Novartis chooses Boston area as new research hub

Novartis is taking its research headquarters away from Basel swissinfo.ch

The Swiss pharmaceutical giant, Novartis, is to make the Boston area its new global hub for research in a bid to lure top scientific talent.

The company is to spend $250 million (SFr398 million) building a new institute, which will direct Novartis’s global drug research. CEO Daniel Vasella said the location had been chosen because of its proximity to the “best medical researchers in the world”.

Novartis has already poached Dr Mark Fishman, a Harvard professor, to head the new institute – called the Novartis Institute for Biomedical Research (NIBR).

Novartis spokesman, Felix Raeber, told swissinfo the reason for the move was simply because: “For us, it’s easier to recruit top scientists [in the US] than it is in Europe.”

He added that Fishman had been head hunted because “He is based [in the Boston area], he is a celebrity there, and therefore he can really attract scientists.”

Blow to Basel

The move is seen as a blow to the company’s home base of Basel in Switzerland, which has until now directed global research.

Raeber admitted it would shift the emphasis to the US, but stressed that “Basel will remain a safe and good place to work for our scientists”. Some 1,400 people work at the Basel research facility, which will remain the company’s largest R&D site for the time being.

CEO Vasella confirmed that there were no plans to move any of the company’s other activities to the US, and said the headquarters would remain firmly rooted in Basel.

“[Moving] would be impossible because the company has so many advantages of being in Switzerland, notably the tax advantages,” said Vasella.

The new centre will oversee all research activities in Europe, the United States and Japan. Around 400 scientists and technicians will work at the Kendall Square facility initially, but the company expects to employ up to 900 people there in the future.

Switzerland still home to niche research

Hans Widmer, president of a parliamentary commission for science, education and culture, told swissinfo he was shocked by the news.

However, the Boston decision was no reason for Switzerland’s industry to panic just yet. Widmer said such expansions were understandable, as Switzerland remains too small to contain a global player such as Novartis.

Switzerland would also continue to trade off its current research strengths.

“Switzerland is primarily a good location for niche research, particularly in the areas of bio-security and production,” Widmer said.

New drugs

The Cambridge-based institute will focus on developing new drugs for diabetes, and cardiovascular and infectious diseases. The company expects about one third of the employees to come from Novartis’ pharmaceutical production site in New Jersey.

Massachusetts Senator Edward Kennedy welcomed the company’s decision, saying “Novartis’ strong desire to be in Cambridge further strengthens Kendall Square as being the epicentre of the biotech world.”

Cambridge has become a hub for biomedical research in recent years. The Whitehead Institute, an independent scientific powerhouse, has its centre nearby, while companies such Millennium Pharmaceuticals, Amgen and Biogen have also moved to Kendall Square.

Friendly research environment

Competition specialist Stéphane Garelli of the IMD business school in Lausanne, told swissinfo that the Novartis move reflected the research-friendly environment of the US, where scientists can work unrestrained by legislation.

“There are a number of laws in Europe that are cautious about research and its consequences… particularly in the pharmaceutical sciences, and some companies have become very upset about that. They prefer to move to the US, which is a much more flexible and dynamic environment.”

He warned that Switzerland, like other European countries, risked losing many of its top scientists to the US through the oft-cited brain drain. “A lot of Swiss people are probably going to move to the US, even to work for Swiss companies, and whether they come back remains an open question.”

Some leading Swiss scientists already claim that Novartis’ decision is a catastrophe for the country’s research.

“Resources for research have not increased in Switzerland for 10 years and young Swiss are not interested in staying,” said Catherine Nissen-Druey, vice-president of the Swiss Council for Science and Technology. “They head off to the States because there are better work conditions and career prospects.”

Nissen-Druey also believes the multinational’s choice of Cambridge is another blow to Basel.

“The quality of research carried out in Basel’s major research institutes is dropping, or they are even being closed. This was the case last year when Roche shut down its Immunology Institute.”

Biggest market

The move also reflects changes in Novartis’s markets. Just five years ago, Europe was its biggest, but today the US generates the lion’s share of the firm’s revenue, accounting for over 40 per cent of sales.

“There’s no doubt that growth and profitability in a marketplace help determine where research investment goes,” said Vasella.

Novartis’ decision also reflects Europe’s slumping scientific position. In 2000, $24.3 billion was invested in research in the United States, while the European total was just 70 per cent of that.

This is the second research centre to be opened by Novartis in the US. The company has already bankrolled a genomics institute in La Jolla, California, where over 200 scientists work.

by Scott Capper and Jonathan Summerton with agencies