How Emma Walmsley’s giving GlaxoSmithKline a new lease of life
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How Emma Walmsley’s giving GlaxoSmithKline a new lease of life

GlaxoSmithKline (GSK) is a global drug giant with a three-century history. The last year of that history has been under the watchful eye of the company’s new CEO, Emma Walmsley. She recently sat down with reporters from Fortune to detail how she sees her role and what she’s trying to do at the company. So far, she seems to have a handle on both of these areas, and the company’s stock price is a reflection of investors’ faith in her.

GSK’s share price is up by 16% so far this year

graph 1206 glaxosmithkline

SOURCE: Yahoo Finance

Walmsley described, in her view, what it means to be a CEO: “I don’t think anyone can fully explain how to prepare you for what it’s like to be a CEO until you’re actually on the job. It’s certainly a very different job than leading a division. But the way I define the job is, firstly, in setting strategy for the company and leading the allocation of capital to that strategy—because until you put the money where you say your strategy is, it’s not your strategy.”

“Next is appointing the very best people in the world you can to execute that strategy. Third is defining and modeling the culture, whether it’s through your own behavior or through the people you appoint or through the actions you take.”

“And then, finally, managing risk—whether that be, fundamentally, company reputation, operational risk, or strategic risk. So those are things that I think matter in this job, and arguably when you are, as with me—what one might describe as a surprise appointment or at least an ‘insider outsider’—the most important job is the people that you appoint. That is absolutely the sine qua non.”

This explains her bold move in replacing as many as 50 of the company’s top executives (although she points out that 70% of the hires she’s made are internal ones). And it also explains her repositioning of focus within GSK’s portfolio. Speaking to the latter, she said:

“The most important changes that I wanted to make were, firstly, to focus again primarily on pharma, our biggest business, where we allocate the most capital—and which has the highest risk, highest return. And at the heart of that is R&D. Because I believe that is why a company like GSK should exist, and hopefully should endure, because we discover and develop medicines that make a meaningful difference. And vaccines and consumer products too. But I think over the last decade, we did an amazing job of building up with the team the two other businesses [vaccines and consumer products] and I wanted to get back to our R&D, and to our mojo around science and discovery and development again.”

While Walmsley’s mission is still in its earliest stages, Wall Street has been forthcoming with its opinions of her so far – and they are almost exclusively positive.

Disclosure

Dominion holds GlaxoSmithKline in its Global Trends Managed Fund.


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