GSK loses its biggest fish
EMMA Walmsley could not have done more to woo scientific whizz Hal Barron to Glaxosmithkline. In the manner of a star Wall Street trader, he was offered a package worth more than the chief executive’s, and allowed to set up HQ in San Francisco, far from the labs in Stevenage and Philadelphia.
In picking Barron in 2017, the GSK boss sought to demonstrate her lack of top scientific knowhow was no bar to restoring it to the top division in pharma research and development (R&D).
It is hard to see his departure to join Jeff Bezos in the quest for eternal life at Silicon Valley’s Altos Labs as anything but a setback as Walmsley seeks to keep activists Elliott at bay and win a glorious price for the consumer healthcare division.
Covid has demonstrated that developing vaccines and compounds does not have to take decades, as has been the case for malaria. Nevertheless, creating oncology drugs doesn’t simply happen. That is for the long-term and Barron’s four-year stint doesn’t get anywhere near that.
Moreover, for all the new drugs to escape from GSK’s pipeline during Barron’s tenure the firm is certain to be remembered as the vaccine champion that was beaten to the punch in the pandemic by Astrazeneca in the UK and Pfizer, Moderna and Johnson & Johnson in the US.
Indeed, the pandemic saw sales of its blockbuster, shingrix, stymied by lockdowns. Barron is to be succeeded by Tony Wood as chief scientific officer. He is described by GSK as ‘one of the world’s pre-eminent chemists’ and will bring R&D headquarters back to the UK.
If Wood is so capable, one wonders why GSK felt it necessary to entice Barron back as a non-executive director and to offer him a one-day-a-week role. Aside from potential conflict of interest, it is hardly a vote of confidence in Wood to have a ‘big foot’ in the background. Where all this leaves Walmsley is hard to gauge. She has shown her mettle as the staggering prices for selling consumer healthcare demonstrate.
But the loss of Barron will reinforce the activist view that after all, she is not the right person to run pharma and vaccines.
Jilted Jope
WHERE does this leave the Unilever effort to buy GSK’s consumer healthcare?
Walmsley, the board and minority partner Pfizer could start to feel that the slow burn path to an initial public offering this summer is getting too risky. Gaining a £50bn valuation for a float outside the fashionable tech sector might be a stretch.
Unilever’s firm offer has been hurt by the share price slide.
But what cannot be dismissed is chief executive Alan Jope’s determination to reshape the Ben & Jerry’s-to-Dove group around health, beauty and hygiene.
When Unilever decided after a shareholder revolt to domicile in Britain it was partly a decision based around growth. Internal analysis showed this part of the enterprise was outperforming foodstuffs.
The retreat has been under way for some time, with the sale of margarines to KKR for £6bn in 2017 and last year’s disposal of most of its tea operations to another private equity group, CVC. Both disposals demonstrate a willingness to offload even the most historic parts of the empire, for the right price.
Negotiations with GSK are now off the table and Unilever has boxed itself in by imposing a £50bn ceiling. Jope is pressing ahead with a reorganisation and could offer more clarity on ambitions when Unilever presents its annual results next month.
Determination to change direction should not be underestimated. Jope could look elsewhere, with a possible bid or ‘merger’ with £45bn Reckitt Benckiser. But that might pose anti-trust problems.
Anything goes
REVOLUT boss Nik Storonsky may still be awaiting a UK banking licence but his ambition is relentless.
The latest move for the UK fintech outfit is to compete with Robinhood Markets and Charles Schwab in the US lucrative ‘commission-free’ retail share trading.
The market was estimated to be worth a stonking £207bn in 2021.
Instead of charging retail customers commission, Revolut will rely on payments from market makers for orders, a practice that is under investigation by the US Securities & Exchange Commission.
Nothing to worry about then.