In the way to increase the R&D efficiency the majorities of pharmaceutical companies are cutting jobs and out-source the R&D activities. For instance, Roche will cut 1000 jobs within the research center in Nutley, New Jersey. This year, Roche is transferring these R&D activities to sites in Basel and Schlieren (Switzerland) and Penzberg (Germany). Despite the loss of around 1,000 jobs in New Jersey, Roche is looking to establish a new center focusing on translational research on the US east coast, which the company expects will employ 250people.
The Nutley closure makes the Genentech site in San Francisco as the key R&D center for Roche. This decision reflect the Roche strategy, basically the swiss lab is focusing more on its R&D investment in Genentech, who will provide success in the oncology therapies.
From 2001 to 2018, Genentech products will continue to provide the Roche group with the biggest portion of sales. While sales of Avastin, Herceptin, and Rituxan are expected to increase until 2017, after this period an uptake is expected, Avastin in particular, following the US Food and Drug Administration’s (FDA’s) u-turn on its use in breast cancer.
Instead, recent launches of the first hedgehog-signaling pathway small molecule targeted therapy Erivedge (vismodegib, for basal cell carcinoma) and breast cancer drug Perjeta (pertuzumab) will add needed growth to the Genentech sourced portfolio.
Although, the highly anticipated antibody-drug conjugate trastuzumab emtansine (T-DM1), expected to launch this year, will secure Genentech’s position as a growth generator In line with the reduction in staff, Roche have divested the R&D department in order to cut
costs, improve profitability and adopt cost-effective solutions such as outsourcing, offshoring, and partnership agreements.
There are various kinds of R&D partnership strategies which companies, with each strategy offering different levels of investment, risk, and opportunities. Aside from reorganization we can identify few R&D strategies which are currently in vogue:
- Mergers and acquisitions – These offer the most integrative approach and the highest amount of financial commitment. By inheriting revenue-generating products and pipeline compounds, the acquiring company can see an immediate impact on its portfolio.
- Outsourcing – Currently, the majority of big pharma companies, such as Roche are signing long-term outsourcing deals with “preferred provider” deals, which can be more efficient and cost-effective than working with multiple contract research organizations on a short-term basis.
- Spin-outs – These can be used to create new entities more focus on the new portfolio, and often with higher profit growth forecasts than the existing company. By leveraging assets from the pharmaceutical company, spin-outs offer an alternative for the transfer of intellectual property and workforce from the parent company, coupled with external investment, differentiates spin-outs from other commercialization strategies such as licensing.
- Partnerships with universities – While these are relatively low-cost investments comparing to the other strategies, this is reflected in their higher risk profiles as well as the long-term nature of this type of deals. The pharma-academic partnerships is not a new strategy, Roche and the other Big pharma has adopted a more ingrained approach through close collaboration with academic experts, and researchers.
- Venture capital investment –Investing in earlystage projects can be a risky strategy, funding a venture-type company enables Roche to keep up with competition, particularly Sanofi, Boehringer Ingelheim and Merck & Co., which have recently established their ownrespective corporate venture capital arms. This facilitates the creation of innovative companies by securing varying degrees of control in the technology developer.
- Licensing and co-development deals – These enable companies to share the risk, expenses, and potential returns by utilizing milestone and royalty payments.
For more information on these strategies, please refer to Hoffmann-Krueger and Oncology-analysis.com
If you have further requirements, queries or comment, Hoffmann-krueger’s consulting team may be able to help you. For more information about Hoffmann-Krueger consulting capabilities, please contact us directly at Elena.k@hoffmann-krueger.com
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