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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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April 13, 2010

Novartis, Roche Threaten To Leave the UK

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Posted by Derek

Now, here's some hardball negotiating: Roche and Novartis, fighting with the UK government over drug pricing and regulations on clinical trials, are threatening to pull their R&D out of the country.

The Swiss drug companies made their threats known in personal meetings with a government minister, according to Whitehall documents seen by the Guardian.

The documents also make clear that cabinet ministers have been conducting a vigorous charm offensive to prevent multinational drug companies leaving Britain. Novartis employs 3,500 people in Britain at nine sites while Roche has 1,500 workers in this country.

The ministers, including business secretary Lord Mandelson, have in recent months visited executives at their headquarters in Japan, the US and Europe in what officials call a "programme of ministerial visits".

The visits have been organised to patch up a relationship strained by ministers' efforts to force the firms to cut the prices of the drugs they sell to the NHS, according to the documents.

In any of these "according to documents obtained by. . ." cases, you have to ask cui bono? Roche and Novartis have not made these threats publicly, so this could be a leak from them to apply more pressure to the government. Or it could be a leak from inside the NHS, in order to make the companies look bad. I would be inclined to not pay attention to any of the public statements on this issue from either side - the real story will take place out of the headlines, unless someone spills some more meeting minutes.

Either way, I think it's unlikely that this would be followed through - but neither is it completely impossible, either, which is what makes it a reasonably effective move.

Comments (22) + TrackBacks (0) | Category: Business and Markets | Regulatory Affairs


1. Indy on April 13, 2010 10:45 AM writes...

Well, it looks like Roche changed its tune very quickly... Wonder why.


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2. sgcox on April 13, 2010 11:03 AM writes...

“Never believe anything in politics until it has been officially denied.”
Otto von Bismarck

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3. Sili on April 13, 2010 12:09 PM writes...

According to Brian Cox the UK govnmt. doesn't like funding research.

But I'm sure they'll bend to the companies anyway.

Personally, I have to say that it's a bad show of ethics to oppose trial regulation.

Secondly, 5000 jobs? In a country of 60 million people? Talk about undue influence.

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4. dearieme on April 13, 2010 12:17 PM writes...

"ministers have been conducting a vigorous charm offensive...": one recent cabinet minister said something like "John and I conducted a charm offensive - I tried charm and he was offensive".

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5. Andrew on April 13, 2010 12:46 PM writes...

Don’t forget we have a General Election going on at the moment, this leak could be aimed at the voters “ look we are being nasty to big for us”. There is also (as part of said election) a lot of concern about Tax rises, as Industry and Commerce is already complaining and threatening to leave the UK, this could be a pre-emptive move by the companies in advance of the result

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6. petros on April 13, 2010 1:17 PM writes...

And Roche axed its UK-based (successful) R&D centre some years back, which was responsible for most of its antivirals and the first synthetic kinase inhibitors. A few chemists had brief sojourns in Paolo Alto

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7. gamer on April 13, 2010 3:43 PM writes...

The UK has been making it harder and harder to continue to do drug discovery & development for years. Other companies have considered stopping work there for some time, and to an extent have indeed moved efforts from the UK to other venues due to increases in government regulations, oversight and restrictions on return of investement.

Neither Roch nor Novartis are likely to completely remove themselves from the UK, but they certainly can decrease their efforts there. I'm surprised that more cdompanies haven't already done so.

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8. Evorich on April 13, 2010 4:05 PM writes...

Well AZ and GSK have certainly been reducing their presence in the UK recently, and doesn't have anything to do with government drug pricing!

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9. wakeup on April 13, 2010 4:21 PM writes...

"....and doesn't have anything to do with government drug pricing!" Hmmm, I guess if you have bathed in the waters of socialism for too long, it’s hard to return to the surface for a breath of reality. Artificial pricing pressure, government or otherwise, may not be the cause, but it is certainly a factor.

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10. Anon on April 13, 2010 8:06 PM writes...

GSk has threatened for years to stop all animal work in the UK.

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11. K on April 14, 2010 2:51 AM writes...

The UK is fast becoming a very unattractive place to do both business & science (no matter what Brown/Mandelson and the rest of them say). I imagine Novartis/Roche will gradually decrease their presence here whatever happens, whether that be to Basel or Beijing!

