GlaxoSmithKline boss Emma Walmsley to remain key focus for activist investors on quarterly results


It’s quarterly results time for GlaxoSmithKline PLC (LSE:GSK) and chief executive Emma Walmsley is unlikely to escape the pressure from the usual activist investors.

Alongside US hedge fund Elliott Management, the FTSE 100 pharma giant has a new vocal shareholder on its register, London-based Bluebell Capital Partners.

READ: Will COVID-19 treatment keep a lid on winter infections?

Both private equity groups are questioning Walmsley’s ability to lead the group ahead of next year’s consumer arm spinoff.

Last month, Bluebell said that reapplying successfully would give her “renewed credibility both internally and externally”.

This followed a similar push from Elliott, which has taken a major stake in GSK and called for several changes, including a “fit-for-purpose” board and “the best possible leadership”. Like Bluebell, Elliott says it is “not advocating a specific outcome but […] arguing for a robust process”.

Even though they are supporting the same goal, the pair aren’t working in sync. Their asset size is wildly different too, as Elliott manages funds worth US$48bn while Bluebell is at a more modest GBP100mln.

Some private equity groups, such as Advent International, CVC Capital Partners and KKR, are reportedly circling around the consumer business segment, while Blackstone, Carlyle Group and Permira might also be interested in a deal around the GBP40bn mark.

Walmsley, who wants to rebuild the pharma divisions drugs pipeline and re-establish the business as a top-tier drug developer, has set in train a timetable that will see the consumer unit split off in mid-2022, but has said it would look at other options if they materialise.

Elliott has already called for the consumer unit to be sold. Glaxo’s consumer business is one of the world’s largest, generating annual sales of more than GBP10bn last year, but is regarded as a solid earner and lacks the blockbuster potential of drug development.

Quarterly results

Back to the quarterly results, they should make for a pleasant read as GSK emerges from a period of good news.

Earlier this month, its malaria vaccine received a recommendation from the World Health Organisation (WHO) after clinical trials showed a 70% reduction in severe symptoms and death.

Meanwhile, HIV-focused subsidiary ViiV Healthcare agreeing to a new deal with Japanese firm Shionogi to develop an ultra-long medicine for the condition.

Analysts at UBS expect the focus of Wednesday’s results on Shingrix, the company’s vaccine to protect against shingles.

First-quarter sales of Shingrix were down 50% year-on-year and were flat in the second quarter.

Quarterly sales of GBP414mln are forecast for the drug, which represents a year-on-year recovery of 18%, the Swiss bank said.

Overall core earnings from GSK “will likely be muddied by contribution from ‘covid solutions’ (affecting both revenues and costs), which are excluded from FY21 guidance,” it added.

Third-quarter revenue is expected to come in at GBP8.7bn, core earnings before interest and tax of GBP2.3bn and core earnings per share of 0.29p.

Shares were changing hands at 1,428p on Tuesday afternoon, having risen 4% in a rollercoaster year-to-date.


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