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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: derekb.lowe@gmail.com Twitter: Dereklowe

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April 9, 2014

AstraZeneca's Cambridge Move

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Posted by Derek

Here's more on AstraZeneca's move to Cambridge (UK). They've set up an agreement with the Medical Research Council to have MRC people working "alongside" AZ people, although details seem pretty short on how that's going to happen in practice. Here's some of it, though:

Within the AstraZeneca MRC UK Centre for Lead Discovery, the academics will get access to more than 2 million compounds in AstraZeneca's library and have the use of high-tech screening equipment to study diseases and possible treatments.

Their research proposals will be assessed by the MRC, which will fund up to 15 projects a year and AstraZeneca will have the first option to license any resulting drug discovery programs.

I liked this part of the article as well:

Other large drugmakers have built research outposts in life science centers like Cambridge, Boston and San Francisco - but none have undertaken such a wholesale move of operations.

The strategy is not without risks, especially if the upheaval disrupts current research projects or results in key staff leaving the company. A smooth transition is seen as a key test for CEO Soriot as he tries to change the culture at AstraZeneca to put science at the center of its activities.

What was at the center of AZ's operations before?

Comments (29) + TrackBacks (0) | Category: Business and Markets | Business and Markets


COMMENTS

1. anon on April 9, 2014 7:39 AM writes...

Science can be at the center of AZ's activities but increasing shareholder value will always be their mission

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2. Am I Lloyd peptide on April 9, 2014 7:44 AM writes...

What was at the center of AZ's operations before?

Unicorns and pixie dust.

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3. Pete on April 9, 2014 7:51 AM writes...

Hopefully Cambridge will not prove to be Soriot's Dien Bien Phu.

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4. Calvin on April 9, 2014 7:58 AM writes...

Eh. My last experience of AZ indicated that the center of operations was lean six sigma-itis, lots of meetings and meeting about those meetings, empty labs, speed and quality(?), and a strong desire to save AP at the expense of everything else. But obviously I'm just bitter. But still fairly sure that there was no science in there.

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5. John Wayne on April 9, 2014 8:25 AM writes...

Sound to me like even more medicinal chemists will have to manage academics that get a potent result in the primary assay and think they have discovered a new drug. On the other hand, industrial folks need to take more risks. The ability to manage and educate both up, down and sideways and find that middle ground is going to become an important skill in the new economy.

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6. Anonymous on April 9, 2014 8:39 AM writes...

...but increasing shareholder value will always be their mission

And the mission of pretty much every publicly traded company, no?

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7. anon on April 9, 2014 8:58 AM writes...

@Anonymous

Of course - but does that make it "right"? The purpose of money/capitalism should be solving problems, not making make more money. At least in a perfect world...

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8. @anon 8 on April 9, 2014 9:16 AM writes...

IMO there is nothing wrong with profit for the sake of a profit because ultimately it should provide the most efficient discovery and address the most important illnesses.

What most people find troubling is when the boardrooms become shortsighted because of the push for quarterly earnings.

If they took a longer term view than it would be obvious that you have to do fundamental science to push forward in drug discovery, to become more profitable, and thus cure more patients.

And this would still be in the scope of making money for monies sake.

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9. Anonymous on April 9, 2014 10:14 AM writes...

There are two ways to make money for shareholders:

1. *Create value for customers* and *share* that value with *all* stakeholders involved in the value creation process, so that the system is self-sustaining because everyone wins.

2. Take more value than you create from other stakeholders, including customers, suppliers, employees, etc., and hope that they are stupid enough to be happy with that model in the long term. Or accept that you're only in it for the short term.

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10. annon too on April 9, 2014 10:38 AM writes...

Sounds like AZ is following GSK's direction of being more & more Brit-centric. Many folks have mentioned how disorganized & unfocussed AZ has been. Get ready, it's only going to get worse.

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11. dearieme on April 9, 2014 10:50 AM writes...

"UK Centre for Lead Discovery": what a clunker of a name. I automatically first read it as referring to Pb. Then I wondered about a dog lead. I'm still trying to parse the bloody thing: is "Lead" meant to be an adjective?

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12. RGM on April 9, 2014 11:34 AM writes...

Glad to see 'key staff leaving' is cited as one of the major risks. That was my first concern hearing this news.

