GlaxoSmithKline’s decision to appoint Emma Walmsley as chief executive is a clear commitment to past strategy but an acknowledgement that a fresh, and arguably more commercially astute, approach is required to return the company to growth.
Walmsley represents an insider with an established internal track record of success and an understanding of how to get things done, but with a valuable external point of view on the weaknesses of the pharmaceuticals business gained through experiences at L’Oreal and latterly as the leader of GSK’s consumer healthcare division where she has been since 2010.
The choice of an insider signals renewed commitment to the volume-first growth strategy launched by GSK in 2015, a plan borne out of a belief that the current sky-high pricing model in pharmaceuticals is unsustainable in the long run. Industry analysts and investors were initially critical, especially given GSK’s recent performance, but the mood has warmed to the notion that large volume sales in vaccines and over the counter (OTC) products offer an attractive revenue cushion to the more risk-reward pharma division.
Walmsley brings a proven track record of delivering tremendous volume growth in global businesses. She is a seasoned marketer and consumer operator, with an emphasis on emerging markets: her legacy of achievement must be the core reason for her appointment.
Her turn around of the consumer health business unit based on strong marketing and a focus on accountability indicates a more commercially-focused approach for the company as a whole. The OTC business, traditionally seen as a stable revenue-generator, has now been placed at the core of Britain’s largest drug maker.
However, reshaping a pharmaceuticals business in the mold of consumer health will require substantial cultural shifts – this is often the hardest part of an organization to change and will be a challenge.
An interesting parallel to Walmsley’s appointment is Joseph Jimenez’s move from senior executive at H.J. Heinz Company to head of the consumer health business at Novartis, making his way to CEO a short time later.
Jimenez’s success may have set a precedent for industry outsiders with experience in consumer goods to run Big Pharma companies. Consumer marketing is always about the customer, and executives from this arena tend to have an external, ‘big picture’ mindset – a useful thing in pharma.
Many might consider the steep learning curve of the R&D space that lies ahead of Walmsley to be too risky, but she has been on the executive team since 2011 and will have picked up a significant amount through exposure to executives from the pharma business.
The Board obviously believes that the pros outweigh the cons. One risk of this appointment is that Walmsley may continue to operate too much in the sphere of her old job, giving attention to the consumer healthcare and related vaccines business. However, the future for GSK looks bright if she can manage to bring her relentless external, customer and service focus to the pharma business.
At this stage, appointing an ‘inside-outsider’ looks like a shrewd move for GSK.
Christopher Pettigrew is an Associate at specialist pharmaceutical strategy consultants, Novasecta.