Baxalta bets on 'external innovation' to meet its $8.5B goal and ward off Shire

Baxalta ($BXLT) is hoping to launch 20 new drugs by 2020, and the nearly 2-month-old company is taking a decentralized approach to R&D on the way there, relying on partners to handle early-stage work before finishing projects itself.

Speaking to the Boston Business Journal, Baxalta R&D chief John Orloff said his company's new hub in Cambridge, MA, is going to be far from a traditional research campus. Baxalta plans to house about 350 R&D workers at the site by 2016, but the company isn't building a foot of lab space, keeping its in-house discovery unit in Europe. Instead, the Cambridge facility will be Baxalta's dealmaking hub, Orloff said, seeking out partnerships that can widen the company's pipeline.

"We are discovering that a lot of the discovery and basic research is being done in academia, is being done in biotech, and this is the hub of the biotech community," Orloff told the BBJ. "... Our whole approach is one based on external innovation."

Orloff's words echo a great many of the multinational drugmakers piling into Cambridge, with newcomers like Eli Lilly ($LLY) and Bristol-Myers Squibb ($BMY) joining entrenched giants including Novartis ($NVS) and Biogen ($BIIB).

But Baxalta, thanks to an unwelcome buyout offer from Shire ($SHPG), has an air of immediacy with its pipeline work. About a week after the company completed its split from Baxter ($BAX), Shire showed up with an unsolicited proposition to buy Baxalta for roughly $30 billion in stock, an offer the company refused. Last month, Shire went public with its pitch, betting it can convince Baxalta shareholders to force management into a conversation on the topic. Now Baxalta has gone on the defensive, touting its pipeline as undervalued and preaching patience to investors.

The company unveiled that 20-drug goal before its launch last month, projecting to add $2.5 billion in annual sales onto the roughly $6 billion in revenue it currently pulls in.

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