UK Edition
Glaxo launches search for new chief
Sir Andrew Witty’s reign as chief executive of Glaxo Smith Kline is approaching its final months, with headhunters drawing up a list of potential successors.
Glaxo chairman Sir Philip Hampton is understood to have instructed the City recruiters Egon Zehnder to identify candidates within and outside the company. The move signals the beginning of the end of Sir Andrew’s tenure, which began in 2008.
The process is understood to be in its early stages, however, with the board unlikely to make an appointment until next year.
The search has begun as Glaxo faces pressure from some shareholders over its strategy. The City fund manager Neil Woodford last year called on the company to plan for radical restructuring that would effectively mean a break-up of Britain’s biggest pharmaceuticals company.
Mr Woodford has advocated the sale of Glaxo’s HIV business, its consumer health division and its dermatology unit, arguing “the sum of the parts is worth more than the current share price”.
Richard Marwood, a fund manager at Axa Investments, a top 20 investor in Glaxo, said this month: “If you had a blank piece of paper you would have never designed a drugs company like this.
“It is something we have spoken to [Sir Philip] Hampton about in the past year and he is aware it is a structural issue. He said it is strategically something that needs to be looked at, but they are not close to sorting it.”
The American activist Och-Ziff Capital Management is also understood to have criticised Sir Andrew’s commitment to a diversified portfolio of businesses. Glaxo has privately argued that its exposure to multiple markets is a strength in a period of increased macroeconomic uncertainty.
The company is also digesting a complex £14.4bn asset swap with Novartis, and has indicated it does not currently have the appetite for more big transactions.
Sir Andrew told investors earlier this month: “The chance of us doing something in an accelerated timeframe is extraordinarily low.”
But Glaxo has not ruled out major structural changes in the medium term, and a change of leadership in 2017 could pave the way. The company is nevertheless rejecting suggestions of link between shareholder unrest and Sir Andrew’s impending departure after eight years in the top job, it is understood.
In his search for a replacement for Sir Andrew, which was first reported by the Sunday Times, Sir Philip will look inside and outside the company. As the Government’s business equality tsar, in charge of a campaign to increase the proportion of female leaders at top companies, he could face pressure to appoint a woman.
The Glaxo executive team of 12 contains only two women. Emma Walmsley, chief executive of the consumer healthcare division, is likely to be seen as a potential candidate. Some shareholders would prefer an outsider to shake up the company.
Glaxo declined to comment.