GlaxoSmithKline And McLaren: Doubtful Synergy

| About: GlaxoSmithKline (GSK)

Is it just me, or is this sort of. . .baffling?

GlaxoSmithKline (NYSE:GSK) today announced that it has formed a long term strategic partnership with McLaren Group. The partnership, which will run initially until 2016, brings together two UK companies focused on innovation and high-tech research.

Well, yes, I suppose it does. But one of them makes drugs, and the other runs Formula I races. When you get down to the details, such as they are, you find this sort of thing:

A new state of the art learning facility will also be built as part of the agreement, focused on developing UK engineering skills and processes. Called the 'McLaren GSK Centre for Applied Performance', it will be located at McLaren’s Headquarters in Woking and open in 2013. Employees from both organisations and business partners will be able to use the facility to share ideas and collaborate on joint working projects.

Whatever those might be. I could sit back and make catty remarks for another paragraph or two - it's a temptation - but here's what's behind that impulse: while it's true that both companies are engaged in using technology, they're doing it in very different ways and to different ends. A racing company is working with very fast cars. The general principles of building very fast cars, though, are already known, and the question now is how to make them just a bit faster than the other people's. Testing any ideas and techniques that are developed is also relatively straightforward - you have static testing rigs, you have test tracks, you have numerous Formula I races every year, and all of these things give you direct feedback about just how well you're doing. I'm sure that the McLaren people are quite good at taking these results and turning things around quickly - thus all the talk in the press release about their fast, dynamic decision making.

But the drug discovery process is quite different. If we start out trying to make a Whateverase 3A inhibitor for Disease X, there is no assurance at all that such a compound can exist. There's usually not even as much assurance as you'd like that such a compound will do for Disease X what you think that it'll do - witness the clinical failure rates. And the process of finding, developing, and testing such a compound takes years - given all the problems that have to be solved, and the necessity of human trials, it cannot help but take years. The McLaren people are not faced with a ten-to-fifteen year wait before they can get a single car into a single race, and once there, do 90% of their cars fail to complete the course at all?

Let me try for a wider explanation, because this is all coming very close to what I'll call the Andy Grove Fallacy. The single biggest difference between the two types of R&D is this: McLaren is trying to optimize a technology that was discovered and developed by humans. GSK is trying to optimize against one that was not. Really, really not human, not done with human motives or with human understanding in mind. Living systems, I believe, are the only such technology we've ever encountered, and it's something to see. Billions of years of evolutionary tinkering have lead to something so complex and so strange that it can make the highest human-designed technology look like something built with sticks. To give Andy Grove a tiny break, the devices we've built in the IT industry (and the software used to run them) are the closest approximations, but they're really not very close, because we made them, and what human ingenuity can make, human ingenuity can understand. The body-temperature water-based molecular nanotechnology that's running us (and every other living thing on the planet) is something else again. And it comes with no documentation at all, other than what we can puzzle out ourselves, a process still very much incomplete.

So no, I don't think that a company that races cars can help GSK out all that much with the fundamental problems of its business. But I haven't seen that state-of-the-art learning facility, which will be ready in only a couple of years. We'll check back in and see how things are going.