New GSK CEO will become most powerful woman in FTSE 100
GlaxoSmithKline’s (GSK) new CEO, Emma Walmsley, will become the most powerful woman in the FTSE 100 when she takes up her role next March. Walmsley, who joined GSK in 2010 and currently runs its consumer healthcare division, will be the sixth female CEO in the FTSE 100 – joining the heads of EasyJet, Imperial Brands, Kingfisher, Royal Mail, and Whitbread. GSK has a market value of 80bn, over twice that of the next female-led company, Imperial, which is worth £37bn. GSK chairman, Sir Philip Hampton is leading a government review into increasing gender diversity at executive level.

Emma Walmsley

GlaxoSmithKline has appointed Emma Walmsley as chief executive, making her the most powerful woman in the industry and the UK’s FTSE 100 index.

Britain’s biggest drugs company said Walmsley would take over from Sir Andrew Witty when he retires at the end of March after eight years at the helm. Walmsley joined GSK in 2010 and runs its £6bn consumer healthcare business, whose products include Sensodyne toothpaste, Horlicks malted drinks and Panadol painkillers.

Walmsley will be one of just seven female chief executives in the FTSE 100. EasyJet, Imperial Brands, Whitbread, Royal Mail, Kingfisher and Severn Trent are also run by women.

GSK, with a market value of £80bn, is more than twice as big as the next largest female-led company, the tobacco company Imperial Brands, which is valued at £37bn.

Sir Philip Hampton, GSK’s chairman, is leading a government-commissioned review into increasing the number of women senior executives at Britain’s top companies. Part of the plan is to get more women into senior management positions who can go on to lead Britain’s biggest companies.

Walmsley, 47, has been a member of GSK’s top executive team since 2011. Before joining GSK, she was at L’Oréal, the French cosmetics company, for 17 years and has worked in the UK, Europe, China and the US.

Ketan Patel, a fund manager at EdenTree Investment Management, hailed the appointment as a “watershed moment” for the sector, with Walmsley becoming the first female CEO of a major global pharmaceuticals company. Patel said: “The sector has scored surprisingly poorly on diversity at the CEO level.”

The move came as a surprise to many investors, and as a disappointment to those who had hoped for the appointment of an outsider to push through a break-up of the company. GSK shares dipped 0.2% on the news but ended the day broadly flat.

Outgoing CEO Sir Andrew Witty. Photograph: GSK/PA

Simon Gergel, the UK equities chief investment officer at Allianz Global Investors, which has a 6% stake in GSK, said: “For those investors who have seen the company’s move towards a more diversified platform in a positive light, this continuation is encouraging. However, it may disappoint investors who have been calling for GSK to sharpen its focus and demerge its consumer health arm.”

Other challenges awaiting Walmsley include declining returns from research and development (R&D), increased competition from generic drugmakers and pricing pressure from healthcare providers, especially in the US.

Hampton said: “Emma is an outstanding leader with highly valuable experience of building and running major global businesses and a strong track record of delivering growth and driving performance in healthcare.”

Today we’ve announced Emma Walmsley will succeed Sir Andrew Witty as CEO of GSK. Read more: https://t.co/amyuIRK1uJ pic.twitter.com/Z7awbyPKt3 — GSK (@GSK) September 20, 2016

Panmure Gordon analyst David Cox said: “Being an internal appointment it’s less likely to bring any huge shake-ups, as external hires often like to put their stamp on things... She may face a steep learning curve on the pharma side since she has a consumer focused background, but will be surrounded by talented management. Fantastic to see a female at the top of such a significant UK company.”

GSK has been looking for a new chief executive since Whitty announced his departure in March. He had been under pressure to speed up turnaround plans for GSK following several years of weak financial performance and a damaging corruption scandal in China. The company has been hit by expiring patents on its top-selling Advair inhaler but reported strong second-quarter results in July.

While the rest of the industry has focused on beefing up its drug portfolios, Witty has pursued a different strategy, reducing the company’s reliance on blockbuster drugs in favour of high-volume, lower-priced sales of toothpaste, painkillers and other consumer products, along with vaccines.

GSK struck only one big deal during Witty’s tenure, the three-part, £15bn transaction with Swiss rival Novartis in 2014 to pool consumer healthcare assets and exchange cancer and vaccine businesses, which was seen as an innovative move in the industry. Walmsley has overseen the creation of the consumer joint venture with Novartis.

She stressed that developing new drugs remained key to the business in an in-house video interview. “Obviously, R&D is the beating heart of our company and our success is and will continue to be defined most fundamentally by the strength of our pipeline... The number one priority, focus for me over coming months and years is going to be really making sure we are investing appropriately and strongly in our R&D organisation.”

GSK is reviewing its pay policy and declined to disclose details of how much Walmsley will be paid. Witty collected a pay and shares package of £6.7m last year.

Citi analyst Andrew Baum said of Walmsley, a classics and modern languages graduate from Oxford: “A lack of an R&D background or a postgraduate science background does not preclude Ms Walmsley’s ability to materially improve R&D returns so long as she has the appetite and intent to critically assess GSK’s R&D outcomes and add senior external pharmaceutical and R&D hires.”

GSK is yet to appoint a successor for Moncef Slaoui, the chairman of its vaccines business, who will leave next June.