SmithKline Beecham may retain the legacy of its experiment in building an "informatics" business through the appointment of Tadataka Yamada, MD, as its new head of research and development.

Yamada has been head of SmithKline Beecham's Healthcare Services business since 1996. SB has agreed to sell the two main components of that business, DPS and Clinical Labs (see following story).

SB stressed Yamada's recent experience in the diagnostics and reimbursement sectors as a benefit to his new R&D post. "In recent years, the process of pharmaceutical research and development has undergone dramatic changes because of the rapid evolution of basic medicine and the emerging financial constraints placed on health care markets," SB said.

The sale of DPS and Clinical Labs marks the end of SmithKline's attempt to build a direct presence in health care informatics, a strategy espoused primarily by CEO Jan Leschly.

During the April Wharton New Ventures conference, Leschly outlined an approach where SmithKline would create an information-based targeted care service business (designated "Ix"), built on the company's access to a database of pharmacy benefits ("Rx"), diagnostics ("Dx") and medical records ("Mx").

In the long run, SmithKline would have physician connectivity, Leschly said, noting that clinical labs already has that level of information access.

Even while trumpeting the strategy, Leschly acknowledged that it was a tough sell to the financial markets. Wall Street is not as enthusiastic about the Ix business, he told the Wharton conference; investors only care about the next blockbuster drug.

The restructuring of SB in one sense marks a rejection of Leschly's strategy and inevitably heightens speculation about the future of the company as he approaches his retirement in 2001.

However, it may be that SB will continue to pursue the informatics model, but only as it applies strictly to pharmaceutical research and marketing.

During the Wharton conference, Leschly spoke admiringly of Microsoft Chairman Bill Gates' management style, describing an office where the receptionists are not Microsoft employees and the company does no manufacturing. As part of the restructuring, SB is streamlining its manufacturing operations (see related story, p. 17).

SB may see a parallel between the long-term impact of its involvement in informatics and the outcome of its agreement with Human Genome Sciences for genomic data. At the Wharton conference, Leschly acknowledged that the exclusive agreement no longer gave SB an advantage because genetic data has become a commodity, but, he maintained, SB had a two- to three-year head start over most of the industry as a result of the HGS agreement.

More significantly, Leschly maintained, the HGS agreement "changed the culture of our 5,000 researchers. That was the real gain from it."

If SmithKline does pursue another horizontal merger opportunity, Yamada's experience in preparing for the divestments of DPS and Clinical Labs will also come into play. Leschly has been an aggressive advocate of generating critical mass in pharmaceutical industry research organizations.

Yamada has been a SmithKline board member since 1994, two years before he joined the company as an executive to oversee Healthcare Services. "He has been involved in all of the company's major strategic decisions," SB noted. Yamada will retain his board seat as head of R&D.

Yamada is replacing David U'Prichard, PhD, who resigned to pursue other interests. U'Prichard joined the company in 1997 from Zeneca ("The Pink Sheet" Aug. 18, 1997, T&G-10).

When SmithKline was engaged in merger negotiations with Glaxo Wellcome in early 1998, one of the details of the combined management structures that leaked to the financial press was that Glaxo's R&D management would oversee the combined organization. The merger negotiations eventually broke up over disputes about senior management roles.

Like U'Prichard, Yamada has a background in academia as the former chairman of the University of Michigan Medical Center Department of Internal Medicine. His publications are concentrated in the field of peptide biology and the molecular physiology of receptors.

SB Exits "Ix": Informatics Legacy Embodied By R&D Head Yamada

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