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13. Dr. Manhattan on April 9, 2014 11:43 AM writes...

Given the year long turmoil that has enveloped AZ, the 'key staff leaving' is already well underway.

I suspect there will indeed be more Pb than drug leads coming out of this venture. Lost time, project holdup and trying to figure out how to effectively deal with Cambridge UK academic interests (there will be some sort of mandate to work with them, otherwise why spend all that cash to move?).

AZ is looking at Crestor revenue vanishing shortly and Brillinta has been a big revenue disappointment. Soriot is enamored of biologicals, which is why you haven't heard of anything changing at MedImmune.

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14. DrSnowboard on April 9, 2014 2:20 PM writes...

Errr.
They have no projects likely to shore up their pipeline.
The 'key staff' left over 2 years ago, if they were canny.
Medimmune are too arrogant to be wrong....

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15. Anony on April 9, 2014 3:44 PM writes...

#8, Exactly. It's actually quite simple: Do we want the golden eggs or the goose? The problem is that in their quest for multiple eggs right now, today's Big Pharma is basically killing the goose and ensuring that there will be no eggs in the future. Sure they will be pleasing stockholders for the next ten or twenty years but there will be nothing in the pipeline after that, either in house or through acquisition because all the good scientists would have been laid off. The real question is this; do you want obscene profits but only for a few years, or do you want slightly less profits but for a much longer time? I think the shareholders have made their preference clear. The real tragedy is that the patients lose.

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16. Harrison on April 9, 2014 4:30 PM writes...

Apparently moving your operations near a city named Cambridge (country is irrelevant) is how you become innovative. Who's next after AZ, Pfizer and Novartis?

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17. Inculcation on April 10, 2014 3:01 AM writes...

To be clear, we are in the later stages of the deconstruction of traditional big Pharma R&D. What AZ are doing is precipitous but most other companies are at different points along the same route.
Will it prove wise or foolish? The next 5 years will tell (most likely a bit of both) but the inescapable point is that it IS happening.
As a long-term reader of this blog, it seems to me that we can continue to rail against this change or instead, do what chemists' are traditionally excellent at - engaging with, utilising and transforming new opportunities. If we don't then we surrender that role to the self-serving inadequates who disproportionally populate the echelons of R&D management.

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18. Nick K on April 10, 2014 4:39 AM writes...

#15: Your analogy with Aesop's fable of the goose which laid the golden eggs is most apposite, but unfortunately, there are perverse incentives at play which encourage the senior management to favour the short term over the long term. With the short tenures common among the denizens of the C-suites it is entirely rational for them to pump the share price up as high as possible and then to cash out in time. Sacrificing R and D is an easy way to do this.

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19. dearieme on April 10, 2014 5:28 AM writes...

"Apparently moving your operations near a city named Cambridge (country is irrelevant)" …: good point. Is county irrelevant? Because if so there's a much cheaper Cambridge available in Gloucestershire.
http://en.wikipedia.org/wiki/Cambridge,_Gloucestershire

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20. Frequent hitter on April 10, 2014 7:31 AM writes...

An interesting paper by Ringer/Tollman/Hersch/Schulze link suggests that moving to a 'science hub' and publishing more papers do correlate positively with a track record of regulatory approvals. Aforementioned are two tactics used at AZ to improve matters.

What the paper does not tell you is in what direction the causality works of course.

I am still waiting for those go-faster stripes on my car to make any difference.

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21. Bioman on April 10, 2014 7:34 AM writes...

The only "key staff" that have decided to follow AZ to Cambridge are Director level and office-based team leaders. The result - no change in AZ culture. Very few good lab scientists have commited to Cambridge even though they've been offered a years salary bonus, 10% salary increase and £18 k upfront to help with mortgage interest. Pascal and Mene believe they currently have the right people, assets and science in place to deliver 10 new medicines by 2020 so the next few years will be interesting.

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22. Anonymous on April 10, 2014 8:57 AM writes...

#19, How's bout Cambridge, Mississippi, in the good ol' US of A? Center of the civil rights movement and the Industrial Development Corporation would love to integrate again.

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23. newnickname on April 10, 2014 9:28 AM writes...

@13 "Given the year long turmoil that has enveloped AZ, the 'key staff leaving' is already well underway." WHERE are they going?

