EMMA WALMSLEY was just six weeks into her tenure as CEO of GlaxoSmithKline, the $38.9 billion British pharmaceutical firm, when “Glaxit” happened.
Glaxit was not a world-shaking geopolitical tremor à la Brexit, but for GSK it may have seemed hardly less significant. Neil Woodford, the much celebrated British fund manager—who had gained fame for coming out of the dotcom crash and the global financial crisis unscathed, and one of GSK’s largest shareholders—announced he was quitting the company. In a blistering 958-word critique—published on May 12, 2017, and garnering coverage from Reuters to the Telegraph—Woodford explained why, after 15 years, he was pulling every last pence out of GSK stock.
Those 15 years had been “frustrating” for him; GSK had remained throughout, he charged, “a health care conglomerate with a suboptimal business strategy.”
Woodford had long been one of GSK’s most vocal critics; for years he had clamored for it to break up into its constituent businesses. (The company has pharmaceutical, vaccine, and consumer health divisions.) He argued the gambit, fashionable in Big Pharma these days, would unlock shareholder value through more focused stand-alone companies. GSK’s leaders—most recently former CEO Sir Andrew Witty—had consistently rejected the idea, contending that the firm’s conglomerate structure provided stability and some synergies.
But the last straw for Woodford seemed to be Walmsley. Of the company’s new chief executive, he wrote, “Even before taking her seat she has been keen to portray herself as a ‘continuity candidate.’” In other words, more of the same.
Walmsley may not be ready to ditch GSK’s conglomerate structure, but in almost every other way, Woodford’s description couldn’t be more wrong.
To begin with, there’s who she is. Neither a man nor a scientist, Walmsley is something of an outsider in pharmaland. She’s the only woman to run one of the large innovative drugmakers, and her path was hardly a typical one. A marketing whiz who spent 17 years at L’Oréal, Walmsley joined GSK in 2010 and started running the company’s consumer health care business the following year.
Then, there’s what she’s done. Since taking charge in April 2017, Walmsley, No. 1 on Fortune’s International Power 50 list, has made swift and radical changes. Within months, she had replaced 40% of her top managers and pulled the plug on 30 drug development programs and 130 brands. She announced plans to stop selling Tanzeum, a diabetes drug for which GSK had won FDA approval only three years prior.
Within a year, she sold off the rare-disease unit and initiated a strategic review of the company’s cephalosporins antibiotic business. She assembled a roster of all-star talent to fill out her executive team, and in July she did a $300 million deal with 23andMe, the data-rich direct-to-consumer genetic testing company. She instituted new (and unheard of, at GSK) levels of organizational hygiene—implementing uniform key performance indicators, employee standards, and strategies across GSK’s three businesses. As Walmsley told Fortune in June: “The way I define the job is, firstly, in setting strategy for the company, and then leading the allocation of capital to that strategy—because until you put the money where you say your strategy is, it’s not your strategy.” For the new boss, that means a new commitment to R&D.
She has also embarked on a cultural overhaul: Meetings get straight to the point and often begin with the question, “What are we here for?” In her first interview as CEO, she told the Financial Times, a bit clumsily, that GSK scientists would no longer be “drifting off in hobbyland” under her watch.
Walmsley is the fresh face of discipline and rigor at GSK. When asked how her communication style compared with that of her predecessor Witty, a senior leader who recently left the company chuckled before responding they couldn’t be more different.
Sir Andrew Witty may as well have been called Saint Andrew. By the end of his nine-year tenure as boss of GSK, he’d won admiration for his unorthodox business strategies, which tended to buck the worst trends in Big Pharma: Rather than sell drugs for sky-high prices in the few developed markets that could afford them, Witty declared GSK would pursue volume—selling lots of drugs, at lower prices, all over the world. Such efforts regularly landed GSK atop the virtuous Access to Medicines Index and earned it the No. 1 spot on Fortune’s 2016 Change the World list, which recognizes companies that do well in business by doing good for society.
Witty also dispensed with the notoriously sleazy drug-rep sales model, paying his sales staff according to their technical knowledge rather than by the amount of drugs sold. His company was committed to developing vaccines, those vital but extremely low-margin instruments of public health—including the first-ever vaccine for malaria, approved in 2015, after 30 years of effort.
