GlaxoSmithKline CEO Emma Walmsley downplays public speculation about company breaking up

Emma Walmsley, CEO of GlaxoSmithKline. Credit: Flikr

The GlaxoSmithKline board of directors remains unchanged in its view on restructuring as long as all three parts of the business remain competitive, CEO Emma Walmsley said Wednesday in response to reports of a potential company breakup. 

"Now, I'm just going to take a moment here to comment on what I know will be a question later on the recent press speculation regarding our consumer business," Walmsley said. "The board's position on the group structure is unchanged. We believe that the three business structure of the group offers significant opportunities on the current healthcare environment, and provides GSK with more stability in our earnings, and helps in free cash flow generation. But as we have also consistently said, this is subject to each business continuing to perform competitively and having access to capital."

Last week, the Financial Times reported that GlaxoSmithKline's Chairman Philip Hampton was weighing the merits of splitting up the company after several investors pressed the board to consider spinning off the pharma group's consumer division. Hampton had been talking to the company's biggest shareholders about creating, in the midterm, a standalone pharma and vaccines company, the report said. 

The UK-based company focuses on pharmaceuticals, vaccines and consumer healthcare, which includes wellness and nutrition.

In Q2 results released Wednesday, revenues were up 4 percent year-over-year, according to Nasdaq. Sales in consumer healthcare were up 3 percent, pharmaceuticals were up 1 percent and the vaccines segment increased 16 percent.

On Wednesday, GSK's big announcement was its new collaboration with 23andMe to focus on genetics as the basis for developing new drugs.

GSK is making a $300 million equity investment in the collaboration with the California-based consumer genetics and research company.

It has signed an exclusive four-year agreement with the option to extend for a fifth year, under which the company will become 23andMe's exclusive collaborator for drug target discovery programs, GSK said in its earnings statement. 

GSK and 23andMe will both initially co-fund all activities within the organization and will split proceeds from new treatments and medicines developed under the joint venture.

GlaxoSmithKline will have access to 23andMe's database. Over 80 percent of 23andMe's five million customers have consented to participate in research, GSK said. Consenting customers can also choose to participate in research and contribute their information to one of the world's largest genetic and phenotypic databases, GSK said.

For those who do not consent, their information will be de-identified, so no individual will be identifiable to GSK.

"Partnering with 23andMe, an organization whose vision and capabilities are transforming the understanding of how genes influence health, will help to shift our research and development organization to be 'driven by genetics,'  and increase the impact GSK can have on patients," said Hal Barron, MD, chief scientific officer and President of R&D at GSK.

Anne Wojcicki, CEO and cofounder of 23andMe, said, "This collaboration will enable us to deliver on what many customers have been asking for - cures or treatments for diseases."

The research will support identification of patient subgroups that are more likely to respond to targeted treatments, GSK said.

23andMe currently has a portfolio of early stage therapeutic research programs across a wide range of disease indications, which will be assessed for inclusion. GSK will contribute its LRRK2 inhibitor, which is currently in preclinical development as a potential treatment for Parkinson's disease. The program will leverage 23andMe's large base of consented customers who are aware of their LRRK2 variant status as a result of 23andMe's FDA-authorized genetic health reports.

GSK will also have the right to leverage 23andMe's capabilities for clinical trial recruitment.

To ensure broader, ongoing engagement within the scientific community, GSK and 23andMe said they intend to publish results of research conducted within this collaboration, to allow these learnings to be used to guide future research. 23andMe will also continue to provide data and analyses to academics and researchers in areas outside of target discovery.

GSK said it expects to launch in 2018-20 two treatments for HIV and an advanced new oncology treatment.

GSK said a new major restructuring program is expected to deliver annual cost savings by 2021.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com