Glaxo Wellcome's chief executive is one of a rare breed - a scientist who has made it to the top of British industry. So how does he feel, Andrew Davidson wonders, about being responsible for laying off a thousand scientists?
A man not afraid of making a bold move, Sir Richard Sykes, short, dapper and bespectacled, bounds across his office to say hello in his broad Yorkshire accent. There is no trace of majesty in the handshake, nor of aloofness in the manner, as you might have expected from the boss of what is now Britain's biggest company by market capitalisation. But then Sykes, chief executive of Glaxo Wellcome, to give him his full title, is a rare breed: one of the very few scientists ever to make it to the top of British industry. And he looks as if he is enjoying himself.
Just two and a half years into the job he has already shaken up the pharmaceutical world by snatching rival Wellcome with a £9 billion bid earlier this year, setting aside a long-held tradition at Glaxo of organic growth and pulling off the biggest takeover corporate Britain has ever seen. He has swiftly merged the two groups to create a world number one, with a new mission statement and a new set of values, better prepared for a turbulent marketplace where rivals now seem to be gobbling each other up like aspirin.
At the same time he has surprised many by the ruthless efficiency with which it has all been done: panels drawn up to interview staff at both companies, large redundancies swiftly announced. Some found the sight of a former R&D director shutting down Wellcome's research centre and laying off a thousand scientists - among the 7,500 job cuts expected from the integration of the two companies - rather unappealing. It is fair to say that Sykes had a tough summer on the public relations front.
But if the experience left any scars he is not showing them. His grin is as broad and welcoming as a Cheshire cat's and his restless, nervous energy - remarked on by all who have worked with him - gives the impression that he can barely sit still in his seat. Combine this, say those who know, with a formidably sharp mind, a rare (for a scientist) gift for communication and a terrier-like enthusiasm and you have a full picture of the man. What Glaxo Wellcome gets is a 24-hour-a-day, ambitious, uncomplicated leader as happy in a lab coat as in pinstripes. What Sykes himself gets, of course, is nearly £1 million a year and the chance to take one of Britain's last world-leading industries by the scruff of the neck.
Which must be pretty satisfying if you have, like Sykes, worked your way up from a hospital pathology lab at the age of 17. Now 53, he has seen all sides of the drugs business - researching them, making them, selling them, both here and in America - and within 10 minutes of meeting him you get the impression that he knows exactly what he wants to do with his company, and if some of the old traditions get trampled along the way, so be it. Such conviction and certainty must be a useful asset at the top of a big company; it also means that some interesting changes are afoot.
Going, for instance, is the rather pretentiously grand head office in the old Saatchi building on the south side of London's Berkeley Square, where we meet. With its marble floor and tastefully expensive paintings, Glaxo's third-floor reception area seems more like that of an aspiring Manhattan bank than of a company whose products are a matter of life and death to many of its customers. Not Sykes's style at all, and he is moving his centre of operations to Glaxo's Greenford site in Middlesex. He has also swiftly dropped Wellcome's contribution to the Conservative Party. Glaxo already contributes - £60,000 last year - and many are now watching to see how long that continues.
For the present, though, Sykes is stuck in Mayfair, poor man. His sanctum is a relatively modest affair, tucked away down a corridor off the main art gallery, sorry, reception. He has a nice big desk, an old leather-inlaid boardroom table, a good stack of books, a couple of well-polished antique microscopes and a leafy view over the scurrying denizens of Berkeley Square. It doesn't really say anything much about him because, as he points out, with 92% of Glaxo Wellcome's £8 billion-worth of sales happening overseas, the boss spends most of his time on the hoof.
The convergence of Sykes and Glaxo's top slot make for an interesting parallel study. He has made it by the back route: no fancy schools, no slick City training.
