The other thing that has happened is Covid. In particular, it led to a massive drop in sales of Shingrix, GSK’s hit shingles vaccine, as health systems braced for the city’s only spectacle. GSK’s failure to come up with its own Covid vaccine has also clearly hurt the company.
Interestingly, the tone of Elliott’s letter is not particularly aggressive by his own standards. The activist supports the proposed split into two companies – one focused on pharmacy and biotechnology, the other focused on consumer health. Certainly, Elliott deplores “years of under-management” in the company. But Walmsely expressed similar sentiments on GSK’s recent Capital Markets Day.
Maybe Elliott realizes he has to gently bypass drug companies when a pandemic ends, lest they incur the ire of politicians. But also, the activist may realize that if the end of the foreclosure revives Shingrix sales, the acceleration of R&D investment begins to bear fruit and the split is successfully handled, the GSK share price will be. on track to achieve the 45 pc hike Elliott identified. All that remains is for him to recover the ground he has lost since the start of the pandemic and it will be halfway there.
Granted, if Walmsely then begins to hit the profit and earnings growth targets she set earlier this month (and with which Elliott apparently can’t fault), she’ll have earned the right to pick the moment of his own departure.
There is one final thing to consider: Could Walmsley’s intentions in this matter, which she has given no hint of, render Elliott’s entire strategy moot? At the time of the split, she will have led GSK for five years. The average tenure of an FTSE 100 chief executive is 6.6 years, according to Statista.
Does she really want to stay and run a small business? In a recent interview with Sunday Times, Walmsley said: “I have been blessed with an incredibly exciting and fulfilling career so far… I still intend to work for many, many years. “
It has been widely interpreted as a speech of combat. Maybe it was. But notable for its absence in this statement is the name of the company (or companies) for which it will work.