Investors: GSK chief Witty is safe for now, but one more strike and he's out

GlaxoSmithKline CEO Andrew Witty

As GlaxoSmithKline ($GSK) charts a new course to return to growth, investors are willing to give CEO Andrew Witty some time to see it through.

But if any more setbacks turn up? He could be out of there, top shareholders told the Financial Times.

"With shares badly underperforming, there need to be some positive signs soon, or pressure could build up against the chief executive," a top-20 GSK shareholder told the paper. "The company says growth will revive by next year. They have to achieve that."

That puts quite a bit of pressure on the volume-based sales strategy the company rolled out earlier this month. The plan involves hawking lower-margin products--like vaccines and OTC products, two areas GSK put its faith in with this year's blockbuster Novartis ($NVS) asset swap--in high numbers.

That way, the company can avoid pricing pressures facing drugs like Advair, whose unfavorable formulary placement has sent sales sputtering as of late. Glaxo won't be "fixated on defending ever and ever higher prices in the developed world," Witty recently told CNBC, and he expects the new strategy to deliver consumer health sales growth in the mid-single digits and vaccine sales expansion in the mid-to-high-single digits at a compound annual rate between 2016 and 2020.

As one investor pointed out to the FT, though, to achieve that will take quite a bit of volume. Plus, Advair--whose freefall is expected to worsen once U.S. generics hit, a prospect the British pharma giant acknowledges could come sooner rather than later--will leave big shoes to fill.

"Putting your faith in over-the-counter goods like toothpaste is a gamble," the shareholder said.

So how long will investors be willing to wait, without some proof the new tactics are working? According to one top-10 investor, less than two years should do it, or Witty needs to go.

"I think Witty needs to be given 18 months to prove himself," that investor told the Times.

But before that mark, Glaxo may find some deal potential on its hands. Last week, analysts speculated the company could make a good match for deal-hungry Pfizer ($PFE), which has been scouting large transactions since last year's failed attempt at snatching up rival AstraZeneca ($AZN).

- read the FT story

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