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Piling On Andrew Witty

To go along with the recent calls for Andrew Witty to step down at GSK, here’s John LaMattina wondering if he’s the right guy for the job as well:

. . .the bigger issue with Witty’s stance is the direction that he is taking GSK. His company has a long and proud history of delivering new drugs to patients. Unfortunately, he has seemed to have lost his appetite for the difficult challenges faced in drug discovery. Sure, vaccines and consumer health care product are necessary and important. But so are new drugs for cancer, rare diseases, Alzheimer’s disease, etc. For a major company like GSK to deemphasize this type of research, especially given all of its R&D experience and capabilities, will correspondingly decrease the amount of innovation devoted to curing these diseases. That’s a shame.

He’s referring to Witty’s statements recently on drug pricing, and his calls to move GSK out of areas that depend on pricing power. I have long-term worries about this myself, but at the same time, if you come up with a really groundbreaking drug, you do indeed get to price it at what you think it’s worth. That’s your reward for taking on those substantial risks. (If you come out with a drug that makes your flu symptoms five per cent better for the last two days of the flu, on the other hand, you’re not going to get many takers at $50k per course of treatment).
So if Witty is saying that the industry needs to be careful with its pricing, because we can’t use that tool forever, for everything, I think he’s right. But if he’s saying that a fifty-thousand-dollar drug that saves the healthcare system a hundred thousand dollars is not a good deal, then that’s harder to support. (You do, of course, have to make sure that the hundred thousand in savings are real!)

27 comments on “Piling On Andrew Witty”

  1. Nick K says:

    Paging Agilist urgently!

  2. Synergy says:

    John LaMattina’s comments are not borne out by the facts on the ground. GSK is active in very many clinical areas, it leads the way on access to much-needed medicines in resource-poor countries and its R&D effort is led by scientists of world renown. Sir Andrew is seeking to increase GSK’s global footprint and this is helping to de-risk the company by making it less reliant on stagnant or shrinking markets that sustained it in the past. Most would agree that this is an eminently sensible approach that is now starting to bear fruit.

  3. Anon says:

    I didn’t read the comments but perhaps GSK should follow Abbott’s lead and split itself up. One company innovative pharmaceutical company with its high-risk/reward return profile, the other a durable healthcare product company

  4. alig says:

    GSK has been heading in a downwards direction since the merger of GW & SKB. Witty has never been the smartest guy in the room, but his poor performance as CEO has accelerated GSK’s demise. Witty was handed Moncef as head of R&D when he took over and his biggest mistake was not firing him after the Sirtris disaster. GSK has greatly underperformed the pharmacuetical sector for the length of his tenure and at this point (more than seven years) he can’t blame his predecessors for the results.

  5. Anonymous says:

    Good to see Witty leading the Pharma industry into low-value incremental improvements, generics, and oblivion. See ya!

  6. Anonymous says:

    @1: See @2

  7. Big Bill says:

    Cost savings estimates are very dubious calculations, e.g if someone misses a day of work, does it really cost a company a day of pay? Usually not, the work will get done when the employee returns or be done by an existing employee.

  8. Nocebo says:

    #4 What about PV? He’s been there for 9 years now and appears to have supplanted MS. Surely he should be called out for his judgement and leadership (or lack thereof)?

  9. watcher says:

    LaMattina has captured the essence of Witty’s GSK. During his tenure, GSK has spent billions collectively on initiatives which have failed, both from in house sources and by investments. Sirtris may have been the most visible, but others like the acquisition of HGS were more expensive failures due to the failure of darapladib. In this, GSK has been taking big risks with a lack of scientific and strategic expertise at the top, supplanted by a know it all arrogance that cannot be understood without seeing it first hand. In truth, the company seemed to be having some successes, and then Monceff took over R&D with only a vaccine background, and Witty the CEO coming with a weak business resume. Mix this with a good amount of contempt for in house scientist and arrogance and you get a brew that only gives black tar in the reaction flax that became toxic.
    The sale of the oncology business (while still doing oncology research..figure that one out) should have been the last straw — it should have been blocked by an informed and truly independent board, but the back-pocket “Sir” network in the UK does not work that way. Sick, sick management style.
    One thing that cannot be understood in the newly proposed strategy is how the vaccine business, now at less than 1 billion, and the OTC business could make up the loss of targeted drugs, small molecules or macromolecules, to treat diseases. There is no way in my wildest imagination that these areas can make up the annual billions in sales and profits brought in by Advair, once a generic is approved (the patent has already expired). Toward this, GSK recently announced the intent to use cash from the Novartis deal to pay the current dividend for the next several years….after which it’s seems improbable the company will be able to sustain it’s current payout. Dividends will go down, stock price will crash, the company’s value will only be in the individual parts to be sold.
    After listening to Witty, this seems to have been his overall goal for some time, and should have been stopped by an independent board…..which does not exist. If there is any chance for the company to survive, he has to leave “to spend more time with his family and personal interests” and hope that someone else can find a way out of the deep hole. If left in place, Witty seems only able to dig faster in order to escape the deep hole. Instead, the company needs innovative scientific leadership at the top in order to find new and novel ways to escape the deepening hole.
    Makes me feel very sad for all the current and past employees who worked had to bring forward progressive ideas in making new drugs.

