Rebirth of England

“Although GlaxoSmithKline is currently experiencing a major crisis, it is not fatal to its own business. We believe that the most important thing for GlaxoSmithKline at the moment is to re-plan its strategy, especially in the field of vaccines. The trade-off between stable businesses such as , OTC (over-the-counter drugs) and consumer health products and specialty drug businesses with long R\u0026D cycles and huge investments, such as oncology and respiratory systems, is above..."

In the process of short selling GlaxoSmithKline, Barron specifically asked his think tank to conduct research on GlaxoSmithKline's current situation, and finally gave him a piece of relevant information on the company's future development.

In fact, he has not yet made a final decision on whether to be deeply involved in the company.

Even though the stock price has plummeted, GlaxoSmithKline's market value is still over US$80 billion. To have an influence on such a huge pharmaceutical giant, it will definitely require a huge investment.

And in the future, GlaxoSmithKline will slowly fall behind, and its market value will fall out of the top 10 global pharmaceutical companies. Barron's also needs to find out the reasons for this, and determine whether adjustments can be made to prevent this company from happening. .

You must know that the pharmaceutical industry has long-term characteristics.

Although a large single product may drive a company's market value to soar (such as the well-known little blue pill for Pfizer), for an established pharmaceutical giant with technology, pipelines, and commercialization teams already in place, the market value will not be high. Falling down is not that easy.

If we really fall behind, the hidden dangers may have been laid many years ago.

Therefore, later on, GlaxoSmithKline must have had a problem with the company's strategy.

Of course, even though he didn't know much about pharmaceutical companies in his previous life, Barron could still guess one thing.

For example, one of GlaxoSmithKline's main businesses is vaccines. It was the "King of Vaccines" in the past. However, during the global epidemic that occurred before his rebirth, Pfizer regained its market value because of its corresponding vaccine business. TOP2, but GlaxoSmithKline missed that opportunity, which is evident from this.

You must know that ten years ago in 2003, GlaxoSmithKline's market value ranked third among pharmaceutical companies, second only to Pfizer and Johnson \u0026 Johnson.

But before this incident, its market value was already ranked sixth.

In another ten years, GlaxoSmithKline's market value will even fall outside the top 15 in the world...

Of course, when talking about GlaxoSmithKline’s strategy, we need to mention the company’s CEO.

Prior to this, the first CEO after the merger of Glaxo Wellcome and SmithKline Beecham was Garnier. It can be said that he made a great contribution to GlaxoSmithKline.

Under Garnier's leadership, the two companies, which are huge in size, complex in organization, and have different cultures and businesses, have successfully achieved seamless integration.

During his tenure, GlaxoSmithKline has been firmly among the top three in the world in terms of market capitalization. Garnier has planned a more effective marketing strategy for GlaxoSmithKline, optimized the pipeline of drugs on sale and under development, and ensured that More than 30 new products have entered the late development stage, laying a good foundation.

Then in 2008, Garnier retired and handed over power to his successor, Andrew Whitty.

A few years after Andrew Witty took over, GlaxoSmithKline faced two relatively large external shocks:

One was the American medical fraud case in 2012; the other was the bribery case in the Chinese market that just broke out.

It can be said that he had bad luck, but again, as mentioned before, many things were gradually accumulating for the explosion before they happened.

"At present, it seems that Andrew Witty's strategic decision-making is different from that of his predecessor. In his view, compared with more stable businesses such as vaccines, OTC, and even consumer health products, oncology drugs have a long research and development cycle, a large investment in funds, and failure The rate is high, so it’s not a good business…”

This is the judgment of GlaxoSmithKline’s current CEO in the information in Barron’s hands.

And according to information obtained from certain channels, Andrew Witty seems to be interested in selling or replacing all of GlaxoSmithKline’s oncology drug assets on the market to obtain vaccines, OTC and other assets that they are more interested in...

Therefore, what Barron faces now is how to adjust to avoid a decline in its business if he intervenes in GlaxoSmithKline.

“The good news is that we made more than $8 billion in profits from our short position in GlaxoSmithKline. If we reinvest these funds into the company’s stocks, we will be able to obtain a shareholding ratio of more than 8.5%... …”

Daisy shrugged and said to Barron:

“In fact, some small and medium-sized institutional shareholders are already interested in clearing out their holdings in GlaxoSmithKline. Of course, there are investors who hope that the situation can be reversed at any time, but obviously that is not very wise. idea……"

"So what do those major shareholders think now?"

As a company listed on the U.S. stock market, Barron was not surprised to see names such as Vanguard Group, BlackRock Group, and State Street Group among GlaxoSmithKline’s shareholding institutions—after all, as mentioned before, with these The scale of the group's asset management means that it will inevitably invest heavily in stocks with high market capitalization in the stock market, especially those stocks that are components of the stock index.

In fact, before this, the ETF funds under Standard Chartered-Merrill Lynch also held a lot of GlaxoSmithKline shares. Even when Barrons and others were shorting the company, they did not reduce this part of their holdings.

After all, there is something called a stock index ETF fund, which invests in stocks according to the weight ratio of each stock index component stock.

"They?"

Daisy took a sip of coffee, pursed her lips, put the coffee on the table, and said:

"Some of them reduced their holdings in GlaxoSmithKline, including Vanguard Group and BlackRock Group, but they are still on the list of GlaxoSmithKline's top ten holding institutions, and their shareholding ratios are slightly less than 5%..."

"Then temporarily put our holdings at this ratio."

"You are preparing..."

"Wait and see for the time being, I need to find a key to solve the mystery."

Barrons is now the largest single shareholder of Pfizer Pharmaceuticals. If it intervenes in GlaxoSmithKline on a large scale next...

Then perhaps some adjustments can be made to the asset integration between the two companies, so that both parties can focus more on their own core businesses.

However, these are not things that Barron can judge clearly at the moment, he still needs to conduct more research.