The US activist hedge fund launched a scathing attack on GlaxoSmithKline’s management and called for a shake-up of the UK drugmaker’s board.
Elliott Management urged GSK to name new board directors and launch a review of Emma Walmsley’s leadership of the company, in its first public push for change since its investment in April.
In a 17 page public letter to GSK’s board on Thursday morning, Elliott blamed “years of under-management” for the pharmaceutical giant’s poor share performance.
The activist investor said it had so far “refrained from sharing” its thoughts publically, but now the time had come for “a broader discussion regarding GSK’s potential and how best to achieve it”.
GSK boss Emma Walmsley has overseen a 15 per cent dip in the firm’s share price since she took the helm in 2017.
But last week, Walmsley attempted to hold off investor pressure with a new strategy announcement in the company’s investor update, promising a “step-change in growth and performance” at the healthcare giant.
Following what it called “last week’s relatively momentous CMD event”, Deutsche Bank increased its outlook for GSK to HOLD, and shares in the drugmaker rose.
But despite this reception, Elliott said in its letter today that the investor update “was an important step in the right direction” but “it was not sufficient to resolve GSK’s credibility challenges”.
Instead, the hedge fund made a series of recommendations and pushed for GSK to “ensure the right leadership through the right process.”
Elliott called for the GSK board to renew and bring in independent directors with expertise in biopharma or consumer health, and said “the new, fit-for-purpose GSK Board will then run robust processes for selecting the best executive leadership” from internal and external candidates, for the “new GSK” and its consumer health division.
Last month, Walmsley rejected the idea that she was ill-qualified to lead the drugmaker business, and said: “Let me tell you what I am. I am a change agent, I am a business leader, and I’m very excited about the plans for a new GSK that we are laying out.”
A GSK spokesperson said in a statement that the issues Elliott underlined in its letter were “not new” and had been identified by GSK “since 2017” – the year Walmsley took the helm.
“We set out on 23 June an ambitious plan to deliver a step-change in performance and realise significant value for GSK shareholders over the next decade,” the spokesperson said.
“We believe our shareholders are supportive of this strategy, and that they are focused on GSK executing on it without distraction or delay. This is our clear priority.
“We will respond to Elliott’s letter more fully in due course.”
Shares in GSK rose 0.7 per cent today to 1,436p.