Paul Girolami, businessman, 1926-2023

Sir Paul Girolami was one of Britain’s outstanding postwar business leaders. As chief executive and later chair of Glaxo in the 1980s, Girolami, who has died aged 97, transformed a minor player in the pharmaceutical industry into a world leader. That Glaxo, now GSK, still holds that position is due in no small measure to the decisions taken by Girolami during his period at the helm.

Born near Venice in 1926, he was the eldest son of a mosaicist, who emigrated with his family to England in 1928; they settled in Camden. Girolami was educated at William Ellis Grammar School and at the London School of Economics, where he took a bachelor of commerce degree. After graduation he joined a small firm of chartered accountants, Chantrey & Button, before moving in 1954 to Cooper Brothers, where he worked in management consultancy. In 1966, he was recruited by Glaxo as financial controller. Two years later, he became the company’s first finance director.

In 1972, Girolami played an important part in fending off a hostile takeover bid for Glaxo from Beecham; he devised a new financial structure which served as a poison pill, deterring any bidder who could not afford to pay in cash. Another defensive move by Glaxo was to negotiate a friendly merger with Boots, but this proposal, together with the Beecham bid, was referred to the Monopolies Commission, which ruled against both of them. The commission concluded that each of the three was large enough to fund research and that the size and market power of any merged company was more likely to reduce than to increase competition.

Girolami was now seen as a potential leader of the company. In 1980, he was made chief executive. Described in a Financial Times profile as a “small, wiry man with a mournfully humorous expression”, he had a very different background from most of his colleagues, and he cut a somewhat lonely figure at the top. A thoughtful, highly rational manager, he relied mainly on his own judgment as he restructured what had been a loose collection of disparate businesses. He wanted Glaxo to focus on a single mission: the development of innovative prescription medicines.

At the time of his appointment, Glaxo was planning the launch of a new anti-ulcer drug, branded as Zantac. It was a direct competitor to Tagamet, a big-selling drug produced by an American company, Smith Kline & French. The initial plan was to market Zantac at a price equivalent to, or slightly below, that of Tagamet. However, Girolami, who saw Zantac as crucial to the company’s future, argued for a more radical strategy, exploiting the fact Zantac, though not radically different from Tagamet, had several advantages (including a lower dosage) that justified a higher price. This would be supported by an aggressive marketing campaign, with the US as a primary target; Girolami negotiated a co-marketing agreement with the Swiss company Roche, which had a much larger American sales force than Glaxo.

Girolami’s strategy proved extraordinarily successful, and hugely profitable. (The main production base for Zantac was in Singapore, where Glaxo enjoyed a 10-year exemption from corporate taxation.) By the end of the 1980s, Zantac had supplanted Tagamet and become the world’s bestselling drug. As Edgar Jones, the historian of GSK, has written, “Few comparable examples exist in the pharmaceutical industry . . . where a product which was not a radical innovation has achieved such commercial supremacy.”

Glaxo had other drugs, but none that compared to Zantac in sales volume or profits. In 1994, when Girolami retired, Zantac accounted for 43 per cent of the company’s turnover; the basic patent was due to expire in 1997. Other companies that were dependent on a single drug had widened their portfolio through acquisitions, but Girolami preferred to rely on in-house research. “Organic growth”, he said in 1990, “avoids the enormous disruption inherent in mergers and acquisitions, which are often the symptom of structural weakness.”

Towards the end of his chairmanship, Girolami became more open to the idea of mergers; he held preliminary talks with Pfizer, although the two companies never reached the stage of a firm proposal. It was under his successor, Sir Richard Sykes, that Glaxo undertook two major transactions — acquiring Wellcome in 1995 and merging with SmithKline Beecham in 2000 — which radically altered the portfolio and kept the company at the forefront of the global pharmaceutical industry.

Girolami was knighted in 1988. He received awards in several other countries, notably his native Italy, and Japan. In 1952, he married Christabel Lewis, who died in 2009. They had two sons and one daughter, all of whom survive him.