GlaxoSmithKline (GSK) has named its current head of consumer healthcare, Emma Walmsley, as its next chief executive, replacing 'GSK lifer' Andrew Witty at the helm of Britain's biggest pharmaceuticals group. While tabloids have leapt on the fact that she is only the seventh female chief executive in the FTSE 100, for investors it is far more interesting to note that she comes from the consumer healthcare division of the company, which some shareholders had suggested should be separated and listed on its own.
GSK's growing reliance on products in its consumer healthcare range have caused much angst amongst investors, including outspoken fund manager Neil Woodford. Under the tenure of Mr Witty, the company has expanded that division - which includes brands such as Sensodyne, Panadol and Horlicks - so that it now makes up more than a quarter of overall sales. GSK has also disposed of its higher-risk, but also higher-margin, oncology business, which critics have damned as a decision that has resulted in the company missing the benefits of the recent wave of scientific developments.
A new chief at the helm of GSK might be exactly what is needed to help a reputation tarnished in the past few years by prescription drugs scandals in the US and China, the latter leading to its top executive in China being handed a suspended three-year prison sentence, and adeflated pipeline of new medicines.
Ms Walmsley certainly seems to have the credentials required to steady the ship. An Oxford graduate, she began her business life in consultancy before working with L'Oreal for 17 years where she held positions all around the world. This included a stint as the general manager of consumer products in Shanghai. She joined the GSK consumer health team in 2010 and became the chief executive of the consumer health joint venture with Novartis when it was created in 2015. Philip Hampton, GSK's chairman, described Ms Walmsley as an "outstanding leader" with experience of running global businesses.
The appointment of an internal candidate has dampened the likelihood of a break-up of the company and even more so considering Ms Walmsley's background in consumer healthcare. Ketan Patel, fund manager at Eden Tree Investment Management - whose funds hold small stakes in GSK - suggested a new chief executive with "no experience in pharmaceuticals" has made it more unlikely that the company will split.
To some that is good news, not all investors have been opposed to the growth of the consumer healthcare division. GSK's view is that diversifying the business puts it on the right side of the intensifying global debate over the high cost of drugs. Mr Witty's allies have also said measures to widen access to drugs in poorer countries and industry-leading steps to increase transparency in clinical trial data are also in tune with political demands for pharma. With Ms Walmsley at the helm, it is likely this ethos of growth through diversification with more transparent corporate activity will continue. But she also remains committed to keeping pace with the science, describing research and development as "the beating heart" of the company.
