GlaxoSmithKline PLC (LON:GSK) said it might be open to a sale of its consumer health business but is fully supportive of chief executive Emma Walmsley.
Responding to demands activist investor Elliott Management published yesterday in an open letter, the pharma giant said: “The board strongly believes Emma Walmsley is the right leader of New GSK and fully supports the actions being taken by her and the management team, all of whom are subject to rigorous assessments of performance.
“Under Emma’s leadership, the board fully expects this team to deliver a step-change in performance and long-term shareholder value creation through the separation and in the years beyond.”
Elliott has publicly questioned chief executive Emma Walmsley’s suitability to run the pharma side of the business once the consumer health operations are demerged since it took a stake in Glaxo last month.
The investor also suggested that Glaxo should sell the consumer arm rather than demerge it.
GlaxoSmithKline needs to review top management, activist investor Elliott Management says
The UK group said the demerger (with New GSK retaining 80%) was in line with feedback from investors but added if an alternative opportunity arose it would consider it along with the relative costs and benefits involved.
At a recent investor day, Glaxo said it was targeting to grow sales to £33bn by 2031 and expected to be generating cash of more than £10bn annually by 2026.
“These outlooks and ambitions are set as the minimum level of growth that New GSK is expected to achieve or is targeting, with clear ambitions to exceed as stated at the Investor Update.”
Separately, Glaxo also said it was also moving into treatments for Parkinson’s Disease and Alzheimer’s through a deal with US-listed Alector’s (NASDAQ:ALEC) for its monoclonal antibodies AL001 and AL101.
The two companies will co-commercialise and share profits in the US while GSK will retain exclusive commercialisation rights outside the US.
Alector will receive US$700mln in upfront payments and up to US$1.5bn in potential milestone payments, profit sharing and royalties.