GSK boss calls CBI claims ‘absolutely shocking’ and ‘repulsive’
On a call with journalists to discuss the first-quarter results, GSK’s chief executive Emma Walmsley was asked why the company had not terminated its membership of the CBI following the allegations of sexual misconduct reported by the Guardian.
On Friday, GSK said it was suspending its membership, while others, including insurance companies led by Aviva, as well as NatWest and John Lewis, went further and ended their membership. The moves came after fresh allegations including a woman who said she was raped by two male colleagues.
After the exodus, the CBI announced on Friday night that it was suspending all membership and policy activity until an extraordinary meeting in June, when members will vote on its future and purpose.
On Monday, the CBI admitted in a letter to its members that it had failed to “filter out culturally toxic people” from its ranks, leading to “terrible consequences” including allegations of sexual harassment.
Walmsley said today:
I want to reiterate for GSK and for me personally we have a categoric zero tolerance approach to any form of sexual harassment in the workplace or be it anywhere else. There’s no question that the allegations around the CBI are extremely shocking, pretty repulsive. and certainly I applaud whole-heartedly those who have the courage to speak up in a difficult environment.
We obviously saw the open letter and the summary of recommendations and certainly I would agree that seeing culture as a strategic matter – something I have been extremely clear about at GSK – and also having proper profoundly robust handling of complaints including confidential channels to raise them are absolutely key.
Referring to the formal investigation conducted by the law firm Fox Williams on behalf of the CBI, which reported its conclusions and recommendations to the CBI board, the GSK boss said:
They [the CBI] need and absolutely must implement steps to drive profound change at pace carefully and thoroughly.
They took the decision to suspend all activity appropriately which makes other points a bit moot currently. We will see what happens on the progress in the next coming months and once we have seen what corrective action is in progress we will reassess what our position may or may not be going forward.
Key events
GSK sales slide on lower Covid drug sales
Revenues at GSK, Britain’s second-biggest drugmaker, slid in the first quarter because of a 98% drop in sales of its Covid-19 treatment Xevudy.
The US regulator withdrew its authorisation for the drug in late January, saying it doesn’t work on the new dominant strains of the virus. The same happened to UK rival AstraZeneca’s drug Evusheld and Covid treatments by other companies. AstraZeneca is now working on a new version that works against all known variants, while GSK decided to walk away from Covid antibody and vaccine projects.
This meant GSK’s turnover fell 3% between January and March. Excluding Covid drug sales, revenues rose 16% year-on-year, boosted by the shingles jab Shingrix, meningitis vaccines, long-acting HIV medicines and the lupus drug Benlysta. Pre-tax profit dropped 9% to £1.9bn.
The company’s share price dropped 1.1%.
However, the results were better than analysts had expected and GSK stuck to its full-year outlook.
It has a pipeline of 68 vaccines and specialty medicines with 17 in late-stage development. Four are expected to get regulatory approval this year: daprodustat to treat anaemia due to chronic kidney disease, the RSV vaccine for older adults, a myelofibrosis drug and the cancer treatment Jemperli.
Emma Walmsley, the chief executive, said:
We have made a strong start to 2023, with excellent performance across vaccines, specialty and general medicines. We are very focused on our upcoming launches, including our potential RSV older adult vaccine, and on continuing to strengthen our pipeline – both organically with several positive late-stage read-outs already this year, and through targeted business development. This continued momentum is also supporting our confidence in delivering our medium and long-term growth ambitions.
Some analysts say that GSK’s pipeline still looks a bit thin compared to others. Last week, the firm bet on a chronic cough medicine with the $2bn acquisition of Canada’s Bellus Health. Analysts at Citi led by Andrew Baum said today: “We like the recent Bellus deal very much.”
Amazon workers at the delivery firm’s Coventry depot are demanding formal union recognition, after membership more than doubled during strike action.
If granted, it would be the first time a union in the UK has won the right to negotiate with the American tech firm.
The GMB union, which has organised 14 strike days at the distribution centre since January, has been signing up hundreds of new members on picket lines outside.
Amazon implemented a pay rise of 50p an hour last month, taking its minimum pay for warehouse workers to £11; but the staff taking action are demanding £15 an hour – and have been frustrated at the company’s refusal to talk.
Pret a Manger is upping the cost of its subscription service by a fifth – but adding a 10% discount on food and snacks alongside free drinks to the offer from Wednesday – as the sandwich chain warns that the “inflationary challenge” remains.
Its chief executive, Pano Christou, said Pret a Manger may have to put wages up again this year – after a 19% rise in the past year – amid stiff competition for workers.
“We will continue to look after our people in this very challenging time,” he said. Christou claimed Pret did not have staffing issues as its pay was “more attractive than the competition”.
Energy suppliers are hoarding nearly £7bn of customers’ money despite a cost of living crisis that has left some households forced to choose between heating and eating.
More than 16m UK households are collectively in credit by £6.7bn to their suppliers, with half of those holding balances of more than £200, research from comparison site Uswitch.com has shown.
The study said that a combination of mild winter weather and extra consumer effort to reduce energy usage has left companies holding £5bn more in credit than this time last year.
Typically energy customers on direct debits will build up credit during summer, when usage is low, and suppliers will run that down over the winter months when consumption is higher.
