Explore the transformative journey of Emma Walmsley at GlaxoSmithKline (GSK), her encounters with Elliott Management Corp, and the strategic implications of spinning off the Consumer Healthcare segment to drive enhanced financial growth and address key challenges faced by the company.
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WashU Consultants Lei Song - JD/MBA candidate Rufus Ayisi - MBA candidate Sining Li - MBA candidate
Introduction-Emma Walmsley and GSK Emma Walmsley is the British-born first-woman CEO of the global leading pharmaceutical company GlaxoSmithKline (GSK), Prior to joining GSK she was head of consumer business in L'oreal Shangai. During her term at GSK, she has revamped R&D and changed the management board. Emma is questioned by Elliot Management Corp (Elliott), about the underperformance of GSK. Elliott requires GSK to restructure their management and promote GSK to spin off the Consumer Healthcare line of the business. Elliot cited improved execution and new leadership as the way forward for GSK. Lacked direction for selling oncology business to Novartis and reentering the same business through the acquisition of a based company. ELLIOT wants people with biopharmaceuticals and consumer healthcare experience to join GSK board
Key Issues KEY ISSUES AT GSK R&D arm spreading resources on too many drugs Poor performance in revenue led to a drop in rank Always behind other companies in producing blockbuster drugs and failed to make deals with other companies KEY ISSUES FOR EMMA Earnings expectation were reset and complains about dividend payments GSK shares fell off by 15% Failure to lead way against covid Despite her focus on the pharmacy division it was underperforming Layoffs and change of management made her unpopular Failure to produce a promising drug on cancer(Feladilimab) Lack of trust in Emma by investors
PROBLEM STATEMENT HELPING EMMA WALMSLEY TO CONVINCE ELLIOT AND OTHER KEY INVESTORS OF HER CAPABILITIES TO LEAD THE SPINOFF OF THE CONSUMER HEALTHCARE SECTION OF GSK AND TO LEAD GSK INTO NEW ERA OF GROWTH
How can spinning off consumer healthcare help GSK solve its current issues? Achieve a financial growth A total Revenue of 47B in 2031 After Spin-off: Current Revenue: Pharma: Consumer healthcare: 7% annual growth by expanding brand power and marketing strategy 14B in 2031 Financial: achieve 38% growth rate 34B (include pharma and healthcare) 33B in 2031 Risks: Decreased EV due to spin-off of a new healthcare company Potential drop on stock price- --shareholders' concern
How can spinning off consumer healthcare help GSK solve its current issues? Core driver: achieve financial growth Financial: achieve 38% growth rate Specialization Focus better on R&D activities Pharma specialization Decrease R&D cost Able to focus resources and supporting functions on cutting-edge R&D activities, talent, IP portfolio Growth strategy Focus on extending to new customers and markets by leveraging on brand power and marketing Healthcare market penetration Expand brand influence and reputation Focus better on improving healthcare experience and building up brand image on new company Better allocation of KEY services: scientific resources and brand resources Enabling better-supporting functions: operational efficiency, strategic alliance, better decision-making process Management efficiency:
Walmsley Done Great Job Rev Generated: Walmsley led one of divisions in GSK, which contributed of GSK's annual revenue, through innovation. Retain High Market Share: 2018-2020, market growth for GSK consumer healthcare is 3-5%, ranking 1st in the world Communication, Negotiation: Walmsley led the joint venture with Pfizer, 23andME, Tesaro and Sanofi Goal Oriented: Expend to US and China Recruit Talents: 3 high-level R&D talents with hired from competitors Profitability: from 2016 to 2020,profit margin 3.81% to 18.73%
Two core drivers: Innovation and Marketing Innovation landscape of GSK Attracts top talents into R&D team Develop IP independence: work on developing more innovative drugs and bio vaccines Marketing Target market: expand into new markets Price: work on providing higher price drugs Process Academic research Talent team Medical conference Sales forces to HCPs and clinics
Plan Timeline Promote partial of developed drugs to the market Start investigating the reasons of low efficiency Start recruiting pharma talents Connect with selected potential suppliers and partners Launch new salary/award system New year promotion October 2021 July 2021 December 2021 Reevaluate each partnership and supplier Draft solutions for other inefficient causes Start designing efficient award system Increase # of trails in Phrase 2
EV Goal will be Achieved 45% 42% Discount to Fair Value incremented goal for EV 20B 33B from the pharmaceutical business by 2031 assert held to sale
RISK AND MITIGATION MITIGATION Due diligence and in-depth cost benefit analysis on the spinoff A committed effort to build strong image and brand for the new company RISK Spinoffs could be more expensive than expected Small companies are likely to fail on their own
Thank You GSK serves you high-quality and efficient medicine nd vaccine, Even If you Do Not have pharma knowledge
