Drug firms' merger raises R&D hopes

January 21, 2000

The merger of Glaxo Wellcome and SmithKline Beecham to form the world's largest pharmaceutical business may not threaten United Kingdom research, as some politicians and trade unionists have suggested.

Academics are hopeful that the giant firm, which expects to spend an unprecedented multi-billion pound sum on R&D, will continue to invest heavily in, and exploit the world-leading expertise of, UK universities. Most major pharmacy schools and departments of pharmaceutical sciences are already involved in collaborations with the two companies.

Some researchers believe that the merger - which would have had an annual R&D budget in excess of Pounds 2.4 billion, based on last year's figures - might make more resources available for university research.

But the announcement that the new firm's operational headquarters would be in the United States and the appointment of two US former academics - Tadataka Yamada and James Niedel - as chairman of research and development and chief science and technology officer respectively, have fuelled fears that there could be a gradual shift of funds across the Atlantic.

Glaxo SmithKline would derive 45 per cent of its revenues from the US, based on current sales figures.

Evan Harris, the Liberal Democrat's science spokesman, complained: "The major concern is that research investment will drain away from Britain."

Staff unions are worried that one of the two companies' UK R&D centres might be axed, a claim that the company has denied. Despite that, there has been an admission that some overlaps in the two research briefs would need to be rationalised.

However, Sir Richard Sykes, chairman of Glaxo Wellcome who will become the non-executive chairman of the new company, said the research programmes were eminently compatible.

"With this merger we are bringing together two world-class organisations with complementary technologies and scientific knowledge," he said.

UK academics were generally upbeat about the merger.

David Woolfson, professor of pharmaceuticals at Queen's University, Belfast, said: "Both companies have a large research infrastructure in the UK and a great deal of expertise, which is why the UK is effectively a world leader in the area."

Greater research strength was one of the main drives behind the merger, and the new firm would be in a prime position to take advantage of data flowing from the Human Genome Project, which will have an enormous impact on the pharmaceutical industry.

The latest figures from the Office for National Statistics show that UK pharmaceutical R&D expenditure in 1998 was Pounds 2.2 billion, 22 per cent of all R&D spending.

Between them, the two companies are responsible for a significant proportion of this, with major bases at the Glaxo Wellcome Medicines Research Centre in Stevenage, Hertfordshire, and SmithKline Beecham's New Frontiers Science Park in Harlow, Essex. Nevertheless, both have laboratories worldwide and important US facilities, with Glaxo Wellcome spending a third of its R&D budget in the US and SmithKline Beecham's twin New England bases employing 3,500 researchers. People, page 10

Opinion, page 16

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