GlaxoSmithKline shares have taken quite a thumping but judging by comments made by its chief executive-in-waiting, investors who have been calling for a sale of its consumer health division are going to be disappointed.
Speaking at the firm’s annual press conference in London, Andrew Witty, who takes over from Jean-Pierre Garnier in May, said he had spent the last few months getting to know the operations at GSK he has had less direct contact with and consumer health tops that list. However it is clear that he is impressed with what he has seen.
Certain disgruntled shareholders have been pushing for a divestment of the unit principally because of the windfall such a sale would bring but also because many do not see a business that sells products such as Lucozade, Ribena, Aquafresh and Sensodyne as a core asset. When Mr Witty was asked by PharmaTimes World News whether he did, however, the answer was a resounding yes.
He noted that when he first stood up to address the assembled throng at the press conference, “the first thing I talked about was consumer health and that wasn’t an error”. He added that it is a fast-growing business and its margins are at the upper end when compared with similar companies.
Mr Witty went on to say that GSK has proved that “we are great managers for that business and, for me, that checks all the boxes” as being “a terrific part of this company”. The financial figures for 2007 for consumer health would appear to back up that viewpoint. Total sales were up 14% to almost £3.5 billion, and up 30% in the USA to £990 million, a far more impressive than its pharmaceuticals division.
Dr Garnier echoed Mr Witty’s comments and gave special mention to the performance of Alli, the over-the-counter version of Roche’s weight loss drug Xenical (orlistat). The product has contributed £150 million to GSK’s coffers since it was launched in the USA in June.
