The star fund manager said he had tried for years to persuade the group to split itself up into more focused businesses, but to no avail.
“I have long believed that value could be created for the company’s shareholders if it split itself into separate, more specialised business units. The sum of the parts is significantly greater than the whole. My viewpoint, and that of other like-minded institutional investors, has been heard but ultimately ignored – repeatedly.”
He said the new chief executive, Emma Walmsley, who took over last month, had been “keen to portray herself as a continuity candidate” and as a result “the prospect of a Glaxo breakup now looks more remote than ever”.
“In the event of a breakup being pursued, I would have viewed a dividend cut as a tolerable consequence of such a positive outcome for shareholder value more broadly. My base assumption now, however, is that Glaxo remains a healthcare conglomerate with a sub-optimal business strategy, and shareholders face a cut to the dividend.
“These characteristics do not appeal to me as an investor. That is why I have recently sold the fund’s position in Glaxo.”
Mr Woodford sounded a remarkably upbeat note about the British economy, saying many investors were “far too pessimistic” about the effects of the Brexit vote.
“I think the market has become too cautious about the rising inflation and about broad economic activity,” he said. “We have record levels of employment and job vacancies – and the one other very significant factor, for which I’ve been waiting for some time, is that the credit environment has begun to normalise.