Gone are the days when shareholders valued quantity over quality.  Massive conglomerates with their hands in every industry from consumer goods to industrial machinery can no longer survive on the sheer size of their portfolio.

The wider the variance in skills and resources required for a corporation to function, the greater is their need for capital investment and large supporting function departments.  Without a clear focus on what they do well, a corporation can waste a tremendous amount of time, money, and human capital on inefficient operations.

Companies in the UK have woken up to the new trend of demergers and disposals to counter the unwieldy size of today’s corporations.  They are streamlining their value chains to minimize costs and maximize the use of their core competencies.  And shareholders are responding well.

GlaxoSmithKline is the latest UK corporation to jump on this bandwagon.  Last week, under the leadership of CEO Emma Walmsley, they announced their decision to demerge consumer healthcare brands from their pharmaceutical segment and instead merge them with Pfizer in a new joint venture.  The news was met with a vote of confidence from shareholders, resulting in a 7.4% increase in GSK’s stock value.

GSK plans to split their existing UK stock listing into two separate companies within three years.  With their pharmaceutical division being freed of its ties to the consumer healthcare business, the company expects to realize significant cost-savings by streamlining those operations.

The joint venture with Pfizer is expected to do equally well.  By combining the capabilities of the two corporations, a savings of £500 million is expected by 2022.  And the new company focused entirely on consumer healthcare goods will have a combined market share larger than that of any rival, including Johnson & Johnson, Bayer, and Sanofi, making it the worldwide over-the-counter market leader.

This is all welcome news for shareholders.  In fact, one of the primary drivers behind the trend of corporations slimming down into more focused components has been activist shareholders.  Previous GSK CEO, Sir Andrew Witty, consistently defended the risk-mitigating qualities inherent in a well-diversified portfolio.  Witty’s focus was always on profit through volume rather than large margins, and he eliminated the hard-sell salesman tactics and sky-high pricing models that other big pharma competitors continued to rely on during his tenure.  But competent leaders can’t continue to ignore stagnating share prices and large investors jumping ship when the board doesn’t recognize the need for change.

So, the new GSK CEO as of the beginning of 2017, Emma Walmsley, took action when British fund manager, Neil Woodford, pulled out of GSK entirely.  Woodford didn’t leave quietly, instead of making the reasons behind his frustrations with the company very clear in a published letter.  For years, Woodford had criticized the unwieldy size and breadth of GSK, pushing it to split up its pharmaceutical, vaccine, and consumer healthcare divisions.

Walmsley, unlike her predecessor, saw the sense in Woodford’s point of view.  GSK no longer had a clear business strategy for further growth and profitability, and change was sorely needed.  Unfortunately, Woodford didn’t stick around long enough to see that Walmsley was a very different type of leader than Witty.

Rising through the ranks of GSK from a marketing and cosmetic, rather than a scientific and pharmaceutical, background, Walmsley was extremely adept at making bold decisions and relentlessly seeing them through.  She brought her strong leadership style, unequalled ambition, and marketing prowess to every position she held at GSK and was considered the natural choice to be Witty’s successor.  Under her leadership, the consumer business segment saw a 38% increase in revenues in five years, and a potentially disastrous joint venture with Novartis went off without a hitch.

Walmsley’s keen eye for strategically beneficial corporate manoeuvres and implementing tried and true best practices has earned her a tremendous amount of respect at GSK and landed her the No. 1 spot on Fortune’s International Power 50 list.  In the top executive spot, she quickly overhauled the management team at GSK and disposed of 130 brands and 30 R&D programs that weren’t showing the promise she demanded.  She has introduced new standards, key performance indicators, discipline, and a focus on actions over words.  Until money and resources have been dedicated to a plan, she refuses to recognize it as a real strategy.  Perhaps most importantly, she listens, she learns, and she adapts.

With the divestiture of the consumer division into a separate joint venture with Pfizer, it is clear where Walmsley’s focus, and GSK’s future potential, lies – pharmaceuticals.  While recognizing Witty’s legacy of doing good, Walmsley wants to reenergize GSK’s R&D division, discovering and developing the latest breakthroughs in medicine like it used to.  She is getting all hands on deck, including her impressive executive team in public forums like town halls and investor presentations and giving them the freedom to make bold moves on behalf of the company.

One of those bold moves was the partnership with 23andMe forged by the new chief of R&D, Hal Barron.  This partnership will give GSK a virtual treasure trove of genetic data they can tap into for their pharmaceutical research, giving GSK an incredible competitive advantage over its competitors.

The restructuring of GSK may be as much a result of Walmsley’s new style of leadership as it is a result of current trends in big business.  Time will tell whether investors like Woodford will back the new strategy.