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Five Reasons Why GSK Spinning Off Consumer Is Not So Straightforward

 
• By Eleanor Malone

GSK once again provided grist to the stock market rumor mill over the weekend, with reports emerging that its chairman has been talking to major shareholders about the possibility of splitting up the company. But there are reasons to doubt whether talks would lead to action any time soon.

Emma Walmsley GSK
GSK's CEO, Emma Walmsley • Source: GlaxoSmithKline

It's not the first time that investor disgruntlement has bubbled to the surface at GlaxoSmithKline PLC. If UK media reports are to be believed, major shareholders have been pushing the UK big pharma's chairman Philip Hampton to consider breaking the company up, something that had become a common refrain under the leadership of previous CEO Sir Andrew Witty, culminating not only in Witty's departure in 2017, but also the withdrawal of high-profile fund manager Neil Woodford as a shareholder.

The argument for a break-up rests on the fact that GSK's lower-margin consumer business has a very different financial model from its pharmaceutical and vaccines divisions. However, breaking up is...

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