“I’ll be a hero in three years” JP Garnier 5 April 2004
Sorry JP, but I think you’re past your sell by date.
This from today’s Observer:
GlaxoSmithKline, the UK drugs giant, faces a shareholder revolt over its dismal share price performance. Anger has spilt into discussions between investors and chairman Sir Christopher Gent over who should succeed chief executive Jean-Pierre Garnier. He is due to retire in May 2008.GSK’s big institutional shareholders have held meetings with Gent and told him in no uncertain terms that Garnier’s successor should be someone who is prepared to undertake a fundamental overhaul of the company and consider a radical streamlining of its operations, including a possible break-up.
One institutional investor says: ‘What we are telling the chairman is that with the industry facing a regulatory clampdown that makes it more difficult to get new medicines approved, GSK should look at ways to release shareholder value. The status quo is no longer an option.’
Another shareholder, who spoke on the basis of anonymity, says: ‘GSK should recognise that Big Pharma is broken and needs to be fixed. Garnier’s successor needs to take that on board. It’s no good producing more of the same.’
GSK’s shares traded at close to £15 in early 2000 against a Friday close of £12.79. The stock price has been hit by safety fears linked to Avandia, one of its leading drugs, worries about generic competition and concern about a possible dearth of new blockbuster medicines in GSK’s R&D pipeline.
Neil Ransome, head of the pharmaceuticals department at PricewaterhouseCoopers’ corporate finance arm, said recently: ‘Evidence that mega-mergers in this sector improve the rate of discovery of new drugs isn’t compelling.’
Analysts Citigroup shook the market earlier this year with research suggesting breaking up GSK could boost the value of the firm by half and enable the company to return £20bn to shareholders.
Read the entire article here at the Observer.
For more detail on Glaxo’s challenges, see here.