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12. petros on April 14, 2010 7:36 AM writes...

Well if you take the top 20 pharma companies and their UK presence in R&D, and both major UK based companies are axing signiifcant sites

Pfizer Sandwich key site for the company
Merck Newhouse (from Organon via S-P)
GSK Stevenage major site, Harlow closing
sanofi-aventis no sites left
Novartis Horsham significant site
Roche closed Welwyn
AstraZeneca Alderley Edge major site but closing Charnwood another major site
J&J none
Abbott none
Bayer closed small UK site long ago
Eli Lilly Windlesham significant site
BMS none
Amgen none
Takeda Cambridge small site
Boehringer none
Astellas none (closed Yamanouchi's small site years ago)
Novo Nordisk none
Eisai Hatfield new, expanding, site
Merck Serono none

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13. not unique on April 14, 2010 8:13 AM writes...

Could make a similar list in the US. The motivations for many of these actions come from general consolidation, downsizing, strategic focussing or moving activities to low cost countries (for now).

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14. Anonymous on April 15, 2010 2:13 AM writes...

MSD Terlings Park (closed) is missing from the list I think.

Sadly Novartis and Roche can squeak all they want as they are minor players compared to what has already gone without protest. What makes me angry is the lack of scrutiny from the press and lack of comment from politicians from any side. Despite some distinctly dodgy practices to avoid labour laws in the UK.

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15. Anonymous on April 15, 2010 2:18 AM writes...

Also let's not forget that Sandwich while supposedly a key site for Pfizer has just lost all of Vet Medicine investment, all of manufacturing, 40% of chemistry over the last year, and is still in the process of removing biology and parts of pharm sci. Not so key after all and I'd give it no more that 18 months before it's gone from your list too.

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16. Doug on April 15, 2010 8:44 AM writes...

Sandwich has lost 40% of chemistry? Admittedly, I don't know anyone who works there, but I thought that site was holding up well given the slaughter elsewhere....

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17. Anonymous on April 15, 2010 9:25 AM writes...

The first cull of lower grades was applied at the beginning of 2009, the more experienced grades were whacked in Jan 2010.

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18. Doug on April 16, 2010 1:09 AM writes...

So that explains the recent Peakdale contractor deal then! I saw that as some kind of expansion of their operations, but it's really just a cheap, easily chopped-and-changed replacement for the people they dumped only last year?

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19. Anonymous on April 16, 2010 2:27 AM writes...

"So that explains the recent Peakdale contractor deal then! I saw that as some kind of expansion of their operations, but it's really just a cheap, easily chopped-and-changed replacement for the people they dumped only last year?"

Precisely - the deal was signed a few weeks after the last lot were shown the door this Jan, although it had been on the table for a while. By getting rid of people in small groups each time they were able to argue that only minimal employee consultation time was required (allegedly they are also supposed to have told the employee forum representatives that any protests would lead to higher job losses). They then trumpeted the Peakdale deal as an expansion to the local press. The RSC also failed to smell the rat (much like the ACS then !). So a great deal for Pfizer as they got rid of the majority of their synthetic chemists and can use contract staff from Peakdale at a fraction of the price. Consequences ? Well the cost per FTE is now a very large number at Sandwich compared to other sites despite a low pound-dollar exchange rate and building 500, the flagship research building now echoes from the lack of occupants, and large numbers of labs have been mothballed. The internal market within the company means that groups don't have to base themselves there if they can find a cheaper alternative hence the Vet Med pull out. They've bought themselves a year or two at best.

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20. big red bruce on April 16, 2010 5:18 PM writes...

The Pharma guys are making their point known. No doubt a negotiation tactic but aimed to get some attention & I bet it worked. It's funny when I read this article orginally - my first thought was this is real "hardball" which hardly seems cricket.

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21. Anonymous on April 19, 2010 4:34 AM writes...

"No doubt a negotiation tactic but aimed to get some attention & I bet it worked"

Nope. The current UK plan is to tax the banking industry until it dies and invest the money in media studies training courses for our children. Our economists believe that designing and making things is "so last century darling". And note, this isn't a party political statement - I see little evidence that any of our leaders show anything other than indifference to industry.

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22. Anonymous on March 15, 2011 8:53 AM writes...

It seems Novartis will be announcing their imminent leave from Horsham, west Sussex tomorrow to staff.

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