GSK Will Replace CEO Walmsley With a Company Insider. The Stock Is Up.

GSK’s ADR is down 7.2% under Emma Walmsley’s tenure as CEO, in contrast to the S&P 500’s 182% rise. (Michael Nagle/Bloomberg)

Key Points

• Emma Walmsley will step down as GSK CEO at year end, to be replaced by current Chief Commercial Officer Luke Miels.
• GSK’s stock is down 7.2% since Walmsley became CEO, while the S&P 500 rose 182% in the same period.
• Walmsley led GSK through the spinoff of its consumer-health brands and expanded its oncology pipeline.

Emma Walmsley, the CEO who led the U.K. drugmaker GSK through the Covid-19 pandemic and the transformative spinoff of its consumer-health brands, will step down at the end of the year, the company said Monday.

Her replacement, GSK’s current Chief Commercial Officer Luke Miels, is a drug industry stalwart who has been at GSK since 2017.

Walmsley has led GSK since March of 2017, when she succeeded Andrew Witty, who went on to lead UnitedHealth Group before stepping down in May. Walmsley was the first woman named to lead a Big Pharma company, and she came under attack partway through her tenure for her nontraditional background for a top biopharma executive.

For Walmsley and GSK, the past eight years have been turbulent ones. The stock’s American depositary receipt is down 7.2% since she became CEO, a period in which the S&P 500 is up 182% and the Health Care Select Sector SPDR exchange-traded fund, which tracks healthcare stocks in that index, is up 82%.

During that period, GSK spun off Haleon, a consumer-health company that owns over-the-counter medicines previously sold by GSK and Pfizer . Once seen as a company with an effective vaccine business and a generally underwhelming pharmaceutical business, GSK has made efforts to change that under Walmsley, moving aggressively into oncology, among other areas. GSK now says it has 15 drugs in its pipeline that could launch by 2031, and analysts expect earnings per share to grow from £1.64 per share this year to £2.07 per share in 2030, according to FactSet.

GSK now has a long list of blockbuster drugs, including the asthma treatment Trelegy Ellipta, the COPD injection Nucala, a long-lasting HIV injection called Cabenuva, the shingles vaccine Shingrix, and the respiratory syncytial virus vaccine Arexvy, among others.

In 2021, Walmsley weathered a serious threat to her leadership when the activist hedge fund Elliott Advisors pushed for the board to consider a new executive for the company. At the time, GSK was preparing for the separation of its large consumer-health business, which sold Advil and Excedrin, among many other top brands. Elliott and other critics suggested that Walsley was not the right pick to lead the pure-play biopharma business that would remain after the spinoff.

Unlike virtually all other Big Pharma CEOs, Walmsley had no biopharma background before ascending to the top role at GSK. She had been an executive at consumer goods giant L’Oreal before arriving at GSK in 2010, and rose on the consumer health side of the company, ultimately serving as CEO of GSK Consumer Healthcare before being tapped to lead the whole company.

Walmsley weathered the attack from activist funds. “We know that this company has not delivered as we would all like it to be doing, in terms of shareholder returns,” she told Barron’s at the time. “We’re looking forward to being held accountable for that.”

GSK’s ADR was down 2% from the day before Elliott published its letter on GSK in the summer of 2021 to the close of trading on Friday. The S&P 500 was up more than 54% over the same period.

Walmsley’s replacement appears to have a more traditional pedigree. Miels worked at AstraZeneca, Roche, and Sanofi before arriving at GSK. In a statement on Monday, the company said that he had been “instrumental in building GSK’s specialty medicines portfolio, notably in oncology and respiratory.”

GSK’s ADR was up 2.6% on Monday morning.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com