There’s a new skipper at the helm of GlaxoSmithKline, and she takes over in the wake of lackluster growth in recent years and some uncertainty as to just what course the company needs to chart to get back to its vigorous old self. Emma Walmsley officially becomes CEO tomorrow, the Wall Street Journal reports. Walmsley takes over from CEO Andrew Witty who, over the course of his nine-year tenure, had to steer GSK through rough seas that included patent expirations of some of its best-selling medications.
Despite the problems, Witty exits on a somewhat high note. The company’s core earnings rose in 2016, the first time that’s happened since 2007. “Since the start of 2016, its total shareholder return was 32%, well above the sector average of 2.3%,” the Wall Street Journal reports.
Many want to blame astronomical health care costs on the pharma companies these days and with the way some of those companies have been acting (see EpiPen), that outrage can be justified. But Walmsley will face the reality that much of the public isn’t aware of: it takes millions of dollars (sometimes hundreds of millions) to develop a drug and bring it to market. “Pharmaceutical companies succeed or fail on the outcomes of expensive clinical trials with uncertain outcomes,” the Wall Street Journal reports. “Drugs that become blockbusters typically have just a few years of market exclusivity before their patents expire and cheap versions erode sales.”
Witty’s strategy to raise the money needed for drug development was to concentrate on sales of other items, such as kinda-sorta health care related products like shampoo, toothpaste, and over-the-counter painkillers.
Walmsley’s expected to continue that strategy, but GSK still has a way to go. There’s a generic version of its best-selling inhaler Advair on the way, for instance. Witty countered with an HIV pill Tivicay and a successor to Advair called Breo. He said these should generate sales of about $7.5 billion by 2018.
Still, as the Wall Street Journal reports, “Glaxo’s late-stage pipeline is relatively bare, though the company plans to ramp up drugs in late-stage trials in the coming year, in hopes of launching another wave of new drugs between 2021 and 2025.”
Walmsley becomes CEO after serving as the company’s head of consumer health, a background that did not exactly calm investors’ concerns. Walmsley hopes she’s won trust by luring away rising pharma star Luke Miels from rival AstraZeneca.
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