12.15am: What about Elliott
When asked whether new investor Elliott Management had any say in the new strategy, Walmsley said she wont’ start “commenting on individual conversations” with either long-term or short-term shareholders, but “we are always keeping an open ear”.
“This is a presentation which is the summary of four years of extremely ambitious, unprecedented comprehensive change of a company,” she said.
“Obviously, over those last four years we've listened hard and talk regularly to all of our shareholders.”
12.10pm: The COVID-19 potential
COVID-19 potential has been excluded from sales forecast because it’s still uncertain how the pandemic will play out, the chief executive said. GSK has one approved medicine so far, while data readouts are awaited for late-stage vaccine trials in the coming months.
Based on those, the company will figure out its plans for other mRNA vaccines, including a next-generation jab as part of the CureVac partnership.
GSK sees it as “an opportunity, not a threat”, Walmsley said, as the formulations tend to have 90% efficacy.
11.55am: Debate over Walmsley’s competence
When asked by a journalist why she’s the best person to carry out the chief executive job following debate in the City, Walmsley said:
“I am a change agent, a business leader and I am very excited about the new plans for a new GSK that we're laying out today.”
“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, adding she is supported by "the most outstanding people possible".
"My focus is resolutely on leading us through this transformation through a successful separation."
11.45am: Spinoff won’t be vulnerable to potential takeovers
Walmsley said the spinoff won’t be vulnerable to potential takeovers.
“We are very excited and confident about delivering on this step change in performance and growth for new GSK,” she said.
The £33bn sales forecast excludes the early-stage pipeline potential and any future business development, which may include M&A.
11.40am: ESG at the forefront
ESG “will be a key driver” of long-term growth, the company said.
“We believe our approach to ESG will support delivery, sustainable performance and long term growth builds trust, with all our stakeholders, reduce risk to our operations, and enable delivery of very positive social impact,” Walmsley said.
“A defining measure of success will be health impact at scale,” she said.
“Our plan shows that new GSK can positively impact the health of more than 2.5bn people over the next ten years.”
11.35am: Walmsley is "very aware" of share price underperformance
“I am very aware that GSK shares have underperformed for a long period”, said Walmsley.
She added that the new strategy “will move GSK from historical underperformance to a new, ambitious, top quarter growth outlook and delivery”.
Investment going forward will focus on core therapy areas, infectious diseases, HIV, oncology, and immunology including respiratory diseases.
“The next five years will see a building on the momentum we've delivered to date, and we expect growth to be increasingly supplemented by contributions from the late-stage pipeline assets,” she said.
The board envisions peak sales of over £20bn.
11.30am: The demerger
The FTSE 100 group has planned to spin out the Consumer Healthcare business in a demerger of at least 80% of GSK's 68% holding to GSK shareholders.
The new entity will IPO in London with ADRs to be listed in the US.
New GSK will retain up to 20% of GSK's holding in the new Consumer Healthcare company as a short-term financial investment, while the new entity will yield an £8bn dividend to GSK.
11.20am: New ambitious targets
Walmsley has announced a target of annual growth of 5% and 10% for sales and adjusted operating profit respectively from 2021 to 2026.
In 2022, GSK shareholders will receive dividends from both companies as the demerger will happen mid-year, with proforma dividends amounting to 55p per share.
GSK will retain a holding of 80% in the new business.
The group is targeting £33bn sales by 2031, with £20bn coming from the new drug pipeline, which will protect sales from the loss of exclusivity over HIV medication dolutegravir in 2028. It will prioritise innovation in vaccines and speciality medicines.
Profit growth is expected to be underpinned by a combination of strong revenue growth from new vaccines and specialty medicines, improving operational performance and benefits from the transformation of recent years. These financial outlooks exclude any contribution from COVID-19 related revenues, the group said in a statement.
Adjusted operating margin is expected to improve from the mid-20s% in 2021 to over 30% by 2026.
The demerger is expected to deliver savings of £200mln. All restructuring programmes will complete in 2022 and no further major restructuring programmes are planned.
11.15am: About to start
Chief executive Emma Walmsley will set to present the pharma giant’s growth outlook for the next five to ten years, confirm the extent of the proposed 2022 dividend cut and confirm the route and timing of the demerger of the Consumer business.