London: GlaxoSmithKline said on Thursday its Chief Executive Andrew Witty would retire in 12 months time, after leading the group since 2008, prompting Britain`s biggest drugmaker to start a formal search for his successor.
Witty, a 31-year company veteran, has been under fire from some investors in the past three years as sales and profits have flagged. His reputation was further tarnished by a damaging bribery scandal in China.
His decision to retire at the end of March 2017 is not a huge surprise, since Chairman Philip Hampton had already discussed the need for succession planning with some shareholders, according to people familiar with the talks.
His departure comes at a time of uncertainty over the direction of GSK, however, and investors may fear a period of limbo before a new CEO comes on board.
There have been calls from a minority of shareholders, including respected UK fund manager Neil Woodford, for a break-up of the group, with critics arguing its pharmaceuticals and consumer health units would do better as standalone businesses.
Witty has conceded in the past that spinning off the company`s large consumer healthcare division could be an option but he has argued this is not something that should happen in the short term.
In explaining the decision to announce his retirement a year ahead of his departure, Witty said it was important the board had sufficient time to conduct the search for his replacement.
"By doing so we will strongly position GSK to achieve the medium-term outlook set out to investors last year and deliver a return to core earnings growth in 2016," Witty said.
GSK said its board would consider both internal and external candidates for the role of new CEO. Executive search firm Egon Zehnder already works on a retained basis for GSK as a consultant on senior management appointments.
Internal candidates could include GSK`s global pharmaceuticals head Abbas Hussain and leader of the consumer division Emma Walmsley, as well as finance chief Simon Dingemans, a former Goldman Sachs banker.
Externally, GSK might try to snare a senior figure from a rival drugmaker, such as Novartis` respected pharma head David Epstein, or else look beyond the drugs sector to an executive with broader experience in consumer products.