first came to the top job in early 2017, but several projects failed to play out as she had planned. Most notably, its partnership with Sanofi on a COVID-19 vaccine has yet to yield efficacy data. And its second collaboration with CureVac was also put into question after the biotech's first-generation mRNA candidate reported a mere 47% efficacy against any severity of COVID-19.

GSK’s underperformance has attracted criticism aimed at the CEO. Activist investor Elliott Management has reportedly contacted many GSK shareholders, rallying support to push out Walmsley and to split the company further between the pharma and vaccine departments.

Calling herself a “change agent,” Walmsley once again defended her position and her intention to stay on at the reshaped company during Wednesday’s call.

“I have been leading and driving very hard a shift to a more performance-oriented company and that’s evidenced by the vision of what we have ahead,” she said. “My focus is resolutely on leading us through this transformation, through a successful separation and with momentum beyond that.”

Whatever her commitment, Walmsley and her management team were expected to face some tough questioning from shareholders at Wednesday’s investor event.