Billion-pound prescription for success

January 26, 2001

Sir Richard Sykes, the new rector of Imperial College, London, believes that UK universities can compete with the best, but, he tells Alison Goddard, they need some generous donations.

From his office on the top floor, Sir Richard Sykes surveys Imperial College's newest development - the biomedical sciences building that forms a gleaming backdrop to the college's landmark Queen's Tower. He has been rector for less than a month, but Sykes has plans for the college - plans that are reflected in the building opposite.

"There is so much potential in bringing together science, technology and medicine," says Sykes, who was chairman and chief executive of pharmaceuticals giant GlaxoWellcome until its merger with SmithKline Beecham late last month.

"A place like Imperial College has all the pieces: mathematics, engineering and physics are all important to medicine. It's a great institution," he says.

Sykes's background combines a solid research record - he was elected a fellow of the Royal Society in 1997 - with business acumen. He is passionate not only about putting science to good use in medicine but about what he sees as the latent potential of "people and intellectual property, ideas and brains".

"Knowledge is becoming critically important to all areas of business. Nobody is interested in tangible assets or buildings, they are interested in the people. GlaxoSmithKline is a perfect example. Its tangible asset value is in the single-digit billions, but its people are valued at £120 billion," he says.

"Imperial has an enormous amount of intellectual capital - intellectual property and the expertise of the people here - and we can use it. We can spin off companies, we can use our expertise as we move into a knowledge-based society, and that can help us build up funds. If we spin off companies, and they are successful, then the college would share in that wealth."

In a week when Imperial College is reported to be cutting earth science staff because of funding problems, it is lucky that Sykes excels at making money. He earned £3.6 million in salary, share options and other benefits in 1998-99, while his predecessor at Imperial College, Lord Oxburgh, received a measly £107,000 as rector. He has no idea how much money he has made more recently and will only discover the true figure when his audited accounts become available.

"Money is usually tied up in equity or investments. I live a reasonable lifestyle, but it's not excessive. My car is eight years old. I have a flat in London and a house in the country," he says.

Sykes's nest egg could be good news for King's College, London - which acquired his alma mater, Queen Elizabeth College - or the University of Bristol, where he completed his PhD in microbial biochemistry. For Sykes is a great believer in all things American, including the culture of charitable giving. He hopes that others will follow Imperial alumnus Gary Tanaka's example in donating cash to the college - £ million in Tanaka's case.

"I think the contribution culture is changing in the United Kingdom. We are much more of a giving, caring society. Today, unlike 20 years ago, you have more discretionary spending. There are people who have money that they can give to charities. People who have been educated here do feel a loyalty to the place, I'm sure. And if you have been successful, it's nice to give something back," he says.

According to some commentators, the size of Sykes's salary as chairman of GlaxoWellcome was surpassed only by the scale of his ego. Investors were furious when GlaxoWellcome and SmithKline Beecham announced that their initial merger plan had foundered on disagreements between senior executives, wiping $22 billion from the firms' combined market value in a matter of minutes. Sykes had been negotiating with Jan Leschly, then SmithKline Beecham's chief executive, whom he had worked with in the 1980s while in the United States.

One City analyst commented: "There are powerful egos at play... [but] no egos are worth $20 billion."

Sykes's wealth is the result of a career spent in industry. He joined Glaxo in 1972 after completing his PhD. He then spent nine years working at the Squibb Institute for Medical Research, just outside Princeton in the US, before returning to Glaxo in the late 1980s, rising to chairman and chief executive on its acquisition of Wellcome in 1995.

"I remember making the decision, in my early 30s, over whether to stay in academia or go into business. It was not really a difficult decision. I went into business for the money and the opportunities," he says.

His rise to the head of a pharmaceuticals giant has brought its tribulations, however. Sykes and his family have been targeted by animal-rights militants, and ensuring his security has been part of his daily life since the 1970s. The location of his country house is kept secret in case activists once again besiege his home. He is deeply concerned about the wider implications for universities of the Huntingdon Life Sciences case.

He says medical research work is essential for the health of the nation and that the basis for the animal-rights protesters' campaign is intimidation. "If your family was threatened and you were threatened, you would think twice. It is pure intimidation."

He believes in such cases the government needs to step in because, if the animal-rights protesters win, things will get worse for researchers. "It will be the medical schools that get attacked next. It won't stop," he says.

Now Sykes must turn his attentions to generating wealth for Imperial College. The college has no financial reserves and spends as much money as it receives. It has long been rumoured that Imperial would collapse within weeks if its income were suspended. "There is no big pot of money that sits there as a flexible fund. The money comes in and the money goes out. Colleges like this one do not have significant endowments. We must have that."

Speaking of Conservative proposals for endowing universities, he says: "It needs to be thought through but, if it were done selectively, it could give the internationally competitive universities in this country greater flexibility."

He is thinking of at least £1 billion in the case of Imperial. The money is vital to maintaining Imperial's world-class standing in teaching and research, he says.

"Money is fundamentally important. We need to attract the best students and staff, and we need to attract them from around the world. We cannot bring top scientists into London and expect them to live on nothing. It will have to be significant: 3 per cent or 4 per cent is not going to make the difference. There has been a big deficit for many years and the academic sector has not kept pace with the rest of the market," he says. "That is why we need more independent funding."

A £1 billion endowment would allow the college to offer scholarships to talented students without the wherewithal to pay the market-rate tuition fees that Sykes sees as inevitable.

"The situation (of flat-rate tuition fees) has to change because it is not viable in the long term. There has to be a business case for saying: 'This is the real cost.' But it cannot change in isolation. That is why you need endowments. How you pay for the real cost is another matter. If people can pay, why shouldn't they? And if they cannot pay, there should be mechanisms for the funding to come from somewhere else. If there were scholarships, it would not deter students from less affluent families. It does not deter students in the US."

While supporting the idea of differential fees, Sykes regrets the phasing-out of the maintenance grants that occurred when tuition fees were introduced. As a member of the Dearing committee that published its review of higher education in 1997, he is clearly annoyed that some recommendations were disregarded by the incoming Labour government.

"I suspect there are students dropping out of university because of hardship, and it is not the tuition fee that causes the hardship, it is the living expenses. The Dearing report's suggestion - that the maintenance grant not be abolished when tuition fees were introduced - was ignored. It was as though the decisions were made before the report came out," he says.

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