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The Danish diabetes drug giant Novo Nordisk is cutting about 400 R&D positions in China and Denmark to make room for four new “biotech-like” research centers that will expand the firm’s reach in chronic disease drug development. The company is also establishing a new business development unit in Cambridge, Mass. The moves are part of a push to find more innovation externally.
Novo Nordisk employs about 42,000 people. The firm previously shaved its workforce by 1,000 employees in 2016 and 185 more in late 2017. The company’s North American sales decreased 10% in the first half of 2018, and drug pricing pressures in the U.S. are crimping the company’s outlook for 2019.
Ken Inchausti, a Novo Nordisk spokesperson, says the revamp, to affect all areas of R&D, will invigorate the company. “We foresee a more dynamic workforce with employees from around the world moving to new positions and not necessarily staying as long in the same positions as we have been used to in the past,” he says. Many employees not being laid off will see their projects or units dissolved. Some will move to new departments or one of the four new research centers.
One of those centers, the Novo Nordisk Research Centre Oxford, opened at the University of Oxford earlier this month to focus on type 2 diabetes and cardiometabolic conditions that accompany the disease. Novo Nordisk will invest about $150 million at the center over 10 years and employ up to 100 researchers.
Another new research unit will open in Indianapolis, home to the firm’s diabetes competitor Eli Lilly & Co. Two more centers will open in Copenhagen. The specifics of each center’s research aren’t being disclosed yet, but the company says priorities include stem cell therapy and gene therapy, fields outside the firm’s staple diabetes drugs.
Both fields could potentially upend the insulin business by creating an “artificial pancreas” that restores a body’s ability to regulate glucose levels without drugs. “If someone comes up with an artificial pancreas, it will blow Novo’s business to bits in no time—and the artificial pancreas looks ever closer,” says Bernard Munos, a senior fellow at FasterCures, a think tank at the Milken Institute.
Novo Nordisk already has a head start on stem cell therapy research through several academic partnerships. It is working with scientists at the University of California, San Francisco to develop human embryonic stem cell lines to treat type 1 diabetes and other chronic diseases. A collaboration with Cornell University is focused on developing a device to encapsulate insulin-producing beta cells to avoid attack by the immune system.
The Danish firm isn’t giving up on small-molecule and peptide drug approaches to diabetes, though. In July, Novo Nordisk partnered with Kallyope, a biotech start-up studying metabolites of the gut-brain axis, to discover peptide therapies for obesity and diabetes. It also made a pact with the German company Evotec last month to develop small-molecule drugs for diabetes, obesity, and related conditions. And in August, the company announced it would purchase Ziylo, a University of Bristol spin-off developing glucose-responsive insulin therapies.
Munos sees all of this as emblematic of a larger trend in the industry. “Most of the science comes from outside the pharma companies,” he says.
“As companies grow, they became more culturally hostile to new ideas, but they need those new ideas to empower the increasing amount of innovation needed to sustain a growing company,” Munos says. He saw it firsthand during three decades at Lilly that ended in 2010. “The only way to reconcile those two imperatives is to increasingly rely on external innovation. I think Novo has realized that.”
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