New GSK chairman reiterates support for CEO

GlaxoSmithKline's new chairman has voiced support for Sir Andrew Witty, chief executive, but acknowledged the frustrations of shareholders over its recent performance.

Sir Philip Hampton, who was elected at GSK's annual meeting on Thursday, said Sir Andrew had the full support of the board to turn round the struggling UK drugmaker.

"I hope Andrew is here for a good while to come," Sir Philip said, describing him as "one of the most impressive CEOs I've come across".

Sir Andrew's future has been under scrutiny after an 8 per cent drop in GSK's share price over the past year compared with a 16 per cent rise in the broader pharmaceuticals sector.

"We haven't kept up with the best-performing companies," Sir Philip admitted, in his first public comments after replacing Sir Christopher Gent as chairman.

But he expressed confidence in the strategy laid out by Sir Andrew this week for returning GSK to growth with a bigger emphasis on vaccines and consumer healthcare.

Sir Philip, outgoing chairman of Royal Bank of Scotland, said he "likes the mix" of businesses and did not believe there was a "screaming case" for GSK to be broken up as some investors and analysts have mooted.

The appointment has been welcomed in the City as a sign of change, but Sir Andrew used Thursday's meeting to defend his record during a period of structural changes for GSK.

He was "not happy" with the performance of the past year but highlighted the 51 per cent increase in dividend and total 90 per cent shareholder return since he took over in 2008, including £35bn in cash returned through dividends and buybacks.

He reiterated the plan he laid out on Wednesday to reduce dependence on patented pharmaceuticals at a time when drug prices are coming under pressure in the US and Europe. This follows a $20bn asset swap with Novartis in which GSK traded cancer drugs for vaccines and consumer healthcare assets.

Sir Andrew said the new structure was aimed at tapping rising global demand for healthcare while recognising the fiscal pressures on health systems as populations age. The focus would be affordable, high-volume products rather than high-priced speciality medicines for the rich world.

"It's not going to be about the 600m people in Europe and America, it's going to be those 600m plus the other 6bn in the rest of the world," he said.

Sir Christopher, who is standing down after a decade as chairman, expressed regret about the Chinese bribery scandal that led to a £300m fine last year and said operations in the country had been overhauled. But he praised Sir Andrew's leadership during the crisis which he said had resulted in "the least worst outcome" for the company in China.

One shareholder used a question-and-answer session to call for Sir Andrew to be replaced but Sir Christopher's expression of support for the chief executive was met with applause from many in the hall.

Reacting to Wednesday's investor presentation during which Sir Andrew set out his plans, Alistair Campbell, analyst at Berenberg, said he was "a little underwhelmed" and warned that near-term cash flow would remain under "intense pressure".

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