Turning the Glaxo supertanker

July 24, 2008

witty-july-2008.jpgDiversification is the buzz word in pharmaceuticals as the feared 2010-2012 patent “cliff” looms nearer, when many of world’s top medicines lose patent protection.

New Glaxo CEO Andrew Witty, 43, is embracing the concept wholeheartedly via a bold deal with South Africa’s Aspen that takes the world’s second biggest drugmaker into generics in emerging markets and a strategy to broaden out the group.

But how long will Glaxo’s not-so-patient shareholders have to wait to reap the rewards?

Witty gave a confident performance during a two-hour meeting with analysts this week, but a sliding share price the day after suggests investors see little to cheer about just yet.

Investing for diversity to de-risk the business may make sense, but bulking up in non-prescription healthcare products, vaccines, biotech and emerging markets will take time – as well as money, as evidenced by the decision to delay completion of the company’s 12 billion pounds buyback programme.

“You can’t turn a supertanker on a dime,” says Deutsche Bank analyst Brian Bourdot.

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/