  10. Anonymous says:

    I’m going to apply for Witty’s job now. You never know. Nothing ventured, nothing gained… if only Witty had the same philosophy. 🙂

  11. exGlaxoid says:

    #4 and #9 sum it up well. Since the GSK merger, before which the stock peaked at $72/share, the stock has been bouncing between $40 and $60, thus proving via valuation that the merger did nothing to create value, and compared to the other big pharma companies, the company is half or less of the value it should be now. I don’t think either Garnier or Witty have done many good things and Moncef was able to take a number of great research labs and systematically destroy them.
    Selling the oncology portfolio was a bad idea, but since they laid off all of the best researchers in that area, I doubt that they would have found anything new now. GSK is now just waiting for someone with cash to buy it and strip it for parts.
    I wish it was not so bleak, but they don;t have many areas with even a hope for a new blockbuster now, and it will take that to replace Advair. Steven Nissan did not help things either, with his one man crusade against Anavdia, which appears to have nearly as bad of science as Sirtris.

  12. Anonymous says:

    A pharma company swapping cancer for vaccines and tooth paste certainly makes bad sense both scientifically and economically. Even I can see that. It is so obvious a blunder I wonder if the move was not part of a preliminary step toward a future merger/buyout target – aligning portfolios etc. It is the only way I can make sense out of it. But what would an X-GSK R&D scientist know – don’t ask PV or Moncef?

  13. E42ndStreet says:

    Payers will struggle to pay now even if some of these breakthrough innovations can generate real savings in the long term. Question is how to make it affordable to payers now? May be some sort of financial innovation that allows health systems to borrow and pay today with those borrowings backed by the guaranteed savings these innovations generate in the future….some parallels to the mortgage backed securities idea though that didn’t turn out so well. As Derek said, the savings need to be real indeed!

  14. Emjeff says:

    Both Patrick and Moncef should have been shown the door years ago. PV bought Sirtris against the advice of his scientists, who were absolutely correct that there were no data at all there. Furthermore both of them went full speed ahead with darapladib, which was another colossal failure. Good people are leaving in droves for other companies, and the ones who are left are either looking to retire, or too incompetent to find another job. Very sad…

  15. Anon says:

    So many mistakes by Witty, Moncef, and Vallance over the past 8-9 years. 1) Sitris (the con artist David Sinclair came to GSK this week trying to set the record straight, can anyone out in GSKland tell us how this went?)/How and why did GSK pay $1 billion? 2) Darapladib, 3) HGS ($3 billion in order to get all sales income from darapladib and buying the entire company), 4) Oncology divestment (the only part of the business with rapid growth). Their errors will be discussed in business schools for years to come. Witty came into the job with his mind made up in 2008 (no more “little white pills for western markets”) Aren’t you very clever Andy!
    After the laughter from the market about GSK going after “volume”, Witty is running scared and attempting to highlight he supports innovation. He flys across the Atlantic to get media coverage about a joint venture with a university on an HIV company to “cure” HIV. Why is this news? Hasn’t the intention from the in-house efforts always been to “cure” HIV as well? He pulls back ViiV from an IPO after realizing that there would be no growth without it following the brainy sale of oncology.
    Where is the accountability? Mr. Hampton, please get out your broom!!

  16. Anon says:

    #15, you forgot to mention the GSK China saga to add to the failures of Witty, Moncef, and Vallance. Others, please feel free to add to the list.

  17. Nick K says:

    #2 Synergy/Agilist: Thank you for responding so promptly!

  18. Little white pills for western markets says:

    AW has justified his “volume” strategy by indicating that televisions are of higher quality and cheaper than what was purchased 10 years ago. He says the same thing about T-shirts. People will always pay for innovation especially if it is truly revolutionary. People pay $80K for the new drugs for hepatitis C, the immunotherapy drugs for cancer, because these are truly transformative. They do not pay a premium for a once a day asthma drug that is essentially the same as a twice a day drug that is going generic.

  19. Anonymous says:

    @2: Synergy/Agilist: Are you so completely and utterly blind to how badly Witty has done for GSK? Just look at the empty pipeline, the shrinking revenues, the lost shareholder value, the shattered reputation, the criminal charges for bribery, the disastrous deals, the job cuts, etc. Stop deluding yourself, stop trying to delude others, because we’re not stupid, wake up, smell the coffee, and get out while you can. Because very shortly when you’ve lost your own job despite your sychophantic loyalty, you will realise that your sychophantic loyalty doesn’t stop a company from going under.