(Or to use the 'golden goose' theme, "Goosey Goosey A-Zenicar, Whither dost thou wander?")

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24. Dr. Manhattan on April 10, 2014 11:39 AM writes...

"Pascal and Mene believe they currently have the right people, assets and science in place to deliver 10 new medicines by 2020".

Well, I honestly hope they are right! But, they would say that regardless of the reality of the situation. In any case, it is always a win for people at that level. If they don't deliver in 2020, they will be off to their next lucrative port of call in the business, leaving the wreckage in their wake...

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25. Chemistryextinction on April 10, 2014 5:27 PM writes...

So AZ have decided that there should be 3 strategic r&d sites worldwide. This is a big improvement on the 13 (or more depending on how you count them) they had since the Astra/Zeneca merger &Medimune acquisition. The question of course is have they chosen the right 3 !
In the US they have nominated the Medimmune site in Gaithersberg as one of the 3 global R&D sites & this is probably reasonable as it is the headquarters of their biopharms expertise acquired via Medimmune (at great expense). However, since acquisition, Medimmune have basically produced F/all so they need to do something soon to maintain their exalted position in AZ.
Moldal in Sweden has been nominated as their global centre of small molecule expertise. However, although they have produced some huge sellers (eg,losec, nexium), these are from many years ago & recently there has been naff all (remember Brillinta came from Charnwood) from them.
The 3rd global site is the yet to be built Cambridge CofE. Difficult to determine how successful this will be but I suspect they will have difficulty recruiting people for lab work as housing is so ludicrously expensive (so only accessible for director or above). Good luck with that then.......
As far as I can see, the only new(ish) drugs selling well have either been discovered at Alderley Park or licencesed in. Must explain why Alderley Park got the chop.....
For the record, I do not work at or have worked at AP.

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26. barney on April 10, 2014 9:14 PM writes...

Give 'em a break, they need your help! Specifically, help them find what to do with their compounds:

https://www.innocentive.com/ar/challenge/9933012

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27. Wage_Slave on April 11, 2014 2:57 AM writes...

I suspect there will be plenty of interviewees for lab work in Cambridge as there are a lot of local chemists hoping to improve their outlook!

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28. Nile on April 13, 2014 6:49 AM writes...

I view the move as indirect downsizing: a disguised dismissal of the junior-to-middle ranking research staff in Alderley Park.

Anybody under forty coming into Cambridgeshire from Cheshire might as well be arriving penniless, a gastarbeiter with a suitcase, hoping that their degree will get them better work than feeding plates into a dishwasher.

Here's why: the cost of living in Cambridge is comparable to London for middle-grade staff, or worse; the aggregations in the published household expenditures statistics 'average away' the differences between one-percenters, prosperous over-forties who own most of a house, educated under-forties who will never pay off their debts and own an apartment, semi-skilled workers struggling with the rent; and unskilled workers getting less than living wage and turning up at foodbanks in the winter.

Unless you are in the top 10% of households by earnings, you can't afford a mortgage in Cambridge - and the house rents are eye-watering. In the top end of that market, you're competing with households of 3-5 graduate professionals, still renting a house-share in their late twenties, who know that they will never get a mortgage without inherited money; and at the bottom end, you're competing with the shopworkers and clericals who live four, six, or eight in a house that's subdivided and partitioned like a wasps' nest.

No problem for the forty-something managers in Alderley who can sell up and bring in £150,000 upwards of the equity in their former houses; but £18k and a 10% pay rise isn't just a 'drop on living standards' to everyone in Cheshire under forty - most of them will look at it and say "We simply can't afford to live in Cambridge'... Nor Huntingdon, Ely, Peterborough; not even the Northern commuter belt of London, if they want to spend an hour a day to get to work.

This is a downsizing move, and a decisive one; AstraZeneca UK in twenty years will be Head Office, and the advertising operation based in Luton. If there is any AZ operation left in Cambidge at all, its function will be early-stage funding of biotech startups and eventual buyouts - for licensing or the purchase of the patents, with all production under contract overseas.

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29. sgcox on April 20, 2014 7:52 AM writes...

It might be all academic by now.
The Sunday Times just published a piece about Pfizer bid of £60B for AZ. It was rejected apparently but probably just a matter of time.

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