Amgen, the biggest independent biotech company, recently declared the increased penetration of emerging markets and Japan as a core strategic objective. In October, the company also announced the elimination of 225 R&D jobs from its headquarters in Thousand Oaks, California, and sites in Seattle, San Francisco, Boston and the UK. Elsewhere, Bagsvaerd, Denmark–based Novo Nordisk, a worldwide insulin supplier, is also in the midst of a $100 million expansion of R&D in Beijing. Although both biotech companies appear to be aping the strategies of big pharma, it seems unlikely that many other companies in the biotech sector will follow their lead, mostly because Amgen and Novo Nordisk are exceptionally large R&D organizations that sell products with a global reach. Even so, the issues that are driving pharma's shifting and restructuring are exerting a profound influence on the ecosystem for private and public biotech companies.
For pharma, global competition from China and India, revenue losses from patent expirations, the absence of new blockbuster drugs, pricing and reimbursement pressures, poor R&D productivity and the global economic slowdown are all contributing to its reshuffling. In December, Merck, in Whitehouse Station, New Jersey, announced plans to spend $1.5 billion on R&D in a new facility in Shanghai, anticipating that the China market, now second in the world, will become number one in 10–15 years. Other pharmaceutical firms are similarly aiming at emerging markets. Paris-based Sanofi now calls emerging markets its strength, and in October, cancer drug giant Roche, headquartered in Basel, reached out to BioBay, a biotech park operator in Suzhou, China, to collaborate on the development of new treatments. Although eyeing China expansion, Merck has also cut 12,000–13,000 jobs—about 30% of its workforce since the merger with Schering-Plough in 2009, according to The Wall Street Journal. New York's Pfizer is reducing its R&D budget by $1.5 billion. And Abbott Laboratories, in Abbott Park, Illinois, will now split off its pharma division entirely, partly because it does not foresee maintaining its current growth rate from drug sales (Box 1). A question now on many minds is whether mega mergers in pharma will be succeeded by a period in which large multinationals spin out independent business units (Pfizer management discussed this possibility in 2011).
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