New digs. Novartis will set up shop in this MIT-owned building.

Novartis Sows Its Future in U.S. Soil

CAMBRIDGE, MASSACHUSETTS--It was no mere political braggadocio when U.S. Senator Edward Kennedy (D-MA) last week called Cambridge's Kendall Square the "epicenter of the biotech world." The Swiss drug giant Novartis, based in Basel, intends to set up a $250 million research facility here that will guide its overall R&D efforts.

The new center--the Novartis Institute for Biomedical Research Inc.--will coordinate the company's $2.4-billion-a-year R&D portfolio in the United States, Japan, and Europe. The lab, slated to open early next year, initially will house 400 scientists--eventually staffing up to 1000--and will specialize in developing drugs against diabetes, cardiovascular ailments, and viral diseases. Novartis's market is increasingly centered on this side of the Atlantic: Less than one-third of the company's sales are in Europe, while 43% is in the United States.

Novartis's move is the latest blow to European drug research and reflects the company's efforts to keep U.S. competitors in its sights. "Europe created its own problems by failing to ... ensure a dynamic research environment," explains Novartis Chief Executive Officer Daniel Vasella. In Europe, there is more resistance to links between industry and academia, and European governments have failed to match the prodigious investments in biology and biotechnology made by both the U.S. government and venture capitalists, Vasella says: "The U.S. has pursued a much smarter policy."

Members of the Swiss scientific community agree that their research programs are underfunded and offer few incentives to retain young talent. Last November, the Swiss Science and Technology Council launched a petition imploring the government to boost the research budget by 10% within 5 years. "The Novartis move is a very serious symptom of the downhill course of research in Switzerland," says Catherine Nissen-Druey, the advisory body's vice president. "It sends a message to young Swiss scientists that research is more promising in the USA than it is here."

With reporting by Helena Bachmann in Geneva

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