March 14, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LONDON – The U.K. press has “made more” concerns over the leadership of Sir Andrew Witty, GlaxoSmithKline ’s chief executive officer, than is justified, Simon Dingemans, chief financial officer of GlaxoSmithKline and a potential successor Witty, told the Economic Times during a recent trip to India.
Dingemans said the time a CEO spends at the top of a company is not always a long one, so it’s no surprise that some members of the board of directors have talked about replacing Witty. However, he said it will be Witty’s decision to step down and the board will have to be ready for whenever any such announcement is made.
“It’s the chairman’s job to plan whenever Sir Andrew wants to says (sic) he wants to stop,” Dingemans said, according to the Economic Times.
During his interview with the Economic Times, Dingemans praised the strategic vision Witty laid out for the company when he took over the helm in 2008.
“We feel very good about the shift in the mix of the company to give it more balance and more opportunities to grow with a renewed pipeline. These don’t happen overnight and some of these things go towards negative before the positives appear. From last year we have been in good shape and we see a lot of those momentum drivers beginning to appear,” Dingemans said.
Several reports in the British press indicate GSK Chairman Philip Hampton has held a number of meetings with shareholders and made it clear that planning for a new CEO will be a board priority. The Telegraph of London reported Hampton has instructed recruiters to begin identifying potential CEO candidates from within and without the company. Witty’s tenure at GlaxoSmithKline could end by next year, the Telegraph reported. A lengthy CEO search could suggest an orderly transition for the company, which would provide a sense of stability for investors.
Witty has been under fire over the past months as the company has faced a number of financial challenges due to a drop in earnings, declining stock value and the company’s search for a new blockbuster drug.
GlaxoSmithKline’s stock has slipped over the past year, down from a high of $48.81 in March 2015 to a low of $37.56 in September.
Witty has faced increasing criticism from some investors, including Neil Woodford, a top 20 investor, who wants to see the company broken up into separate entities following a three-part deal with Novartis AG . That deal, which was announced in March 2015, saw GSK acquire Novartis’s global vaccines business, excluding the influenza vaccines. It also created a Consumer Healthcare joint venture with Novartis, and sold its Oncology business to Novartis. Although some investors want to see the company break up, Witty has been slow to do so. At the J.P. Morgan Healthcare Conference in January, Witty said he would consider the breakup suggestions, but that any such split wouldn’t happen for at least a year or two. In particular, it would have to wait until the company finishes integrating the changes that came with the Novartis deal.
Dingemans told the Economic Times the Novartis deal is an exciting one for the company and will provide the company with stability to grow “consistently and also take more risks in growing the R&D pipeline.” He also touted GSK’s new focus on new drug developments which are projected to generate about $8.6 billion in revenue by 2020. He did note the company is facing some difficulty in launching new products in the United States due to lack of access and insurance coverage.
“… until we have coverage and reimbursements in that market, it is not really worth promoting them because the prescriptions get rejected. We are now moving well and we are putting promotions behind them. Our transaction with Novartis gives us the synergies that we can allocate to new products and we are seeing the benefits,” Dingemans told the Economic Times.
