In conversation at the FT Global Pharmaceutical and Biotechnology Conference in London,* an energetic Emma Walmsley discussed the strategic and cultural shifts she has implemented in her two and a half years as CEO of iconic British firm GSK, the increasingly important intersection between technology and pharma, and countering the industry’s problematic reputation.
Did you know before you came in as CEO of GSK the scale of the changes you wanted to make?
During the period of being appointed, I was making the case for change, as well as highlighting the things we should continue with in the company. The case for change was predicated on the facts that the outside world is rapidly changing and that, frankly, GSK needed to improve its track record in terms of shareholder returns.
Frankly, GSK needed to improve its track record in terms of shareholder returns
We have been working on two really big changes in particular. The first was to firmly and clearly make the strengthening of innovation our number one priority, with our pharma pipeline at the heart of that. With changes in leadership and a readjustment of our strategy, we have 41 new medicines and 17 vaccines available. The levels of change can be seen in the fact that last summer we had eight oncology medicines available; we now have 16 following the acquisition of TESARO. I am very pleased with our progress so far but there is a lot more to do. Also, we have good data in respiratory in both biologics and for chronic obstructive pulmonary disease (COPD), as well as lots of data in HIV, and new data on antibiotics.
Making the strengthening of our position in new medicines the priority of capital allocation was always going to affect our structure. Whatever people may have assumed, given my background in consumer healthcare, I have been clear from the beginning that we are open to change in terms of group structure because we wanted all of our businesses to be able to perform competitively and have access to sufficient capital to be able to do so.
When we were able to buy out Novartis’ share of our consumer business and then form a second joint venture with Pfizer it became clear that we would have the world’s biggest consumer healthcare business within GSK that was not going to be the priority for capital allocation. Therefore, the right thing to do was to give that business the freedom to set its own capital allocation priorities.
What are the pivotal changes in the industry that you have had to react to?
As in any industry, there are both tremendous opportunities and renewed pressures. On the opportunities side, there is an explosion of understanding in biology and technology at the same time. We want to build a very competitive capability in genetics and genomics, improve productivity through AI and machine learning, and enter whole new technology spaces such as cell & gene therapy. All of these are opportunities to bring better solutions for patients, which is ultimately why the industry exists.
There are also opportunities to try and solve the problem that drug discovery and development takes a decade, billions of dollars, and has a 90 percent failure rate. We are working on these issues both internally and through partnerships, as we’ve done with 23andMe in genetics, or with academic institutions.
At the same time, our industry is somewhat ‘reputationally challenged,’ for example in the debate around pricing. As CEO, I want to continue the good work we have already been doing in this area such as responsible behaviour around pricing and commitment to access and global health.
How do you make pharma’s case to such a sceptical political class and public?
In terms of reputational challenges, there are two parts to the industry’s job. The first is to behave well. It would be fair to say that there are some examples of egregious behaviour. However, the most important thing that we do is innovate. That is why pharma companies like ours exist and spend USD four billion a year on R&D – there are still so many unmet healthcare needs.
Every person in this room, for example, will have been touched by cancer in some way. There are still so many cancers for which there are no effective treatments, which means we have to continue investing in innovation. One in three of us will be impacted by some kind of neurodegeneration, for which there are no solutions. We have to find a way, as an industry, to keep being evermore successful. I am excited about what technology can bring to this and communicating that value to society.
Are you conscious of quite a pressing deadline to convince investors that you have revitalised GSK’s pharma and vaccines business as you approach the decision to finalise the split with the company’s consumer healthcare division?
Since my first day in the job, I have been focused on creating value for shareholders, so this is nothing new. It is, however, true that we have declared our intent to separate into two separate companies but I don’t find it unhelpful to have a ticking clock, quite frankly, because there is a lot that we need to do and we need to get on with it. We know – because we’ve done it before – that it takes a few years to integrate successfully, which is what we are working on now.
What role do vaccines play within the new GSK?
It’s important to remember that we are a pharma and vaccines company. GSK is the world’s biggest supplier of vaccines. We are in the process of proving what we can do when we have something to differentiate ourselves – Shingrix, our shingles vaccine, has already achieved USD 1.3 billion in sales for what is still a relatively new treatment. We are very excited about how science is advancing as we move towards therapeutic vaccines as well as preventative ones. Let’s face it, in a world where there are economic challenges around healthcare, there is nothing cheaper than preventing disease.
Having made a lot of changes within your R&D operations, how have you incentivised and reassured your teams that this is not just a two-year blip but part of a longer-term cultural shift for GSK?
I have always believed that the question of culture is fundamental for any organization. Culture – mainly defined not by the values and expectations written on the wall but by the way that leadership behaves – can be a fantastic accelerator for change, but can also be a complete de-railer if a company gets it wrong. When I laid out the priorities for GSK, they were innovation, performance and trust to the power of ‘c’ for ‘culture.’ The definition of the kind of culture we want is fundamental.
I have always believed that the question of culture is fundamental for any organization
The structural changes we have made to R&D are not that significant. Major reorganization and restructuring takes a long time and a lot of dedication and can be enormously disruptive. The changes we were trying to make in R&D were more around governance, decision-making, and better communication between R&D and commercial. We do not want to have tremendously exciting science going on that is not able to be converted into competitive and exciting medicines.
We are big fans of single point accountability decision making which, from a cultural point of view, has been very new for GSK. Like many multinationals, we have traditionally been a heavily matrixed organization, which has an impact on speed, motivation and quality of decisions.
Are GSK employees ready to step up to a higher level of accountability?
As always, when you listen to the people inside of the company, you do not need – with apologies to the consultants in the room – a huge amount of expensive external insight. It is usually inside the company that people know the changes that need to be made.
For some people it has been uncomfortable, and that is why updating talent is also important. Although many of the people who have come before have done incredibly important things and in some cases been successful for a period, when you are redesigning and resetting what you want to do for the next chapter, you need to have fit-for-purpose leaders who embrace the kind of culture that you want.
GSK has a tremendous legacy in neurology and psychiatry, with drugs for depression, pain, epilepsy and bipolar disorder, but has now shifted its focus to oncology, immunology and vaccines. With the opioid crisis in the US and a broader desire to find better painkillers and better drugs in those classes, do you see a route back into neuroscience?
To clarify, we define ‘immunology’ in its broadest sense – as the science of immunology, genetics and new technologies, which goes far beyond the classic immunology spaces.
We have not explicitly stated that we want to be seen as an oncology company. Everybody has spotted that we are investing in that area, but what we are really doing is following the science. Where we spot an opportunity to do something truly differentiating, we will follow it. In that sense, I don’t think we are closed to the areas you mentioned. We are, however, making much tougher choices about the allocation of capital much earlier and holding the bar quite high in terms of what we will then pursue to later development.
Specifically referring to your question about pain relief, we have gone into Phase III trials with a new product in rheumatoid arthritis and we have another asset which we think may have a differentiated benefit in a highly competitive class around pain.
Moreover, in our consumer business, we are world leaders in over the counter (OTC) pain relief. After the merger with Pfizer we have three quarters of the top OTC pain relievers on the market. We are very mindful about how to re-engage at the earlier stage of an illness with more preventative measures. If we, through our research, find opportunities in other areas, we will no doubt follow them.
* This is an edited transcription of the conversation that took place between Emma Walmsley and the FT’s Sarah Neville at the FT Global Pharmaceutical and Biotechnology Conference in London on the 11th of November 2019.