Glaxo Defends Strategy in Face of Elliott Management Stake

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GlaxoSmithKline Plc’s management defended the company’s strategy as the pharmaceutical giant comes under growing pressure to revive its fortunes after activist investor Elliott Management Corp. took a stake.

Speaking at Glaxo’s annual general meeting Wednesday, Chairman Jonathan Symonds said he understood investor skepticism, but said the company was now “doing the right things” and asked shareholders to judge it on the results. Glaxo is preparing to split in two next year, spinning off its consumer unit and leaving the remaining company focused on biopharma and vaccines.

“We recognize there is much still to do,” Symonds said at the virtual AGM. We “understand skepticism given promises made in the past. But be in no doubt that we -- this board and this management team -- are determined to deliver.”

Glaxo is in the middle of a turnaround effort led by Chief Executive Officer Emma Walmsley, who has been in post since 2017. The company has lagged behind competitors, notably fellow British drugmaker AstraZeneca Plc, after it moved away from lucrative areas like oncology, which Walmsley has been trying to rebuild. Pressure on Glaxo to demonstrate successful change stepped up in recent weeks because of Elliott’s move to build a stake.

While the activist hedge fund’s plans are unknown, investors and analysts have speculated it may push Glaxo to execute its split and strategy faster. The company is planning to set out the blueprint for the new business in June. Symonds reiterated Thursday that the dividend for the two new companies will be lower than the longstanding annual payout of 80 pence a share.

The company has also come under fire for its absence on the Covid-19 vaccine effort. Glaxo decided early on to use its adjuvant technology -- substances used to enhance the immune response to vaccines -- to partner with other drugmakers in developing a shot, rather than creating its own. Symonds acknowledged at the meeting that it was “disappointing” its main partnership with Sanofi hasn’t moved as quickly as planned.

Glaxo is still working with a number of companies to develop coronavirus shots that could be available later this year. The company is also awaiting emergency approval from U.S. regulators for its Covid-19 antibody treatment with Vir Biotechnology Inc.

It was “disappointing that the largest of those partnerships -- Sanofi -- was delayed,” Symonds said. “We intend to be competitive across a range of vaccine technologies, including mRNA, and we are well-placed to do this.”

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