The future of UK R&D

Last month, the world’s largest drug maker, Pfizer, announced the closure of their 140-hectar site in Sandwich, Kent making 2,400 workers redundant. Pfizer are the latest in a stream of pharmaceutical giants who are “realigning their global R&D footprints”. What does this mean for UK R&D and the future of biomedical research? Leila Sattary investigates the major drug companies who are externalising their innovation

The closure of Pfizer’s research and development site in the UK is a depressing but perhaps predictable development. While Pfizer said that their move did not reflect badly on British talent in the life sciences, they obviously no longer feel it is important to work in the UK. This move is one of the many signals that indicate profound changes for big pharma as one by one they pronounce a move away from R&D spending.

Once upon a time, pharmaceutical companies were the places were leading research was done and world-changing drugs were discovered. However, now every big pharma company faces the same problem - a mutli-billion dollar “patent cliff”. The money-spinning drugs that big pharma have relied on for decades are about to lose their patented status. Copycat rivals will be able to reproduce their popular drugs and undercut them. You might expect that this should not be a big problem as there are more new drugs in the pipeline, but there are not enough to replace the revenue from those they are about to lose as patents expire. The other drain on big pharma is the ever increasing regulatory requirements, which have dramatically increased the costs of drug development. Despite R&D spend in the pharma sector increasing dramatically, the number of new drugs approved for public use is slowly declining.

A few big pharma companies have maintained their R&D spend but most have cut it dramatically. GlaxoSmithKline, for example, are externalising parts of early-stage scientific discovery forcing universities and small biotech companies to take on more of the risk. This way, GSK only need license new compounds that have already showed promise. The problem is that it is much easier for big pharma to pull a product that isn’t working when they have a big portfolio of drugs to fall back on. A small biotech, whose whole existence perhaps relies on one drug will obviously hold on to it as long as possible. Big pharma, by pushing the cost of failure on to small companies is in fact increasing the costs. Not to mention the costs being pushed on to universities and therefore the public purse.

This action by big pharma might be understandable if the sector was in trouble. Maybe it is, but all signs point to the fact that these companies are always more than keen to keep their shareholders happy. GSK have pledged to buy back up to two billion pounds worth of shares this year as part of a long term commitment to return cash to investors. Similar strategies are playing out in other pharmaceutical companies. The decision by Pfizer to close the site at Sandwich, combined with the announcement of share buybacks was greeted on the Stock Market as great news.

Over the past few years, big mergers have spawned plans to cut back on research as big pharma struggle to find a way through the looming problem of patent expirations and risky clinical trials. Although these are commercial companies and they need to keep afloat, surely they should have more responsibility to the public to bring new and effective drugs to the market, than to simply appease their shareholders. It looks like pharmaceutical companies are moving away from doing their own R&D but I wonder whether they have really thought through the long term consequences to their own companies, the industry more generally, and their ability to positively impact on healthcare.

One solution could be for pharma companies to start working together better. The pharmaceutical sector is one where competition seems to impede progress rather than spur it on. Often Big Pharma companies are working on the same targets, independently, but without sharing research results. Millions of pounds and years of clinical trials could be saved if only they could move to a more open innovation model where they work together for the greater good rather than keeping their research results secret and all trying to develop the same drugs in parallel, which may or may not work in the end. Unfortunately, the drive to make money seems to get in the way.