Bottom Line: Upbeat Witty sets his company a high bar
FORGET the Chinese whispers surrounding GlaxoSmithKline’s problems in the Far East – chief executive Sir Andrew Witty is shouting from the rooftops.
His bullish message yesterday could not have been clearer – Glaxo’s pipeline is thick and healthy; threats from generic competition are overstated anyway; the firm is in pole position to benefit from emerging market growth – even despite the Chinese bribery case.
He is quick to play down headwinds. Emerging markets will remain a long-term win, despite “periods of volatility”, he insists, adding that the damage from China seems to be stabilising. His rhetoric is inspirational, enthusing about a groundbreaking vaccine for malaria.
The boasting went down well, with the stock clearly outperforming the FTSE on the day. Yet with shares down over 10 per cent since the summer, more evidence is needed.
“There’s still work to do in turning the pipeline into pennies and shillings,” explained Panmure Gordon analyst Savvas Neophytou.
The share price lifted yesterday partly because the results were “a nice surprise,” Neophytou adds. Yet with the firm’s bullish new forecasts, there’s not too much room for an easy beat next time around. Having happy boffins and a healthy pipeline is one thing, but turning this into an impressive bottom line is another.
Witty’s focus on pharmaceutical development, and flogging of unrelated products such as Ribena and Lucozade, is admirable. Let’s hope it’s the right medicine.