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AstraZeneca PLC (AZN) and Roche (RHHBY) Overhaul R&D Operations


1/15/2013 7:16:02 AM

The meager pipelines and R&D setbacks plaguing the pharmaceutical industry have prompted two of the largest drugmakers to shake up their operations today. Roche hired John Reed (pictured left), who heads the Sanford-Burnham Medical Research Institute in California, to take over as head of its Pharma Research and Early Development unit, replacing Mike Burgess. And AstraZeneca announced that R&D head Martin Mackay is leaving. In fact, the moves at AstraZeneca are more widespread than just R&D as Tony Zook, who had been executive vp for global commerical activities, is also leaving. As part of the shake up, AstraZeneca is also creating several new R&D and commercial positions, including a new executive job that will be responsible for global portfolio and product strategy, in hopes of “bridging” R&D and sales. The moves reflect the frustration that many large drugmakers have encountered in recent years as they muddle through the patent cliff – the moment when big-selling meds lost patent protection and face generic rivals; laboratory setbacks; regulatory hurdles and an increasingly competitive scramble to acquire or license compounds or simply purchase smaller companies. Roche, for instance, last spring abandoned development of a pill that was being tested for raising HDL, or good, cholesterol after the compound failed to deliver meaningful clinical efficacy. The disappointment prompted a decision to close a New Jersey facility and cut 1,000 US R&D positions. Whether Reed is the needed elixir for it woes remains to be seen. The 54-year-old is a leading researcher who has focused on cancer, neuroprotection and autoimmunity, among other afflictions, and has served on boards for various biotechs and drugmakers, but he has not worked in a large corporation or run an R&D unit of the sort that he will now oversee. Nonetheless, one analyst viewed the change at Roche as welcome. “Appointing a new head of (pharma research and early development) from the outside is viewed as an excellent move in order to reposition this organizational unit within Roche,” Kepler Capital Markets analyst Martin Voegtli tells Reuters. “Historical R&D productivity (at the unit) has been poor and we expect dynamics to pick up.”

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