- Following up on a similar recommendation back in October 2015, UK investor Neil Woodford called for the division of GlaxoSmithKline into separate units.
- Woodford, founder of Woodford Investor Management, told the BBC that "the sum of the parts is worth more than the current share price." His previous proposal in October envisioned splitting off GSK's HIV, consumer health division, and dermatology divisions—leaving a leaner GSK holding onto its prescriptions drugs and vaccines business.
- However, GSK CEO Andrew Witty told investors last quarter GSK has already considered divestments and decided against proceeding further.
Biopharma companies recently have focused on improving core businesses, moving to become leaders in specific therapeutic spaces (think Gilead with its hepatitis franchise). Woodford is making a similar argument here.
Speaking to the BBC, Woodford said, "We'd like the business to recognize that it should focus on certain activities in the portfolio and do them better than they have done in the past, demerge the bits they haven't managed particularly well and let other people who specialize in those activities run those businesses."
Glaxo doesn't seem to be particularly interested though. On a call with investors, CEO Andrew Witty said the company had considered spinning off its HIV or "Established Products" arms. But Glaxo decided against moving forward with either idea.
When it came to its HIV business, ViiV Healthcare, Witty said the company believes it is the "best owner." As for spinning off established products, it "wasn't a good economic transaction to do," Witty said.
For now, it appears GSK has moved on from any divestment plans. However, Woodford is a prominent investor in the UK and may bring more pressure to bear.