A few challenging looks at the industry from the UK last week caught the eye. Be sure to check out our UK News postings.
- The Guardian reported an investigation that found Shire uses a chain of internal loans from Ireland and Luxembourg to lower its tax bill. An in-depth report illustrates this activity by pointing out how the company used $1.87 billion in profits made by one of its Luxembourg units as an example of how multinational companies legally move money around the world. Though such complicated financial structures may face increasing political scrutiny in the wake of the recent inversion strategies, it remains unlikely that there will be either the will or the power to stop such practices. Creativity in treasury tax avoidance schemes will remain the norm for multinationals.
- Separately, the BBC seems to have finally come up with some numbers, sourced from GlobalData, showing that pharma actually does spend more on marketing than R&D, with 9 out of 10 Big Pharma companies actually doing so. The lone exception was Roche which spent some $300 million less on marketing than R&D. The biggest marketing premium belonged to J&J with $17.5 billion in marketing spending, more than double its $8.2 billion in R&D costs, followed by Pfizer and AstraZeneca. Roche is more specialised than others that have large consumer divisions or that have more mass-market products. Cuts have come in both R&D as a response to unproductive R&D, but also in marketing, especially with shrinking sales forces.
- EvaluatePharma issued its Orphan Drug Report for 2014 which showed how orphan drug makers have stormed the marketplace, taking an increasing share of prescription drug sales. This is predicted to grow to 19% of sales by 2020, with the major caveat being the potential for significant payer protest which could become a reality if the prices for treatment continue their eye-watering trends.
- Beckman Coulter announced a collaboration with the University of Birmingham aimed at research into higher-throughput biology in environmental and health applications while Verona Pharma received funding from the Cystic Fibrosis Trust for use in funding preclinical tests of its lead CF pipeline drug.
- The UK’s innovation agency, Innovate UK, announced a £50 million four-year investment that will nurture the very latest and potentially game-changing technologies such as synthetic biology and non-animal technologies. The effort seeks solutions to major global challenges which could come in the form of new drugs, autonomous sensors and hyper-spectral cameras for advanced detection systems. This represents a doubling of Innovate UK’s investment in emerging technologies.
- Herman Hauser, very much the founding father of the UK’s semiconductor industry, notably with ARM, released a report commissioned by Innovate UK calling for the long-term expansion of the Catapult network. Back in 2010, Hauser recommended the creation of a network of technology and innovation centres around the UK modelled on Germany’s Fraunhofer research centres. To date, seven Catapult centres have been established across the country with two more due to open in 2015, each focused on a specific area of technology and expertise with great global potential for UK businesses. In the life sciences there is one focused on cell therapies and another that touches upon the sector focused on high value manufacturing. Anticipated next year will be a Catapult focused on precision medicine.
- The Catapult centres are funded in equal part by government, industry and via contractual work focusing on areas where the UK has an edge and where the market potential is global. Universities and businesses are brought together to share premises and labs in the hunt for breakthrough technologies. While Hauser has been surprised and impressed with some of the progress made, he is disappointed they have not drawn in more SMEs and feels the centres have been too dominated by industry and not close enough to top-flight universities.
- Though the jury is still very much out on their success, the Catapults do represent a worthy effort to help boost UK spending on R&D which is still low by international standards at 1.8% of GDP and can become important conduits for the translation of research into practical applications. Hauser wants to see 30 Catapults be created by 2030 and a doubling of the budget for innovation policies to nearly £1 billion. We will watch with interest.
I hope everyone has a spectacular week.
Nigel