Prince Andrew held his shareholdings through a government-backed shell company that was created to conceal royal investments from public scrutiny.
The prince was among at least five members of the royal family who used the shell company Bank of England Nominees, which was set up in the 1970s to prevent the “embarrassing” public disclosure of Queen Elizabeth II’s investments.
The monarch successfully lobbied the government to alter a draft law in order to permit the Windsors to hide the size and value of their shareholdings from the public. The shell company operated for more than 30 years.
Heathrow: passengers can ‘travel as normal’ during coronation weekend
Joanna Partridge
Heathrow airport has warned that it is still loss-making, even as it continues to be Europe’s busiest airport, welcoming almost 17 million passengers in the first three months of the year.
The airport also insisted that passengers would be able to “travel as normal” during the peak getaway period around the coronation of King Charles, taking place on 6 May, despite a fresh planned strike by security staff.
Releasing its financial results for the first three months of the year, the airport said it had not yet returned to profit after the coronavirus pandemic, and reported an adjusted pre-tax loss of £139m for the first quarter. It is not forecasting paying any shareholder dividends in 2023.
Heathrow is blaming the regulator for the level at which it has set its annual price cap for the amount it can charge airlines for using the airport for preventing it from increasing its earnings.
The Civil Aviation Authority (CAA) is responsible for setting the amount Heathrow can charge each airline customer. The current level for 2023 means the average maximum per-passenger fee remains at £31.57 this year. It will, however, drop to £25.43 in 2024, and stay broadly flat until the end of 2026.
Heathrow called this cap “too low” and said it had appealed against the CAA’s settlement to the competition watchdog, the Competition and Markets Authority.
The CAA has previously said its decision could contribute to lower fares for passengers in the coming years.
A Chinese invasion of Taiwan would destroy world trade, and distance would offer no protection to the inevitable catastrophic blow to the global economy, the UK’s foreign secretary, James Cleverly, warned in a set piece speech on Britain’s relations with Beijing last night.
In remarks that differ from French president Emmanuel Macron’s attempts to distance Europe from any potential US involvement in a future conflict over Taiwan, and which firmly support continued if guarded engagement with Beijing, Cleverly said “no country could shield itself from the repercussions of a war in Taiwan”.
He added that he shuddered to think of the financial and human ruin that would ensue.
European stock markets have fallen modestly in early trading, as investors remain nervous about the banking sector.
The UK’s FTSE 100 index edged down 8 points, or 0.1%, to 7,883 while Germany’s Dax, Italy’s FTS MiB and Spain’s Ibex all fell 0.4%. France’s CAC lost 0.5%.
New CBI boss starts today as crisis continues
The CBI’s former chief economist Rain Newton-Smith is taking over as director general of the business lobby group today.
The group is battling for survival amid allegations of sexual misconduct first reported by the Guardian, including two women who claimed they were raped.
On Monday, the CBI president, Brian McBride, said in a letter to its members that the organisation had “made mistakes” and “badly let down” its staff. He said the future of the group was hanging in the balance, and that he did not know if members would be able to “consider trusting us again”.
Newton-Smith worked at the CBI for nine years and left in March to join Barclays. She will replace Tony Danker, who was sacked after separate allegations of misconduct against him.
Danker said in an interview with the BBC last week that he felt he had been “the fall guy” for allegations unrelated to his own conduct and that his reputation had been “trashed”.
Some have questioned whether, as a former CBI employee and executive board member, Newton-Smith is the right person to lead the organisation.
More than 50 CBI members – including John Lewis and NatWest – publicly quit or suspended their links to the business group on Friday after fresh allegations including a woman who said she was raped by two male colleagues. After the exodus, the CBI announced it was suspending all membership and policy activity until an extraordinary meeting in June, when members will vote on its future and purpose.
Introduction: First Republic Bank shares slump 50%, raising fresh fears over banking sector
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
First Republic Bank’s shares closed nearly 50% lower yesterday, a day after the troubled US bank announced a $100bn slump in deposits, sparking fears that it could be the third bank to fail after the collapse of Silicon Valley Bank and Signature Bank.
This sent Wall Street lower, and European stock markets are set to open in the red this morning. The S&P 500 closed down 1.6% while the Nasdaq lost nearly 2% and the Dow Jones slipped 1%.
In Europe, the Spanish bank Santander and UBS in Switzerland both set aside larger than expected provisions in their latest quarterly results yesterday. Santander pointed to concerns about the outlook for the mortgage market.
Happily, PacWest, another regional US bank, brought some calm to markets when it announced after the closing bell that its deposits stabilised in March, and its shares jumped almost 14% in after-hours trading.
Also, Microsoft and Google released better-than-expected results after the bell.
It’s not all doom and gloom. In Germany, consumer confidence has improved for a seventh month as energy bills come down, according to GfK. Its consumer index climbed to -25.7, the highest in more than a year and better than expected, but remains well below the long-term average of -10.1.
The Agenda
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9.30am BST: Transport committee to quiz RMT leader Mick Lynch and rail bosses on government’s strikes bill
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11am BST: UK CBI retail sales survey for April
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1.30pm BST: US Durable goods orders for March (forecast: 0.7%)
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1.30pm BST: US Trade for March