Born in 1942, he was brought up, the youngest of three brothers, in a village outside Huddersfield. His father was a carpenter, his mother helped run the family smallholding. He attended the same grammar school as the late Harold Wilson, enjoyed science but was not, at that stage, academically inclined. He left school at 16 and at 17 went on to work in the pathology laboratories at Huddersfield Royal Infirmary never for a moment dreaming that 35 years later he would end up running the biggest company in Britain. 'Life', he says as he beams at me, 'is full of surprises.' 58e Pathology and disease, it turns out, were his metier. From Huddersfield he moved south to do a degree in microbiology at London University, then west to get a doctorate in microbiology from Bristol University. 'Infectious diseases really fascinated me,' he says, admitting that, on the down side, it didn't do much for his social life. Forced to choose between university and commerce, he finally joined Glaxo in 1972, at the age of 29, as head of the antibiotic research unit, before moving to the American rival, Squibb, in 1977. He worked in America for nine years - a formative experience - before rejoining Glaxo in 1986 as deputy head of Glaxo Group Research. It appears to have been a happy reunion. He returned a different man to a very different company.
For the company he left was basically a minnow, operating mainly in Britain and the Commonwealth selling antibiotics. It had, at that stage, no big ambitions and not too many big products, and did business in an environment that did not encourage rapid corporate growth. By the '80s all that had changed. On the back of the discovery of one immensely popular drug, Zantac, the anti-ulcer treatment, and a formidably fast expansion programme in America, Glaxo had suddenly become a British blue-chip giant.
How it did it is still the subject of some debate. You can hand credit to the scientists, or to the marketing men, or to the autocratic vision of Glaxo's former chairman, Sir Paul Girolami, or to Mrs Thatcher for providing the appropriate political and economic climate, or even to the poor old NHS, which allows British drug companies unique access to a national healthcare system, but whoever or whatever was responsible (probably a combination of all five) you have to acknowledge that Glaxo's growth has been, by any standards, remarkable. For Sykes, newly enthused with American-style drive, a job at R&D was the perfect homecoming present.
Since then those in front of him on the promotion ladder have simply melted away. Former managing director Bernard Taylor (now chairman of Medeva), former commercial director John Burke and former chief executive Ernie Mario were all notable departures from the increasingly fractious Girolami regime of the late-'80s and early-'90s; before them research directors David Jack and Ian Shedden had been pushed aside. Sykes slid smoothly upwards. When I ask him if he was a good political operator, he replies without blinking that Glaxo was never a particularly political company. 'If there were a lot of colleagues jockeying for position then they weren't jockeying for it in R&D,' he laughs.
Yet finally Sykes emerged as the man with the plan, and a crucial grasp of both sides of the drug company game: science and finance. Why him? A mix of serendipity, a quick brain and an easy loquaciousness. Those who work with him describe him as an excellent communicator, almost in a tone of surprise, as if most people's experience of scientists at Glaxo is that they can only speak gobbledygook. And running a major drug company really does call for some very special skills.
For a start, just consider the quirks of the marketplace: drug companies are frequently reliant on a handful of best-selling wonder-products which make them a fortune but tend to have a limited lifespan; they have to invest hundreds of millions of pounds in research and development with no certainty of return; they have to target myriad different customers - governments, healthcare companies, doctors, patients - often at the same time; and they have to choose the product areas that will give the best return because they have to satisfy shareholder demands.
Add to this the fact that the marketplace is bizarrely fragmented, and that most drug companies have a serious image problem, as they are seen to profit from other people's misery (witness the rumpus over Wellcome's pricing of its AIDS treatment Retrovir, or indeed Glaxo's pricing of its migraine treatment, Imigran), and it is clear that running a pharmaceutical giant is not like running Ford or Unilever. For over a decade Sir Paul Girolami steered a steady course committed to organic growth on the back of good R&D and excellent marketing, building sales to £5 billion, employee levels to 40,000 and earning a reputation for Glaxo as a good, blue-chip bet in the City, if a little over-generous in its executive remunerations. Now Sykes has turned the organic part of that strategy on its head. Why?
Two reasons, he says. First, the squeeze on healthcare costs caused by recession. Drug companies, with what is perceived as their arbitrary pricing of products, are easy targets for governments trying to cut costs. And second, Zantac. 'You cannot continue to grow organically if you have got a £2.4 billion product that is going to go on the decline, however clever you are. So recognising the need to have a bigger market share, and to compete in world markets, the only way to do that quickly was to take over another company.' Hence last January's bid for Wellcome, a move which took many by surprise, including, ironically, Glaxo's merchant bank, Lazard, which had long since given up hope of getting any big business out of its client. Nicholas Jones, Lazard's managing director, who worked closely with Sykes on the takeover, says the speed with which the new Glaxo boss picked up the financial intricacies of the bid, and his assurance in pushing it through, were remarkable.
