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 She will become the first woman to head a top global pharmaceutical
company and will bring the number of female chief executives in
Britain's FTSE 100 index to seven.
Walmsley, 47, joined Britain's biggest drugmaker in 2010 from
L’Oreal and will replace Andrew Witty, who had previously announced
his decision to retire on March 31, 2017. She will join the board
from January.
The decision will disappoint investors such as Neil Woodford, a top
shareholder and a critic of the drugmaker's current structure, who
wanted to see an outsider appointed to overhaul the company.
However, Walmsley had always been tipped as a strong internal
candidate, along with pharmaceuticals boss Abbas Hussain and
manufacturing head Roger Connor.
Her appointment is likely to be seen as a signal that GSK will
retain the consumer business as a core part of its operations,
rather than splitting up the company.
"Choosing Emma Walmsley suggests a strategy of evolution rather than
revolution," Joe Walters, senior portfolio manager at Royal London
Asset Management, one of GSK’s 30 largest investors, told Reuters.
"A big change in the firm’s corporate structure is less likely, but
any worries about a reduction in Glaxo’s attractive dividend
payments should recede."
GSK's 5 percent yield is a big lure for investors. A weaker pound
after Britain's vote to leave the European Union helped the group's
2016 outlook and also soothed fears of a dividend cut, but there had
been speculation that an outside CEO might go on a major buying
spree that could crimp payouts.
Chairman Philip Hampton said in a statement that GSK had
market-leading positions in pharmaceuticals, vaccines and consumer
healthcare that provided excellent platforms for sustainable,
long-term growth.
Shares in GSK slipped 0.5 percent by 0940 GMT.
BROAD PORTFOLIO
At the helm since 2008, Witty has struggled with flagging sales and
profits, as well as a damaging corruption scandal in China, although
earnings are now improving.
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Some investors and analysts have questioned his focus on a consumer
health business that ranges from headache pills to toothpaste. Other
drugmakers have enjoyed better share price performance in recent
years by riding a wave of innovation in disease areas such as
cancer.
GSK has chosen to largely sit out a wave of acquisitions in the
pharmaceuticals industry that has seen rivals spending billions of
dollars on promising experimental medicines.
A $20 billion asset swap with Novartis, completed last year, which
involved the exchange of cancer drugs for the Swiss group’s consumer
health products and vaccines, was a centerpiece of Witty's time in
charge.
The deal crystallized the company's idea of reducing exposure to
premium-priced pharmaceuticals and increasing sales of
over-the-counter products, as well as selling more lower-priced
medicines in emerging markets.
Walmsley has been intimately involved in that strategy as head of
consumer healthcare and, like Hampton, she sees the breadth of GSK's
portfolio as a key strength.
"We have momentum in the group and as the demand for medical
innovation and trusted healthcare products continues to rise, we
have the opportunity and the potential to create meaningful benefits
for patients, consumers and our shareholders," she said in the
statement.
As head of GSK's consumer healthcare operations, Walmsley is
responsible for a business with 21,000 employees and annual sales of
6 billion pounds ($7.8 billion), equal to around a quarter of group
sales.
(Additional reporting by Sinead Cruise; editing by Louise Heavens,
Jason Neely, Sonya Hepinstall and Giles Elgood)
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