WSJ's Pete Loftus Begins To Fill In Details -- On Merck's New R&D Hubs Approach

Pete Loftus, a good guy, and a quite well informed one to boot, has just put out a solid piece -- providing additional on- and off- the record glimpses at Merck's new R&D footprint and strategic model, under returning chief Dr. Perlmutter.

Do go read it all -- but here's a bit:

. . . .Together, the moves would represent a significant shift for Merck, making it more receptive to external opportunities and less wedded to in-house handling of the entire life cycle of a drug's development, from discovery through clinical trials.

The company has long asked its scientists to stay on top of promising science outside its walls, and has had offices in Boston and Palo Alto, Calif., to further those efforts. Merck became more active doing deals over the past decade, notably its 2009 acquisition of Schering-Plough and the 2011 purchase of Inspire Pharmaceuticals.

Yet the company's laboratories have tended to shun the kinds of full partnerships with outsiders that other pharmaceutical companies now count on heavily for drug candidates and technologies. Merck has also lacked a significant R&D presence in London, while its presence in Shanghai has been primarily commercial operations. . . .

The regional hub plan would resemble approaches taken by other leading drug makers. Pfizer Inc. has drastically reduced the size of its longtime R&D center in Groton, Conn., in favor of building up a presence in cities including Boston; Cambridge, U.K.; and La Jolla, Calif. Johnson & Johnson last year unveiled a plan to establish innovation centers in California, Boston, London and China, to focus on identifying early-stage R&D. GlaxoSmithKline PLC recently said it was opening R&D satellite offices in Boston and San Diego to help manage external collaborations and look for new ones.

"The advantage of having these innovation centers is they capture the academic research at a very early stage," said Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development in Boston. As companies like Pfizer and J&J set up innovation hubs in these research hotbeds, their competitors would stand the risk of being left out if they didn't make similar moves, he said.

Dr. Perlmutter has discussed Merck's potential plan for regional innovation hubs in internal meetings with employees, as has Rupert Vessey, who leads early-stage drug discovery at Merck, according to people familiar with the matter. . . .

We will keep a weather eye on this -- but again it is likely to reduce the footprint inside New Jersey, overall, for research. Boston isn't a terrible change, but having to relocate to San Francisco (while picturesque) would greatly impact the affected employees' discretionary income -- as almost eveything is significantly more expensive in the city by the bay. So, I wouldn't expect too many researchers to relocate to the West Coast -- even if offered that chance.

A good last weekend of the year, to one and all! I'm bolting.