In truth, the strategy was not purely benevolent. GSK, whose meds are mainly for respiratory conditions and HIV/AIDS, didn’t have a big stable of revolutionary cancer drugs, or those for rare diseases—the sort that had been fetching astronomical prices. (Notably, the handful of pricey gene-therapy drugs GSK did have in its arsenal—including a $700,000-plus drug for an immune disorder called ADASCID or “bubble baby” disease—Walmsley sold off in April, as part of her refocusing campaign.)
But in an era of six-figure prescriptions, investors didn’t have the patience for Witty’s slow-going, do-gooding volume play. Many were disappointed by the seeming lack of innovative medicines being developed at the storied 300-year-old drug company. GSK’s shortcomings were more likely to be lapses in marketing rather than discovery. In recent years, it had actually developed more new drugs than most of its peers; they just weren’t commercial successes for the most part. One telling stat put the problem in stark perspective: Due in part to patent expiries, the pharma unit’s revenues in 2016 were roughly equal to its revenues in 2004.
When in March 2016, the GSK board announced that Witty would step down the following year, they promised an extensive global search for his replacement. By September, they had found someone right inside the company: a then–47-year-old exec whom Witty himself had recruited years earlier at a networking event in Shanghai.
TO HEAR HER past and present colleagues tell it, Walmsley was the ideal pick. GSK board member Laurie Glimcher, an immunologist and CEO of the Dana-Farber Cancer Institute, calls Walmsley “a force of nature” and “the quickest study I think I’ve ever met.” Moncef Slaoui, GSK’s former R&D chief, describes her as a “courageous, supportive, and demanding leader.” Excellent at listening and always learning, she’s nevertheless quick and unwavering in decisions, colleagues say. She also has a knack for consultant-speak, repeating mantras like “Innovation-Performance-Trust!” and coining catchphrases—“fast moving consumer health care” is a favorite.
She grew up in Cumbria, England, the daughter of Sir Robert Walmsley, a vice admiral in the Royal British Navy with a long résumé of corporate board–ships. She attended St. Swithun’s, a posh all-girls boarding school, where she participated in public speaking and choir—and once played Prince Charming in an opera—and then Oxford, where she studied classics and languages. After college she joined the Coba Group, which has since been acquired by PwC, and became a consultant. Sophie Masson, who would later work with Walmsley at L’Oréal, attended St. Swithun’s a few years behind Walmsley and remembers her as having “amazing charisma” and being “a leader” even then.
Walmsley joined L’Oréal in 1994, where she climbed the rungs of the French beauty giant, with jobs in the U.K. and France for the L’Oréal Paris and Garnier/Maybelline brands.
In those early years, Patrick Kullenberg, now general manager of L’Oréal Luxe Nordics who worked with Walmsley, says in meetings and presentations she came off as someone with theatrical training because she was so deliberate with her delivery. She spoke, he says, “with effect.” Her presence alone stood out among L’Oréal higher-ups, who, Kullenberg remembers, were mostly male and mostly French.
Walmsley later left Europe for the U.S., where she took a top managerial role at Maybelline before moving to Shanghai in 2007 to head up L’Oréal’s consumer products division there.
Walmsley was an “admired executive” within the company, Kullenberg notes. She had military discipline when completing tasks. “She’d say something like, ‘Don’t speak to me until 12 o’clock; I’m focused,’ ” says Kullenberg, who briefly shared an office with his onetime boss.
She didn’t just set high standards for herself. “I remember her being very challenging to us as a team,” says Masson, who recalls Walmsley asking for changes to a lipstick launch in the 11th hour. And that managerial style worked. “We were all very impressed by her vision and wanted to deliver for her,” Masson says.
Walmsley’s progression from brand to brand and country to country was the trademark trajectory of someone headed for the tip-top of L’Oréal’s ladder. So it was a shock when Walmsley decamped for GSK. In fact, she seemed to shock even herself in making the move.
It was 2010, and 40-year-old Walmsley, her entrepreneur husband, David, and their four children (all under the age of 10) were in the midst of “a tremendous family adventure” in China, according to an essay Walmsley wrote for LeanIn.org. Then a meeting with Witty and a subsequent offer to take a job as head of consumer products at GSK in the U.K. threw it all into flux.