Why Wellcome? Because, says Sykes, it is the right size to be managed, the right shape to be easily integrated, and it had a weakness that made it an easier prey than others: it was 40%-owned by the Wellcome Trust, a charitable foundation which had a fiduciary duty to maximise its income. In effect the deal was done in informal talks between Lazard and the Trust's advisers at Fleming's before the bid was even made. It looked a stroke of genius - and treachery - and infuriated Wellcome's executives.
Now of course, with Fisons accepting Rhone Poulenc Rorer's £1.8-billion offer in October, and others looking around, it seems a doubly prescient move, but doubts still remain. If the need for ever-greater R&D means increasing consolidation, does that mean pharmaceuticals will eventually end up like the aircraft industry, with just two commercial manufacturers? And anyway, no-one has ever convincingly argued that being big necessarily makes you any better at finding the right drugs.
But there is no doubt Sykes enjoyed the experience. He lights up when he talks about the bid, and 60e looks almost disappointed when he says there won't be any more big acquisitions for five years, or at least till the new Glaxo Wellcome operation is working smoothly. In the past he has described the bid as the most exciting period of his life. Does he want that to stand? 'Yes, it's exciting not only because of what you get out of yourself but also out of your colleagues. You see everyone change - this place was like a wasps' nest. It was incredible how people changed, people you thought of as normal, staid individuals, suddenly became activated. It was such a wonderful experience to perceive people in that mode.' And if Sykes did get completely caught up in the emotional rush of the situation - apparently he didn't even tell his wife what was going on in case some silver-tongued journalist should prise it out of her - he was nothing if not coldly rational in evaluating what could be done post-takeover. It is, he points out, a wonderful opportunity to 'reskill'. 'It's not just Wellcome people being laid off,' he explains. 'I believe it has been a fair process all the way through. Certainly a lot of Glaxo people have said, "Why the hell do we have to go through this?"' Doesn't he worry some might think him callous? 'I'm sure some people do,' he says, perhaps mindful of his recent interview on the Radio 4 Today programme, when he appeared quite surprised that anyone could doubt the logic of Glaxo's move to close Wellcome's research park in Beckenham, Kent. 'But I have to worry about the future of this company. I am quite sure there are a lot of people out there who don't feel warm towards me, but that's not the point. I cannot run a company on the basis of what people think about me. I have to run the company on the basis of what I believe is right for it in the long-term.'
But for the older scientists laid off, disposed of like so many unwanted laboratory rats, it must be particularly galling to see one of their own pushing this through. How many jobs for scientists are there in Britain? Not many. 'Yes,' says Sykes, 'we knew that jobs would be lost and sites would be closed and said so.... The environment changes. We have got to change. How do you think we are here today? We are here through natural selection, through evolution, through change, it has to go on through every aspect of life.
'You have to recognise that there has been a shift in this industry and it cannot continue as it has done in the past. It is a high-tech business where the top five companies don't even control 20% of the market - that is unheard of. Sustainability is meaningless in those circumstances. You have got to be visionary and say, "If I don't do it, a hell of a lot of jobs are going to be lost anyway, but if I do do it, the chances are we might be creating a lot of jobs in the future...." It is not pleasant, but it has to be done, it is part of the system.' The system in the past, of course, has not been that welcoming to scientists at the top of big British companies, even if they can bring a certain icy, analytical rigour to business problems. Sykes says his own move was a fairly drawn-out transition.
'There was no paradigm shift from scientist to businessman. As a scientist I was always interested in the applications. In the '70s I spent a lot of time with the marketing people at Glaxo, and the same at Squibb. It's a process that goes on over years.' Yet it is difficult not to conclude that America had a far more positive influence on Sykes' business style than his experience as a scientist ever did. He says he left Britain because he didn't like the mess it had got into in the 1970s. America, and the American way of doing business, were a revelation to him.
