It’s been a stunning run so far for Emma Walmsley, who took the helm at GlaxoSmithKline in 2017 and has led it through a series of headline-worthy moves, including the announcement this week of a joint venture with Pfizer. Walmsley boldly dropped the direction of her predecessor, Sir Andrew Witty, to separate the consumer healthcare business from prescription drugs, something shareholders had long been calling for.
“Ultimately, our goal is to create two exceptional, UK-based global companies, with appropriate capital structures, that are each well positioned to deliver improving returns to shareholders and significant benefits to patients and consumers,” Walmsley said.
Essentially, Pfizer and GSK will bring over-the-counter goods like Advil, Sensodyne and Flonase together in a company that, over the next three years, will become a separate entity from GSK’s focus on vaccines and high-value pharmaceuticals.
As expected, the stock exchange took note. Early trading after the announcement in London saw GSK shares rise by 5.635%, for a year-to-date uptick of 16%. I can’t imagine this deal being anything but positive for the drug maker or for Walmsley herself. (Though as one commentator said, “The proof of the pudding is in the eating.”)
There’s a lot to like about Walmsley. After a long tenure at L’Oréal she jumped category and country to lead marketing efforts for GSK, eventually becoming the first woman CEO of a major pharmaceutical company. That in itself is no small feat. What I admire most is her take-charge leadership style and her thought process, which has led to major changes at GSK over the past 18 months, such as:
· Acquisition of Tesaro, a cancer drug maker, for $5 billion earlier this month
· Selling GSK Consumer Healthcare India to Unilever this fall for $3.75 billion earlier this month
· Forming an exclusive partnership with 23andMe for $300 million last summer
· Purchasing Novartis’ consumer healthcare business in March of this year for $13 billion
She has also brought on new leadership, including Hal Barron to head R&D. Barron is known for developing 10 successful drugs during his career at Genentech and Roche.
These strategic moves have put Walmsley at the top of Fortune Magazine’s Most Powerful Women in business . Trying to revitalize a stagnating pharmaceutical business (shares peaked in 1998 at $69.56 and have been on a slow decline ever since) by gambling on the development of new drugs is major.
Walmsley told CNBC she was hoping the joint venture with Pfizer would solve “…one of the biggest challenges in pharma development, which is it can take 10 years, cost billions of dollars and still have a 95% failure rate.”
She’s facing the challenge by using the steady cash flow promised by consumer healthcare to fund innovation in vaccines and pharmaceuticals over the next three years, before consumer healthcare splits off into its own company — and by investing in people.
When Walmsley was deciding to take on the role of CEO, she wrote on LeanIn.Org, “The brief was a big change agenda: people, portfolio, results and culture. Change is good but the outsiders leading it aren’t usually the most popular.”
It’s true that you’re unlikely to be trusted (or liked) when you’re coming into shake up an industry, but Walmsley has managed to win over her shareholders.
I love how she defined her role in an interview last summer with Fortune as: “…firstly, in setting strategy for the company and leading the allocation of capital to that strategy — because until you put the money where you say your strategy is, it’s not your strategy. Next is appointing the very best people in the world you can to execute that strategy. Third is defining and modeling the culture, whether it’s through your own behavior or through the people you appoint or through the actions you take. And then, finally, managing risk — whether that be, fundamentally, company reputation, operational risk, or strategic risk.”
I couldn’t agree more. Strategy is just a bunch of talk until it’s cooked into the business plan. In a book I co-authored and published this year, I highlighted the importance of choosing your team and creating a culture of transparency as you manage risk. Because innovation always involves risk, and, as we can see, the stakes are especially high for pharma.
What I was struck by from Walmsley’s recent interviews was her understanding of the digital marketplace, no doubt strengthened by her background in beauty and by having led marketing for GSK’s consumer healthcare prior to becoming CEO.
When asked whether Amazon’s foray into consumer healthcare was a consideration in the joint venture with Pfizer, Walmsley said, “It’s a good point, absolutely no question that digital in every sense, whether be the way we market brands or the way we distribute them or indeed the way we operate as companies for all of us in all industries is an incredibly important factor.”
Given that my experience in digital goes back to MapQuest, I find this to be incredibly relevant. No industry is immune from digital, and if any category isn’t exploring it, they should be.
In a longer interview with CNBC, the CEO put things in perspective by focusing GSK’s desire to do good.
“…we’ve been talking a lot about the financial structures to this deal, the benefit to shareholders,” Walmsley said, “but let’s remember the reason why a company GSK should exist and should endure is because of the impact we have on people all over the world and their health to help them do more, feel better and ultimately live longer.”
I almost wanted to cheer. Isn’t that the motivation for so many of us who innovate? Making people’s lives better?
Kudos to Walmsley for pulling this off. I wish her and her family a very happy holiday.