Novo Nordisk to bet £115M on Oxford University diabetes centre

Novo Nordisk is to invest £115 million over the next ten years in a new type II diabetes drug discovery laboratory at Oxford University, in what is being held up as an important vote of confidence in the UK’s research future.

Canadian scientist James Johnson of the University of British Columbia, considered to be one of the world’s leading diabetes researchers, has been recruited to head the centre, being built on Oxford University’s biomedical campus.

“It’s the first real inbound investment in discovery life sciences in the UK in the last 15 years,” said John Bell, Oxford’s professor of medicine and recently appointed government ‘Life Sciences Champion’. “We’ve lost many discovery programmes, such as ones run by Novartis and Roche.”

Novo Nordisk already has an established relationship with Oxford, as co-founder of the Oxford Centre for Diabetes Endocrinology Metabolism, which produces some of the most highly cited research in its field.

“We do some fairly chunky collaboration together,” said Bell. “I think Nordisk would say the quality of [drug] candidates we provide far exceeds what they have found elsewhere.”

The pharma firm is the world’s biggest maker of diabetes drugs, including Novolog, Victoza and Levemir. Its shares rose marginally on news of its collaboration with Oxford.

The investment was greeted warmly by the British government, with chief secretary to the Treasury, David Gauke, describing it as, “a vote of confidence in the UK’s position as a world leader in science and research.”

It is also the first time Oxford University will permanently host industry scientists on its campus. While the university will contribute the basic science, any new drugs or treatments will be developed and manufactured in Denmark.

“If we find good molecules or targets, [Nordisk will] repatriate them to Copenhagen,” said Bell. “When they ultimately commercialise them, any royalty we get will depend on what we’ve contributed.”

While the Novo Nordisk investment is the largest single foreign direct investment in Oxford University, it is also home to the Structural Genomics Consortium, a drug discovery collaboration involving pharma companies including Pfizer, Merck, Johnson & Johnson and Novartis, which has brought in close to £80 million in recent years.

Fillip for UK science after Brexit vote

Before the referendum, the life sciences as a whole warned that exiting the EU would isolate UK science and damage the sector. Both the Association of the British Pharmaceutical and the BioIndustry Association were strongly in favour of Remain.

But while several large financial companies have already outlined plans to increase their headcount in mainland Europe in response to the Brexit vote, concerns that big pharma companies would divest have yet to materialise.

Of the UK’s two home grown pharma companies GlaxoSmithKline has pledged to expand manufacturing in the UK, saying the country remains "an attractive location" despite the Brexit vote. Meanwhile, AstraZeneca is close to finishing a €385 million headquarters and research centre in Cambridge, started well before the Brexit clouds gathered.

Novo Nordisk announced last September that it would be paring back research and development in Denmark, but will now be replacing some of these jobs in the UK.

The UK’s skilled workforce, competitive tax system and incentives for research play a role. In its autumn statement last November, the government said it would increase R&D spending as a whole by £4.7 billion up to 2020. Last month, it set out plans to grow life sciences – including through Bell’s appointment as sector champion – in a new industrial strategy.

The fall in the pound against the dollar and the euro since the referendum is likely to be attractive too – companies now find it far cheaper to produce products bound for foreign markets.

“Things are remaining pretty buoyant,” said Bell. “The UK has a productivity problem, perhaps, but not in life sciences. We’re hugely more productive in patents and citations than other parts of the world.

“This is partly because the government has committed to the science base and the fact that we have the best universities in Europe by some margin,” he said.

Whatever the prospects for early stage, discovery research, the pharma industry in the UK will not be immune to Brexit. Most notably, it seems certain that the London-based European Medicines Agency will relocate to mainland Europe, reducing the status of the UK as a place for carrying out clinical development.

The UK government’s intent to leave the single market and the customs unions also throws up huge uncertainties for the pharmaceutical industry and its global supply chains.