Analysts are hoping that GlaxoSmithKline plc (ADR) (NYSE:GSK) can stabilize the company amid a series of new strategies that the CEO, Andrew Witty, has been implementing in recent months. Bernstein analyst Tim Anderson has reviewed the company that decided to let go of the cancer treatment drugs and focus instead on the vaccine groups. Anderson is positive about the company’s decision and stated that it would help GSK get fixed revenue. He stated that remains to see whether the company would be able to create a dominance in the respiratory drug markets, which is already overcrowded, and the company has failed here before.
As the company announced a foray into HIV research, analysts did not seem to be impressed. In fact, Anderson and many other analysts are skeptical about the decision and even though Witty defends GSK, the odds seem to be higher. At a time when other pharmaceuticals are enhancing their portfolio by entering into collaborations, GSK seems to have chosen the opposite path and the results are yet to come.
Witty Fails To Deliver
According to Witty, the companies were making bad choices to get cheap money from the market, but GSK was not keen on falling into the wrong tactics. He argued that there could not be a win-win situation for all, and the competition is only going to make things worse for the pharma companies that were currently only concentrating on M&As.
He felt that the low prices could be countered by sales volume, but analysts are not convinced. Liontrust Asset Management’s Fund Manager, Stephen Bailey feels that Witty was short on time and if he fails to deliver in the next 12 months, he should think of stepping aside.
Meanwhile, the shareholders of the company have chosen Sir Philip Hampton as their new CEO as Sir Christopher Gent bid farewell to GSK. The investors are optimistic that Hampton will help the company that has seen a 6% dip in revenue this year and the shares are also not doing too well. Tim Anderson terms GSK to be going through a ‘slow-motion freefall.’