Biogen Idec Chief Aims to Make Firm More Like Biotech and Less Like Pharma with Restructuring Plan
Biogen Idec is returning to its biotech roots, in a way. The Weston, MA-based company (NASDAQ:BIIB) made headlines yesterday for its plans to cut 650 full-time jobs and narrow its research and development focus to emphasize its core expertise in neurology. And a big part of the restructuring plan, the firm’s CEO, George Scangos, says, is to make the biotech company, well, more biotech-like.
Xconomy was early on Biogen’s big news yesterday and also provided details about where the job cuts are being made in Massachusetts and San Diego, where the company plans to completely close its R&D center.
Scangos, who took over as Biogen’s chief executive on July 15, inherited a company that has not brought a new product to market sine 2004 and has been criticized by billionaire investor Carl Icahn and others on Wall Street for an overall lack of research and development productivity. (Those critiques sound an awful lot like the knocks on lumbering big pharmaceutical companies.) So Scangos is taking action, not just to address concerns among investors, but also to remove some of the productivity-hampering bureaucracy from the firm, he says.
“What’s best about small companies is they are fast, they are efficient, and there’s not a lot of bureaucracy,” Scangos said in an interview. “As the company gets larger, it gets harder and harder to do that. We want to make Biogen more like a biotech and less like a pharmaceutical firm.” The CEO has reduced the number of R&D committees, for instance, and he has designated project leaders who report directly to him.
Biogen, founded in 1978 during the biotech industry’s earliest days, has grown into a profitable industry leader, best known as the world’s largest maker of multiple sclerosis drugs. However, the company’s $1.2 billion in revenue for the third quarter of 2010 rose a modest 5 percent from a year ago, in part because of decreased revenue from one of is three major products, the anti-cancer and rheumatoid arthritis drug rituximab (Rituxan). Also, the company’s MS franchise faces competition from, among other products, the Swiss drug giant Novartis’s recently approved oral MS treatment, fingolimod (Gilenya).
Scangos inspected the company’s R&D pipeline and other operations over the summer, and concluded that the company was stretched too thin in terms of the number of therapeutic areas it was researching. A major part of the restructuring plan is to divest the company’s cancer and cardiovascular drug pipelines. The company has designated 11 programs that it plans to remove from its pipeline, including its molecule galiximab for lymphoma, the anti-tumor drug volocixiumab, and the cardiovascular therapy lixivaptan.
Scangos wants Biogen to build on its leadership in neurology. This means increasing revenue from its blockbuster MS drugs interferon beta (Avonex) and natalizumab (Tysabri), developing its existing pipeline of drugs for neurological disorders, and researching biomarkers and other avenues to help personalize treatments for people with illnesses such as multiple sclerosis, he said during a conference call with investors yesterday. The company highlighted its late-stage pipeline, which features five new neurological disease treatments that could reach the market by 2015. The firm also has two hemophilia drugs in late-stage development.
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