  20. more stuffing please says:

    #15. The Sinclair quackinar was emblematic of how truly fubarred GSK R&D has become. He had a cake walk in Philadelphia, serving up the same half-baked goods that he’s been peddling for the past ten years, and the PHL leadership seemed quite content to gobble it up. Patronage by the current Sirtuin DPU Head (formerly of Sirtris) was especially embarrassing (but not surprising), including the serving of koolaid-laced questions to favorably bias discussion. Also, no critical questions from the audience in regard to Sinclair’s sales presentation, a redux of mostly old (published) studies suggesting Sirt activation as a cure for almost every metabolic disorder, including aging, while strategically ignoring many contradictory findings. The beauty of his business model is the Fountain of Youth hook – clinical trials for aging should keep him in business for years to come – what about those expensive fishing expeditions for validated clinical biomarkers of Sirt activation? When a scientist only tells a small portion of the story, the part that favors their financial and professional stake, you are dealing with a merchant, not a scientist. A second helping please…
    In summary, Sinclair’s performance fit perfectly within the scope of the lack of accountability exhibited by past and current GSK leadership. Meanwhile, the scientific culture of GSK is one of acquiescence – dissent or critical thought, if counter to the alternate realities created by GSK leadership, will cost you your job. It’s a tried and true recipe for failure, not innovation. This will become more pronounced in the months ahead as R&D shrinks. GSK needs a combination therapy to treat their R&D ills. There needs to be a systemic overhaul of R&D management/culture/structure if GSK wants to be financially competitive in pharmaceuticals. Perhaps that will occur when there’s nothing left to prune or when a merger/aqcuisition will take care of it without upper managment having to lift a finger. Unloading Witty will resolve nothing in R&D unless mid-to-upper R&D managment/structure is cleaned up – Effort Tracking: 90% politics, 10% research actually geared towards delivering new therapeutics.

  21. Anonymous says:

    I just came across this statement from Witty, reported in 2011 FierceBiotech:
    “There is tremendous opportunity for the few companies who solve the R&D equation. It’s the companies who deliver multiple new products, not one or two, that address material clinical needs of patients and address the economic needs of the payers–so they are fairly priced, if I can put it that way. My belief is that 5 to 7 years from today, you’ll see a significant number of companies retreat from the pharmaceutical space, one way or another. I think you’ll see a few companies solve the problem, and I’m determined that GSK is going to be one of them.”
    How utterly ironic!

  22. toluene says:

    @21 This is what he meant to say!
    “My belief is that 5 to 7 years from today, you’ll see a significant number of companies retreat from the pharmaceutical space, one way or another, and I’m determined that GSK is going to be one of them.”

  23. Toluene says:

    I agree that the incompetence of upper management and ignoring of scientific input (Sirtris) has led to the demise of this once great Company. Back in the 70’s and 80’s Glaxo was making amazing discoveries for PONV, migraine, asthma, and GE reflux through long-term focus on key unmet medical needs with small molecules. Pat Humphrey wrote the book on 5HT receptor classification based on key molecules made by chemists.
    In my 20 years at G/GW/GSK, R&D management NEVER sought input on key decisions and science was driving less of the business. The DPU-thingy was a charade–DPUs were dissolved halfway through their “autonomous” three-year period and the original three DPUs ballooned to over forty last year as a new DPU could be started by one or two scientists with an idea! We ended up back where we started in 2008 with too many projects receiving insufficient support to be successful.
    I would be delighted to return to a GSK that focuses on small molecule science-driven projects with long-term goals.

  24. Emjeff says:

    Well,given the rumors of the last few days, the end-game for “Sir” Andrew seems to be some sort of merger with Pfizer. What say you, Synergy?

  25. R. O. Thornhill says:

    @4: Always been a mystery why there were no consequences to the Sirtris acquisition … if the GBP had been piled high and lit afire, at least you could have had an american-style wiener roast or made s’mores.

  26. Synergy says:

    Sir Andrew has no intention of merging whilst he leads GSK back to its leading position in the pharmaceutical industry. GSK has outstanding leadership in R&D with Drs. Vallance and Slaoui. Dr. Vallance led the company to six approvals (The Big Six), an unprecedented feat, and with the volume strategy of Sir Andrew will lead GSK to even greater heights going forward.

  27. Nocebo says:

    #20 “more stuffing please”, Since I am an ex-employee of the WindPharm, I did not witness that purveyor of Magic Beans that is Sinclair but you captured it perfectly! Very funny but sad also! Those Nagic Beans have cost a lot of good scientists their jobs

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