“I spent a week persuading myself I would be insane to do it,” she later wrote, citing worries about being “disloyal” to L’Oréal and “unfair” to her family. Another chief concern: “It would be really hard. The brief was a big change agenda: people, portfolio, results and culture,” she wrote. “Change is good, but the outsiders leading it aren’t usually the most popular.”
But she got over those hangups, and ultimately made the “bungee jump”–like leap “into the unknown.”
WALMSLEY BROUGHT her marketing chops and inherent ambition to the role. GSK’s brands, from the denture adhesive cream Poligrip to its antacid product Tums, improved lives but didn’t exactly inspire the consumers who used them. Over-the-counter brands, in fact, polled among the least popular brands on the planet. Walmsley asked, Why shouldn’t they be as beloved as Apple or Nike or Coca-Cola?, and set out on a campaign to make them so.
The journey wasn’t easy—the idea of lovable brands wasn’t an instant hit with GSK’s more science-minded folk—but WPP executive Alina Kessel says the effort and Walmsley’s commitment invigorated marketing in the OTC industry. The campaign also coincided with strong business results, with GSK’s consumer sales increasing 38% from $6.8 billion to $9.4 billion in the five years Walmsley served as its head, though some of this was due to a joint venture with Big Pharma peer Novartis.
|Walmsley’s top priority is to reinvigorate pharma, which accounts for 57% of GSK’s sales. Drug launches have lagged those of peers, and the CEO aims to speed development and improve marketing. Approvals of two new meds in 2017—a three-drug inhaler to treat COPD and a combination pill for HIV patients—should help, as should a narrower focus for R&D centered on those therapeutic areas and two less established ones for GSK: oncology and immunology.||The $6.8 billion group, which delivers 2 million vaccines per day, is poised to swell following the 2017 approval of SHRINGRIX, its highly effective vaccine against shingles. The CDC recommends the product for Americans 50 and older. The division has also recorded strong sales of BEXSERO, its meningitis vaccine, which in 2018 became the first vaccine to ever receive a Breakthrough Therapy designation from the FDA.||Walmsley has already transformed the consumer group, which |
accounted for a quarter of GSK’s sales, when she bought out Novartis’s 36% stake in the business earlier this year (the two companies formed a joint venture in 2014). Margin growth will now be an even bigger focus for the group. The portfolio of branded
products, many of which lead their categories, range from XCEDRIN to FLONASE to TUMS.
“Consumer had been a sleepy little side organization that brought in a bit of revenue,” recalls one former GSK senior executive. “Then all of sudden, she arrives and it’s front and center, and you’re hearing about it, and you’re seeing change, and the marketing people are up onstage, and whoa, that gets interesting.”
In 2014, Walmsley’s role became vastly more complex when the company brokered the deal with Novartis. The two firms did a swap—GSK got Novartis’s vaccines unit for its oncology assets—and went in together on what became one of the world’s largest OTC businesses. GSK’s stake in the consumer joint venture was larger, and Walmsley became the new unit’s CEO.
“Joint ventures are notoriously difficult, and they’re often seen as unsuccessful,” says Marvelle Sullivan Berchtold, who then ran M&A for Novartis and sat on the joint venture’s board. (Berchtold, a managing director at JPMorgan Chase, recently helped launch the bank’s much-heralded foray into health care with Amazon and Berkshire Hathaway.) Beyond the obvious integration challenges, many saw the corporate cultures of Novartis (Swiss and performance-driven) and GSK (British and all about stakeholder management) to be near polar opposites.
Walmsley wowed everyone. “It is hard to overstate how seamless that integration was,” says Berchtold. “One could almost forget people often spend years disentangling problems [in joint ventures like this].” Walmsley even managed to keep the highest-level Novartis people on her team. “They spoke so well of her. They felt really very respected, but it was also really clear she was the boss,” Berchtold says.
GSK chief digital and technology officer Karenann Terrell—one of Walmsley’s first major hires as CEO—was Walmart’s chief information officer at the time and witnessed the merging of the two businesses. The execution was flawless and noticed across the industry. “Everyone knew Emma,” says Terrell. “Everyone.”
