GSK executives have options

The end of the CEO race at pharmaceutical giant GlaxoSmithKline raises the question: Will the two executives passed over for the top spot take their talents elsewhere?

The question is especially important for GSK's Research Triangle Park operations because the top executive there, Chris Viehbacher, 47, was one of the front-runners.

The other executive who lost out was David Stout, 54, president of the company's global pharmaceutical operations, who is based in Philadelphia.

"In this situation, it wouldn't be unusual for one of the other two gentlemen to pursue other opportunities within the pharmaceutical sector," said analyst Linda Bannister of Edward Jones.

At Pfizer last year, one of the two vice chairmen who was passed over for the top job at the world's largest drug maker left to "pursue other opportunities" a few weeks after Jeffrey Kindler was named CEO. That succession process, like GSK's, was conducted in the public eye.

Efforts to reach Stout and Viehbacher were unsuccessful Monday.

"The company is extremely interested in retaining them," said spokeswoman Nancy Pekarek. "Both David and Chris are extremely talented, and they are very well-respected, in the company and externally as well."

The appointment is not a statement on the importance of the company's U.S. operations, Pekarek said, although the two executives, who are based in the United States, lost out to Witty, president of European pharmaceuticals operations.

GSK employs about 6,000 in the Triangle, home of one of its two U.S. headquarters.

Witty "has an appreciation of the U.S. market," Pekarek said. She noted that from 1997 to 1999, Witty was vice president and general manager of marketing for the U.S. operations of Glaxo Wellcome, a predecessor company of GSK. Witty was based in RTP during that time.

The U.S. market accounts for about half of GSK's prescription drug sales.

GSK probably has done its utmost to keep Viehbacher and Stout on board, but only time will tell whether those efforts will be successful, said Richard Kouri, executive director of the Biopharma Management Initiative at N.C. State University's College of Management.

"These are smart businesspeople," Kouri said. "The last thing you want to lose is two of your top three managers."

This isn't a good time for GSK to lose a top executive, Bannister said, given the challenges that GSK's diabetes drug, Avandia, faces in the U.S. market.

Avandia, which generated more than $3 billion in worldwide revenue in 2006, saw its sales plunge this year after the New England Journal of Medicine published findings that linked the drug to an increased risk of heart attack. GSK contested that finding but agreed in August to include a black-box warning -- the highest level of caution for U.S. prescription drugs -- on Avandia packages about the risk of heart failure, a different ailment.

GSK has a wealth of capable executives ready to step into Stout's or Viehbacher's shoes, Bannister said.

"We would hate to see one of these two executives leave," Bannister said. "But they have a deep enough bench that they would manage through it."