GSK’s evolving business model (Daily Telegraph)

With GlaxoSmithKline’s new CEO Emma Walmsley presenting her first quarterly results since taking on the new role, investors were seeking signs of her intentions for the company. A renewed focus and attention to the pharmaceuticals business were the highlights, including the planned divestment of selected R&D and on-market assets as well as a strategic review of the rare diseases unit.

In an article in The Daily Telegraph, Novasecta Managing Partner John Rountree noted that “GSK spends a lower proportion of its total pharmaceuticals revenue on R&D, at 15.4pc, than its main FTSE 100 rival AstraZeneca’s 27.6pc”, and that “It all emphasises the importance the new GSK executive team puts on stability and long-term performance, rather than high-risk and high-reward R&D.” He further added that “It does not fit as well with a view that GSK will be a magnet for developing game-changing pharmaceutical R&D innovation.”

Regarding the rare diseases unit, John’s view was that GSK’s potential sale of its rare diseases activities “will ultimately be good for patients”, explaining: “Investors that are more interested in high-upside with risk can take on this unit and give it more focus and space than is currently possible under GSK.”