Global biopharma hub strategy doomed Novartis' outlying R&D facility

Over the past 5 years, the main arteries of drug R&D have pointed straight to the world's biggest biopharma hubs. As hubs have grown, outlying R&D operations have been steadily trimmed away. And that trend played a big role in Novartis's ($NVS) decision to shutter its big respiratory research center in West Sussex, south of London, with plans to lay off 371 staffers and 170 consultants as part of a wider restructuring.

Some, though not all, of the research work underway in Horsham, U.K., will be transferred to Boston and Basel, two of three main hubs that Novartis has identified. Its third big hub is Shanghai, another favorite of the global biopharma crowd that has focused its attention on developing new drugs for the growing Asian market.

"Economies of scale mean it is better to consolidate into those three hubs rather than have them distributed throughout the world," Novartis Country President UK Sue Webb told the local County Times. Webb mentioned that some of the programs would be shuttered, though a company spokesperson quickly hushed that notion to interject that final decisions on research had yet to be made.

The closure in Horsham follows Pfizer's ($PFE) big decision to end most of its work in Sandwich along with a large portion of its operations in Groton, CT. AstraZeneca ($AZN) has plans to get out of Alderley Park and centralize its R&D facilities in Cambridge, U.K. Sanofi ($SNY) has been sparring with French unions to scale back in Europe as it continues its own buildup in the Boston/Cambridge area following its takeover of Genzyme. And Johnson & Johnson ($JNJ) has created a slate of four innovation centers in four big hubs--Boston, London, San Francisco and Shanghai.

Each of these companies spends billions of dollars on R&D each year, and as many of these multinationals explore more collaborations and outside partnerships, it makes more sense to close down the outliers and concentrate in key hubs.

The global restructuring of R&D may persuade some of Novartis's Horsham workers to move to Boston, but Webb was openly skeptical about any large number of moves.

"We will try and determine what is right for those individuals," Webb told the local newspaper. "And yes there will be opportunities for people to relocate, but is it likely that 370 people relocate? Of course not. It will be a compromise decision."

"It is the right decision globally for the company though."

- here's the story from the County Times