Glaxo plans to triple research spending

MAGNUS GRIMOND

Glaxo Wellcome, the drugs giant, told the City yesterday that it planned to triple the productivity of its research and development operation. In one of the first big strategy announcements since its pounds 6.3bn takeover of Wellcome in March the group said it would bring three new medicines to market every year from now until 2000.

The move is part of the new competitive pressures surrounding the pharmaceuticals industry, underlined yesterday by reported comments from Jan Leschly, chief executive of rivals SmithKline Beecham, that he expects "double- digit" profit growth from the launch of new products in the future.

At the briefing to City followers of the company at its new pounds 700m medicines research centre at Stevenage in Hertfordshire, Glaxo Wellcome's senior management announced the results of an important review of the drugs pipeline and a rationalisation of the management structure in the wake of the Wellcome takeover.

Total research and development expenditure of pounds 1.2bn in 1996 will be little changed from the figure spent by the combined companies in the last reported financial period. But the research portfolio has been boiled down to 50 big research and 93 development projects, compared with 160 research projects alone at the two companies before they combined. Areas of concentration in research will be the neurosciences, anti-virals, cardiovascular disease and cancer, while development will lean towards respiratory ailments, anti-viral infections, diseases affecting the central nervous system, oncology and emesis and cardiovascular and critical care.

James Niedel, director of research and development, said that between six and eight layers of management had been reduced to four in the new, much flatter structure introduced in his area of responsibility. At the same time, management had been made more global with research centres in eight countries from the US to Japan being brought under one team instead.

Glaxo Wellcome's new-found productivity in R&D stems in part from the $530m purchase earlier this year of Affymax, a Californian biotechnology company that replaces chemists in the search for new drugs.