Walmsley’s Dream Hire Badly Needs to Find Some Blockbuster Drugs

(Bloomberg) -- Nearly nine years ago, when Emma Walmsley was preparing to take over as CEO of GSK Plc, she wrote in her diary that Luke Miels — then an executive at rival AstraZeneca Plc — would be “a dream appointment for this adventure.”

Now, as Walmsley’s own adventure atop the British pharmaceutical group winds down, Miels has been named to replace her. The 50-year-old, who joined Walmsley at GSK in 2017, will take the reins as chief executive officer at the start of next year. 

His main challenges will be to deliver more blockbuster drugs from GSK’s labs and through astute acquisitions, while lifting the share price, which has trailed far behind AstraZeneca’s during Walmsley’s tenure.

“GSK as a pure R&D business needs to deliver products from its own pipeline combined with selective M&A,” said Ketan Patel, a fund manager at the family office Whitefriars, in emailed comments. “Luke will need to push that strategy over the next 5-10 years.” 

Long viewed as a potential successor to Walmsley, Miels has most recently overseen the company’s global medicines and vaccines business in the role of chief commercial officer. He’s credited with helping get a jump on rival Pfizer Inc. from GSK’s successful vaccine for RSV, and with working alongside Chief Scientist Tony Wood on the drug pipeline, including a push back into cancer medicines. 

“Luke, at the time, was one of my most important hires and has turned out to be the one that really matters,” Walmsley, 56, said in an interview. “He’s been a partner for me in the eight years he’s been here now, really defining the strategy, getting us back into oncology, delivering the big move in terms of our operating performance.” 

The GSK she’s handing over to Miels is very different from the company Walmsley inherited from her predecessor, Andrew Witty. She invested heavily in vaccines and built up the HIV business, while moving back into cancer drugs and splitting off its consumer-health unit, Haleon Plc, into a separate listed company. Sales have increased, investment in research and development has doubled and Walmsley resolved long-running litigation over Zantac in the US. 

Even so, she struggled to win the confidence of markets — leading to a run-in with activist investor Elliott Investment Management, which four years ago urged GSK to beef up the pharma expertise in its top ranks.

While Walmsley fended Elliott off, shares have still fallen about 10% during her tenure even as the market value of AstraZeneca has more than doubled.

Some analysts say Miels looks set to benefit from some of the changes made under Walmsley. 

He’s been “dealt a good hand,” with GSK looking well positioned to deliver its 2031 target of more than £40 billion ($53.7 billion) in sales, according to Sean Conroy, an analyst at Shore Capital. 

“I don’t think they need to change anything drastically here for this to be a good success story for Luke,” Conroy said in an interview. “It’s just a case of executing.”

Miels, an Australian, has worked across Asia, Europe and the US at Sanofi, Roche Holding AG and most recently AstraZeneca. His time at the latter ended acrimoniously, with the company suing Miels in 2017, alleging he was in violation of his employment agreement. The two companies settled, with Miels joining GSK later that year. 

Some analysts are still cautious about GSK’s prospects. 

What GSK has struggled with is delivering the next generation of drugs before the patent expiry for HIV medicine dolutegravir comes at the end of the decade, Barclays’ analyst Emily Field said. 

“GSK has a lot in their pipeline, but we haven’t really seen any late-stage results yet,” she said.

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