Interesting admission from Glaxo -
news.ft.com
GlaxoSmithKline will consider selling a large part of its research operations if the rate at which they discover new drugs does not improve over the next few years.
The world's second largest pharmaceuticals group said it might spin-off the six research centres that develop new medicines if it concluded they were being smothered by being part of a big organisation.
"I am not certain yet that we [the research operations] are any better than a biotech company, a small pharmaceuticals company or a university department," said Tachi Yamada, head of research and development at GSK. "There may come a time when we do not do any of that," he said. "This debate will play out over the next decade. It could go both ways."
Although any decision is years off, Dr Yamada's comments underline how problems have forced many large pharmaceuticals companies to re-think the basics of their business models.
Most successful drugs groups have in the past considered it essential to have a large in-house research capacity, even though they also regularly buy drugs from smaller rivals.
However, faced with a large number of patent expiries on lucrative drugs and a reduction in the number of new medicines being approved, senior executives are scrutinising all aspects of their businesses.
GSK has relatively few patent problems and cost savings from the merger last year of Glaxo Wellcome and SmithKline Beecham will allow it to record strong earnings growth for the next two years. However, it has suffered a string of disappointments with products in the later stages of development.
The group started clinical tests on 15 new treatments last year, which Dr Yamada described as an "unbelievable" number.
The early stage of the research process, when big computers are used to discover interesting targets for new drugs, benefited from scale, he said. Size was also an asset at the final stage of the research process, when drugs have to be tested on a large number of patients and then guided through regulators.
However, it was not yet clear what was the best way to organise operations at the intermediate stage, when companies try to turn ideas into drugs, he said.
Biotechnology groups tend to have higher valuations than pharmaceuticals businesses, partly because investors believe that smaller, more entrepreneurial companies are better at drug discovery.
GSK has divided its management of the intermediate stage of the research process into six autonomous units. It has also promised stock options to successful scientists in a bid to recreate the entrepreneurial climate of the biotech world.
Dr Yamada said the advantage of being part of a large organisation was that research units did not have to spend as much time raising money from investors and had access to the wider group's technology.
"We need to be big and small at the same time," he said. |