'I loved America, it's my kind of place,' he says, 'lots of energy, drive, enthusiasm, let's get on with it, get it done. You know, every time I did well at Squibb, the people there would hold a party. Fantastic! You got promoted. I was a Brit in an American company and everyone was so pleased.'
And here every time he got promoted everyone just grumbled, 'Oh no, not him again?' Sykes laughs. He continues: 'When I came back I thought, that's the great objective, to inject it here, and I hope I have to some extent. But it's not the same and I wouldn't want it to be. No question about that.' At this stage he looks rather wistful. So what brought him back? The warm beer, solid breakfasts and gloomy Sundays? No, he says, what brought him back was simply 'the pragmatism of the job'. He could have stayed in America but was at the point where if he did, his two children would have become American. So he returned to Chalfont St Giles, where he lived when at Bristol University. Now he has a big house there with a nice garden. Lean and wiry, he keeps fit swimming three times a week and playing tennis, and perhaps a bit of golf. You get the impression that the big salary is just a bonus - he says he has spent his money on a nice flat in London and a house for his daughter in Oxford, where she is a medical student - because all he really wants to do is work.
And in that it's hard not to conclude that Sykes, like many of our best scientists, is actually quite a simple man - enthusiastic, dedicated, without any of the hauteur or insecurity that some of Britain's corporate leaders can manifest. He shows me his old microscopes when I ask, although he seems slightly embarrassed, like a train-spotter caught with his timetables. Yet for all that, he is obviously a sharp political operator, or he would never have got as far as he has.
So I put it to him that perhaps the real problem drug companies should address is not whether the future is big or small, or about balancing marketing and science, but just why they are disliked so much? Is it still the backlash from Thalidomide? He didn't seem at all taken aback.
'Funny, isn't it?' he says, 'because really, we should have the opposite image. People should love drug companies, we put so much money into R&D, incredible amounts of money into the infrastructure.
'I do believe there were probably renegades in the past as there are in all industries, but look at a company like ours, with high ethical standards, working with the health and academic infrastructures, trying to build partnerships, trying to produce better drugs, and I don't know why there is this antagonism. If we didn't do it, nobody else would, I assure you.' He shakes his head in disbelief. When, he asks, did you ever hear of a doctor finding a drug? When indeed. It's a debate that has run for years, and it will be interesting to see if Sykes, with his scientific background, gets any nearer to sorting it all out.
1942 Born in Huddersfield
Educated Royds Hall School, Huddersfield; London University; Bristol University
1972 Head of antibiotic research unit, Glaxo Research
1977 Assistant director, department of microbiology, Squibb Institute for Medical Research
1979 Director of microbiology and associate director of Squibb Institute
1983 Vice president, infectious and metabolic diseases, Squibb Institute
1986 Deputy chief executive, Glaxo Group Research
1987 Group research and development director, chairman and chief executive of Glaxo Group Research
1993 Deputy chairman and chief executive of Glaxo plc
1994 Knighted for services to pharmaceutical industry
1995 Deputy chairman and chief executive, Glaxo Wellcome plc
What people say
'I think he was extremely impressive throughout the bid process. I can't think of a single question that caught him out. He is a very rational man, he won't let you get away with an emotional argument.' Nicholas Jones, managing director of Lazard's
'I have to say his appointment as chief executive at Glaxo was very good news for the scientific community in general. There is a tendency in this country to undervalue science. In Germany, for instance, there are far more scientists heading large organisations. I just hope other companies will take Glaxo's lead.' Dr Malcolm Green, president of the British Lung Foundation, where Sykes chairs the business leader group, and director of the British post-graduate Medical Federation
'He has a highly effective grasp of both aspects of the business, scientific and financial. It is remarkable how much he has matured in such a short time.' Lord Howe, non-executive director of Glaxo
'He has a highly analytical mind and that is helping him cut through a lot of traditions and past baggage at this company.' Sir John Cuckney, Glaxo's vice-chairman
'The Glaxo offer is long on cost cutting and short on business building. I do not see how you are going to produce more drugs with fewer scientists.' John Robb, chairman of Wellcome at the time of the Glaxo takeover.