Big Pharma’s First Female CEO Disrupts Glaxo From Within

(Bloomberg Businessweek) -- When GlaxoSmithKline Plc bought cancer-treatment maker Tesaro for $5.1 billion last year, skeptics panned the deal, and the stock tumbled. On July 15 a key medicine acquired in the transaction yielded positive results, a small victory in Chief Executive Officer Emma Walmsley’s bid to overhaul the British drugmaker..Seeking to catch rivals in the race to produce blockbuster drugs—and silence critics who see Glaxo as a lumbering giant—Big Pharma’s first female CEO is engineering a radical shake-up, taking a different path than Bristol-Myers Squibb, Takeda Pharmaceutical, and AbbVie, which are reinventing themselves with megadeals..Walmsley has replaced about 100 of her top 125 managers since she took over in 2017. She hasn’t stopped there—almost a third of the experimental drugs in Glaxo’s pipeline are gone, as well as 3,800 employees. And she’s revealed plans to separate Glaxo’s consumer-health business through a joint venture with Pfizer Inc. that combines products ranging from Sensodyne toothpaste to Advil..Glaxo’s path has resembled those of European companies like Volkswagen AG and Nestlé SA, corporate titans that have found themselves vulnerable to disruption from new technologies and market shifts. The largest pharma companies are grappling with ballooning development costs, mounting pushback on prices, and daunting odds—studies suggest more than 90% of potential drugs fail to make it through human testing to the market..Before Walmsley settled into the role, Glaxo had pulled back in cancer treatment, whiffing on a wave of therapies that have revolutionized the field and led to top-selling products for competitors. Now she’s rebuilding Glaxo’s position in oncology to revitalize its list of drug candidates..Still, the company’s stock has barely moved since April 2017, reflecting investors’ lack of enthusiasm for Glaxo’s new direction. Shares of British rival AstraZeneca Plc have surged about 30% over the same period. “What understandably people want to see is evidence of a future pipeline that’s going to drive growth,” Walmsley says..Her strategy has revolved around focusing on fewer, but potentially more lucrative, opportunities rather than massive takeovers, such as AbbVie’s agreement in June to buy Allergan for $63 billion, Bristol’s $74 billion deal for Celgene, and Takeda’s $62 billion acquisition of Shire. While Walmsley has signaled interest in more transactions since the Tesaro purchase and a partnership struck in February with Merck KGaA, she questions the logic of huge deals. “Companies can die of indigestion just as easily as they can die of starvation,” she says. “I’m not completely convinced that scale is a huge advantage.”.Walmsley wasn’t the obvious choice to lead the drugmaker into the next frontier of therapies to fight cancer and other diseases. After 17 years at cosmetics company L’Oréal SA, she moved in 2010 to Glaxo’s consumer unit, home to brands including Tums and Nicorette. That experience led some investors to incorrectly assume she would hang on to that business..The Oxford-educated CEO is relying on a new team of high-profile specialists to help carry out her plans. She hired Hal Barron, a drug hunter with close ties to the California biotech sector, as head of research and poached Luke Miels from Astra to run the pharma division. “What has surprised me is how much impact changing even a few people can have,” Walmsley says, adding that her mission is to achieve a “culture shift.” Of the roughly 100 management changes she’s made, about 1 in 3 new leaders comes from outside Glaxo..Walmsley has eagerly sought experts’ opinions and turned her lack of pharma experience into an advantage, says Laurie Glimcher, a Glaxo board member and CEO of the Harvard-affiliated Dana-Farber Cancer Institute. “Coming from the outside to a fresh area is sometimes the best thing you can do.”.Ultimately, Walmsley will be judged on whether she brings Glaxo back into the top tier of R&D performers. The company has launched a shingles vaccine that quickly achieved $1 billion in annual sales, rolled out HIV treatments, and moved ahead with three oncology drugs it hopes will be available in 2020. Glaxo in May revamped the way it pays sales reps to better reward individual efforts, reversing a policy introduced several years ago following allegations that it improperly promoted some of its products..With a slimmer but sharper stable of drugs, patience is required. “Her biggest challenge is time,” says Darrell Baker, the former head of Glaxo’s respiratory business who left in 2015. “It’s like a rosebush in the winter. After the pruning stage, you have to wait to see how much it’s going to blossom.”.To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net, Rick Schine.©2019 Bloomberg L.P.

Big Pharma’s First Female CEO Disrupts Glaxo From Within

Emma Walmsley has replaced about 100 of her top 125 managers since she took over in 2017.

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