That success marked Walmsley, even more than before, as CEO material. Yet when she got the top job, Walmsley approached the position cautiously. For six months prior to officially taking over, she embarked on a GSK listening tour, talking to people inside the company and out for their perspective on GSK.
Walmsley considered her “insider-outsider” status at GSK an advantage as she sought this feedback. She could see both perspectives, and then, just as important, translate it to those who could not.
Cue the session of GSK real talk that took place early in Walmsley’s tenure when she gathered senior R&D leaders in a room in London and played for them a video of analysts giving their takes on GSK’s R&D performance. “Almost uniformly, they all came back with pretty scathing assessments, saying, ‘We don’t think we would invest in this,’ ” says a former senior executive who was there.
The reaction in the room? Silence.
It was a “punch in the nose” for an R&D organization that thought highly of itself and thought the world thought highly of it too, the former exec says.
But the wake-up call, however harsh, was effective. It showed the framework from which Walmsley was working. Her message afterward, the former executive says, was, essentially, “Everything’s on the table here. The world is saying it’s broken. Let’s see if we can fix it.”
Right away, she had to perform the delicate dance of acknowledging Witty’s much-extolled legacy within the company while addressing GSK’s business shortcomings.
“GSK has led a lot on doing well by doing good, but we need to do better to be able to do more good,” she told Fortune in June. (She declined to be interviewed for this story.) She credits Witty with doing an “amazing job” with GSK’s vaccine and consumer businesses, but the company’s third division—pharmaceuticals—is the linchpin of her strategy to revitalize the company. “At the heart of pharma is R&D,” she said. “I want us to get back to our mojo around science and discovery and development again.”
Slaoui, GSK’s former R&D chief—he retired when Witty did—was back at GSK headquarters recently, and he noticed a couple of differences immediately. The executive offices were still on the first floor where Witty had moved them, but somehow, they were even more visible now. Everything had been painted white, giving the space a cleaner, sharper feel. “There is nowhere to hide now,” he says.
Slaoui found some people energetic and reinvigorated by the new honest, urgent approach to leadership. Others were shaken and apprehensive about what might lie ahead. “GSK is in a different place now,” he said. “It’s changing.”
For evidence, look no further than Walmsley’s dramatically refreshed executive team. Leading the pharma group, notably, is Hal Barron, who previously led departments at Genentech and Calico, Google’s secretive immortality lab. Barron had turned down many a Big Pharma post in the past, but he agreed to become GSK’s new R&D chief this past November. Other recruits include Luke Miels, a seasoned pharmaceutical executive from crosstown rival AstraZeneca—a hire that sparked a nasty legal battle—and up-and-comers from Pfizer, Novartis, and HSBC.
Walmsley’s executive team is highly visible—all participating in town halls and investor presentations—a noted departure in style. Witty tended to appear alone at such events. “The most important thing I can do is hire people who are aligned with the ambition and challenge of what we have to do … [and] give them the freedom and accountability to use their expertise to make difficult decisions,” she told Fortune.
Walmsley may have a more expansive definition of “freedom” than most bosses. Barron, whom Walmsley wooed to GSK over many FaceTime conversations, is based out of San Francisco, rather than one of the company’s main research campuses. Walmsley says she appreciates his proximity there to innovation.
That is of course her current priority, and while Barron has been on board for less than a year, he’s already made some bold moves, including forging the exclusive $300 million partnership with Silicon Valley–based genetic testing company 23andMe. GSK will now get to use the latter’s anonymized genetic data to help validate biological targets for its would-be medicines. Such a deep reservoir of genetic data on millions of people, analysts say, could offer the kinds of insights that ought to boost the chances of developing a successful drug—a must in an industry in which currently only one in 10 drug candidates ever makes it to market. The data might also help in recruiting patients for clinical trials, a long and expensive process, though the two companies are still working out the details of their arrangement.
So far, some 17 months into Walmsley’s reign, investors seem to be playing wait-and-see. GSK’s share price is flat for the year.
As for former shareholder Woodford, he may be wondering if he Glaxited too soon. In November, just six months after ditching the stock, he admitted he was impressed by some of Walmsley’s moves. “In time,” he told Morningstar, “Glaxo might be back in the portfolio.”
A version of this article appears in the Oct. 1, 2018 issue of Fortune as part of the Most Powerful Women package with the headline “RX For Renewal.”