Pharma mold-breaker Witty turns over the reins after 9 years at the GSK helm

Andrew Witty
New Glaxo CEO Emma Walmsley took over for Andrew Witty Friday.

It’s step-down day for GlaxoSmithKline CEO Andrew Witty, who's passing the baton to successor Emma Walmsley. And the transition marks the end of a nine-year tenure that saw him break with his peers—sometimes, to the tune of heavy criticism—more than once.

Witty hasn’t been afraid to take some chances—at the dealmaking table, bulking up on vaccines and OTC products in exchange for assets in the red-hot cancer field; on the marketing front, eliminating doctor speaking fees and quotas for sales reps; and with the pipeline, pushing hard on a two-drug HIV combo that could imperil the company’s market share if it fails.

And while it’s too early to say whether—or just how much—some of those gambles will pay off, a few of his moves already look as though they may well have been worth the risk.

Take Glaxo’s much-maligned low-margin, high-volume strategy in vaccines and consumer health, for instance. Some industry watchers balked when the company first struck the multibillion asset-swap deal with Novartis, figuring GSK couldn’t come out on top by homing in on areas that offered little pricing power potential and left its pharma portfolio thin.

Witty’s rationale, though? Stay far, far away from the kind of payer pressure that had put the squeeze on its sales-leader Advair, and avoid the price-hike pushback trend taking shape in the U.S.—ideas that may seem pretty good in today’s climate to one-time naysayers. Glaxo has been able to capitalize on its vaccines and OTC beef-ups, too, vaccines revenue leaping 14% in 2016 and consumer revenue climbing by 9%.

Glaxo’s marketing reforms seem to have done their job, too, at least in the reputation-repairing department. A few years back, the company overhauled the content of its doctor-rep interactions and cut out incentives for bad behavior among both parties. And while the moves may have hurt business in markets such as China, where doctors are eager for incentives, they didn’t dent U.S. sales the way some critics predicted. They did, however, help the company save face after an embarrassing $489 million bribery scandal, complete with a pair of private eyes and an illicit sex tape.

And Witty and GSK know the value of a good corporate image. Throughout his time at the helm, the chief exec has pushed for better access to meds for the world’s poor, helping land the British drugmaker a spot on Fortune Magazine's list of “50 companies in 2016 to Change the World.” Access advocate Médecins Sans Frontières wished Witty well in a Friday statement and expressed hopes that Walmsley “ensure his legacy for global health is actually fulfilled.”

A key Witty pipeline bet is looking strong, too—and if things stay that way, Glaxo stands to gain on market rival Gilead. The company made a departure from its nemesis’ three-med cocktails, and its tandem—which posted positive phase 3 results in December—could help reduce both the side-effect burden patients bear and the cost to payers.

Witty has also taken plenty of heat over his decision not to spin off Glaxo’s broader HIV unit, ViiV Healthcare, over the past couple of years—but that’s an area in which he feels he’s come out on top. The unit’s newcomers, Tivicay and Triumeq, have been tearing it up on the sales front and helping the drugmaker beat Wall Street expectations, not to mention backing up waning Advair on the pharma front.

“We took the decision not to separate it because we believed we were the best owners,” Witty said of ViiV in late 2015. “… And I think we've been vindicated since.”

And speaking of Advair, respiratory may be another arena in which Witty gets the last laugh. After a glacial start, Glaxo’s new respiratory products have finally begun making up for Advair’s decline, a feat some analysts didn’t believe they’d be able to pull off. And after years of fending off questions about generic competition to GSK’s COPD superstar, Witty will end his career at the company—one he spent insisting that “the genericization of Advair is not going to be normal”—without an FDA approved substitutable competitor to the behemoth med.

That’s not to say there are no hurdles ahead for the pharma giant. While Mylan may have faced a regulatory setback on the Advair generics front, Jordan’s Hikma is set for its own decision in May. According to Glaxo’s own predictions, the midyear arrival of a generic nemesis could push earnings into a single-digit percentage decline or cause them to come in flat for 2017.

And Walmsley, flanked by R&D chief Patrick Vallance and new pharma president Luke Miels, will also have “a lot of science” outside of the company’s anchor respiratory and HIV businesses to sort through as they plot GSK’s next pipeline moves. “What choices we make and when over the next few years is a big question,” chief strategy officer David Redfern said in a January interview.