Being Better Off as Part Of a Bigger Company

I've been part of the biotech, high-tech community since I joined MedImmune on April Fools' Day in 1992. I have always been a fierce advocate of MedImmune's independence as the best way to build the business.

But I would say that the deal got done [allowing British drug giant AstraZeneca to buy MedImmune] because for the first time in my tenure, and we really had gone through bad times and good times, I came to believe that all of MedImmune's stakeholders -- shareholders, employees, patients and those working in the communities in which we do business -- would actually be better off with MedImmune as part of a larger multinational company than as a, from my perspective, small independent company.

The things that drove that decision for me were some of the things that many of you as leaders of other biotech and tech companies in the region struggle with all the time. We needed to continue to build our research and development portfolio aggressively, and yet we had short-term deliverables required by Wall Street as an independent public company.

We frankly had had a tremendous grace period from our shareholders for a number of years while we ramped up our R&D. We tripled our R&D investment between 2004 and 2007, but we needed to bring that to a halt as an independent public company and begin to drive short-term earnings -- consistent, predictable short-term earnings and revenue growth.

Frankly, I didn't believe that was the best way to build long-term shareholder value, and I thought we had an opportunity to build a bigger and better company if we didn't have to be quite so focused on those short-term requirements.

In addition, at MedImmune, we had reached a point in time where we needed to begin to think globally and not just as a U.S.-focused biotech company. Our commercial organization, sales and marketing team really was exclusively focused on the United States and the infrastructure investment and the talent requirements to become a global company were just very hard to do as an independent public company.

So those were some of the macro things that made us think [about a sale], and then there were some micros going on at the same time. No. 1 was the maturation of our lead product, Synagis, [a drug that prevents certain respiratory infections in babies]. The growth rates after its 10th year on the market are inevitably a bit slow. While it is generating more than $1 billion a year in revenue and it is a real flagship for the whole biotech industry, it isn't growing at 30 percent a year anymore, and that has big implications for how your stock is traded in the market.

At the same time there were some shorter-term challenges related to late-stage product development hurdles, with getting [the nasal flu vaccine] FluMist over some final hurdles that the Food and Drug Administration had launched and getting through some final milestones with the development of Numax, [a new version of Synagis].

When I added all those up, the macro and the continued need to build the R&D pipeline, and weighed all that against the tension of driving short-term revenue and earnings growth and some of the near-term tactical challenges in the business, for the first time in 15 1/2 years, I really thought that we'd be able to do a better job for our shareholders if we were part of a bigger company.

David M. Mott is chief executive of MedImmune in Gaithersburg. This commentary is adapted from a speech he gave Thursday to the Tech Council of Maryland/MdBio, the first time he spoke about his company's $15.6 billion sale to British drug giant AstraZeneca.