Chairman Philip Hampton, who joined GlaxoSmithKline after its Novartis asset swap upped the ante in consumer health, is now stepping down as the British drugmaker prepares to split up the business.
GSK confirmed on Monday that Hampton intends to step down as chairman. The news comes a month after CEO Emma Walmsley unveiled plans to combine its over-the-counter business with Pfizer’s and then pull out of consumer health via a spinoff.
“Following the announcement of our deal with Pfizer and the intended separation of the new consumer business, I believe this is the right moment to step down and allow a new chair to oversee this process through to its conclusion over the next few years and to lead the board into this next phase for GSK,” the outgoing chairman said in a statement.
Hampton, who had been chairman of the Royal Bank of Scotland Group, joined GSK in 2015 at a turbulent time. His appointment was announced right after China slapped the company with a $490 million fine in a high-profile bribery case. GSK operations in at least 10 countries—including Poland, Syria, Iraq, Jordan and Lebanon—also faced corruption allegations.
Besides the scandals, GSK’s financial performance was also under pressure. Its blockbuster respiratory drug Advair was losing ground, and, in the face of a gloomy earnings outlook, its stock was suffering. Restive investors demanded change at the top, either an early exit for then-Chairman Christopher Gent or the scalp of then-CEO Andrew Witty. Some wanted both.
Over four years in the chairman role, Hampton has witnessed a lifecycle in GSK’s consumer health and oncology businesses, and his board replaced Witty with Walmsley in 2017.
When he jumped over from RBSG to succeed Gent, Glaxo had just announced its asset swap with Novartis. In that transaction—which left some investors scratching their heads—GSK traded its marketed oncology portfolio for Novartis’ lower-margin vaccines business. It also doubled down in the OTC business by creating a consumer healthcare joint venture with Novartis, headed by none other than Walmsley.
Fast-forward to March 2018, when GSK shelled out $13 billion for Novartis’ minority stake in that JV, right after it withdrew from OTC takeover talks with Pfizer. As market watchers wondered whether the move signaled a potential consumer spinoff—against a backdrop of an industry move away from low-margin OTC businesses—GSK came back in December with a different Pfizer deal. The two will combine their OTC portfolios in a joint venture with sales of nearly $12.7 billion. And the goal is to break it off from GSK’s pharma and vaccines franchises and list it as an independent company in London within three years.
Separately, as part of Walmsley’s plan to revitalize and refocus GSK’s pharma business, the company is buying oncology-focused Tesaro for $5.1 billion. That deal gives Glaxo the FDA-approved PARP inhibitor Zejula, three clinical oncology assets and a commercial infrastructure in cancer.
“[T]his is a good time to start the process to find Philip’s successor,” Vindi Banga, GSK’s senior independent director, said in a statement on Monday.
Jan 21, 2019