One is Dan Mahony, who was a research scientist for seven years before he became head of healthcare strategy at Polar Capital. He said many investors failed to appreciate the full value of Astra’s R&D capabilities, possibly because some of that value derived from a rather unexpected source.
“In 2013, Astra took the big decision to move its R&D function from Cheshire to Cambridge – right next door to Addenbrooke’s hospital in fact. How does that make a difference? It is now at the heart of one of the best biosciences hubs globally – and being there encourages interaction between academics and the company. Ideas now flow better between the two. The firm was, ironically, a bit of an ivory tower itself before. Yes, your culture really can depend on where you choose to build your R&D centre. Scientists want to be where other smart people are.”
But he said it could take years before anyone could say “this drug was developed because we went to Cambridge” and, as a result, “it’s something most investors don’t appreciate because it’s not yet visible in the financial numbers”.
He added: “I’ve worked as a research scientist and success is not all about the money you spend. Sometimes in research, you need a bit of luck. But, to paraphrase Gary Player, Astra may find that the more it tries to get the most from its R&D, the more luck it has.”
Trevor Polischuk has a doctorate in neuropharmacology and human anatomy and works for OrbiMed, the world’s largest specialist healthcare investment firm. He was not the only investor to say the broader market failed to appreciate the full scale of Astra’s opportunity in China.
“OrbiMed has been investing in China for well over a decade and we have a large investment team on the ground there,” he said. “We have seen first-hand how economic trends and government legislation have shaped an immense increase in healthcare consumption. And the innovation trend too has spread to China.
“Astra possesses the largest and fastest-growing emerging markets business of all the big pharmaceutical companies. It’s impressive.”
Better still, Alexion, the US firm that Astra is buying for $39bn (£28bn), has virtually no presence in China so the opportunities to sell its newly acquired drugs portfolio there will be huge.