GlaxoSmithKline's incoming CEO Andrew Witty - the current president of European pharmaceuticals -brings to the post experience with cost-effectiveness that could prove an asset as comparative and cost-effectiveness become increasingly important to the U.S pharmaceutical industry.

The firm announced Oct. 8 that Witty has been tapped to succeed J.P. Garnier when the latter retires as CEO at the end of May 2008.

Witty's experience in Europe with price and value issues and negotiating national formularies make him well-suited and a strategic choice given the growing preeminence of evidence-based medicine and relative effectiveness in the U.S.

Comparative/cost-effectiveness research gained visibility with the Medicare Modernization Act, which expanded the HHS Agency for Healthcare Research and Quality's programs in the area (¹ Also see "AHRQ Comparative Effectiveness Funding Doubled In 2008 Budget Bills" - Pink Sheet, 16 July, 2007., p. 23).

This year, the spotlight has grown more intense, with Senate Finance Committee Chairman Max Baucus, D-Mont., looking to expand funding for comparative effectiveness and a range of insurance and health care groups expressing support for public/private consortium approaches (² Also see "Baucus Flags Comparative Effectiveness As Priority For Senate Medicare Bill" - Pink Sheet, 1 October, 2007., p. 14).

Witty is linked to GSK's introduction of flexible pricing agreements with European governments based on the clinical performance of a product. Under the "at risk" pricing scheme, the price of a therapy is renegotiated as additional safety and efficacy data become available (³ Also see "GSK’s “At Risk” European Pricing Strategy Aims To Align Market Incentives" - Pink Sheet, 25 September, 2006., p. 7).

Background In Sales And Marketing

Witty, who joined Glaxo U.K. in 1985, also has broad international sales and marketing experience.

He has headed GSK's European pharmaceuticals business since 2003. Immediately prior to that, he held the post of senior VP-Asia Pacific. Witty has also acted as managing director for Glaxo South Africa and area director for South and East Africa.

His only significant U.S. role, which preceded the Asia Pacific assignment, was VP-marketing for Glaxo Wellcome. In that position, "he had responsibility for strategy development, marketing execution, and new product positioning," GSK said.

CEO Selected From In-House Competition

Witty's selection as CEO follows a competitive in-house selection process among three candidates.

In 2003, GSK reorganized leadership of its pharmaceuticals business, following the retirement of Pharmaceuticals Operations President Robert Ingram (⁴ Also see "GSK Management Triangle: Viehbacher To Head U.S. Rx, Reporting To Stout" - Pink Sheet, 21 October, 2002., p. 27). The initiative involved shifting positions and geographic responsibilities for the nine potential CEO candidates.

At that time, Witty moved from Asia Pacific to succeed Chris Veihbacher as the head of the European pharmaceuticals business, Veihbacher became president of the U.S. pharmaceuticals division, and David Stout was promoted from president of U.S. pharmaceuticals to his current post as president of pharmaceutical operations, seemingly establishing him as the heir apparent to Garnier.

Witty, Veihbacher and Stout were the only candidates for the chief executive post. Both regional presidents report to Stout, and all three executives will maintain their current functions until the transition.

Witty, 43, will be the second CEO of GSK, and the first new CEO since Glaxo Wellcome merged with SmithKline Beecham in 2001. Garnier, who had started as head of SmithKline Beecham's North America pharmaceuticals division, worked his way up to the SKB CEO post in 2000 and became CEO of the combined company in 2001 (⁵ Also see "Glaxo/SB Merger Talks Resume After Management, Manufacturing Changes" - Pink Sheet, 17 January, 2000., p. 19).

Witty also has the distinction of being the first top exec to come from the Glaxo side of the corporation. Garnier joined SmithKline Beecham in 1990 following 15 years at Schering-Plough, where he led Schering's U.S. pharmaceuticals business (⁶ Also see "SMITHKLINE BEECHAM U.S. DRUG BUSINESS TO BE HEADED BY JEAN-PIERRE GARNIER" - Pink Sheet, 10 September, 1990., T&G-3). Viehbacher also hailed from Glaxo Wellcome, while Stout came from the SmithKline side.

Witty Relatively New To Public Eye

Given that Witty is not a prominent public figure, it is hard to ascertain his goals and priorities for GSK, and changes he might effect to achieve them. Witty has not participated in any public presentations thus far this year, according to the GSK Web site.

Witty has been quite active in U.K. health circles, however, including having a seat on the interim board of the Office for Strategic Coordination of Health Research and the newly created Health Innovation Council, GSK reports. He is also a member of the Pharma Futures Working Group, a collaborative forum for investors, analysts and pharma execs.

Earlier this summer, the Pharma Futures group issued a report on long-term industry value that calls for more information on earlier stages of R&D and more effective communication between investors and industry (⁷ [A#00690260008], p. 15).

Witty is inheriting a company in a downswing. GSK is currently facing pressure from generic competition and safety concerns about its diabetes therapy Avandia . Pharmaceutical sales last quarter were flat at $9.6 billion, and down 2 percent in the U.S. to $4.7 billion (⁸ [A#00690310003], p. 6).

Although Witty is taking over at a time when there is industry-wide concern about revenue shortfalls due to patent expirations. However, he will inherit a fairly robust pipeline, with up to 25 potential launches from 2007 to 2009, including Altabax , Cervarix , Coreg CR , Tykerb , and Veramyst , which have already hit the market this year.

Big Shoes To Fill At The Top

Witty is succeeding one of the most colorful and outspoken big pharma chief execs. During his tenure, Garnier has been frank and candid about industry topics.

His main legacy at GSK may be the revitalization of the R&D program. Garnier used the merger of Glaxo Wellcome and SmithKline Beecham as an opportunity to establish Centers of Excellence for Drug Discovery as the operating framework for R&D. The 10 CEDDs act as independent operating units specializing in a specific therapeutic area (⁹ Also see "GSK Sees New Round Of “Defensive Mergers” Ahead, CEO Says" - Pink Sheet, 18 February, 2002., p. 11).

Reflecting on the operating paradigm, Garnier conceded that making substantial changes to the traditional R&D model, which had been in place for 30 years, was "a little scary."

In a trademark patois, Garnier added, "Jerry Garcia said it better, in one of his rare lucid moments, 'Somebody has to do something and it's just incredibly pathetic that it has to be us.'"

Garnier's reforms have helped GSK become an industry leader in R&D (¹⁰ Also see "GSK’s Six Launches, Six Filings Slated For ’06: Sign Of R&D Strategy Payoff?" - Pink Sheet, 26 September, 2005., p. 21). "Four or five years ago, we were in the back of the pack, but the transformation of the R&D process ... has paid off in spades, and now we have been able to double the size of our portfolio in only four years," he said in 2005.

The improved R&D capability has reduced GSK's dependence on licensing deals, and the firm recently limited its focus to late-stage opportunities, citing the inherent risk of compounds in early development (¹¹ [A#00690070006], p. 13).

However, Garnier continues to push for greater R&D investments. His vision for GSK is for the pharmaceutical manufacturer to be the "most R&D intensive company in the world." He has called for twice as much spending on R&D as on SG&A - running counter to the industry norm (¹² Also see "Garnier’s Vision: GSK To Be “The Most R&D Intensive Company In The World”" - Pink Sheet, 17 July, 2006., p. 6).

- Brian Marson (b.marson@elsevier.com)

GlaxoSmithKline Selects European Head Witty To Succeed Garnier As CEO

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