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Director, January 1997 The spin-off steams aheadBefore becoming CEO of Oxford Molecular Group (OMG), Tony Marchington organised steam engine rallies for a living. This may not seem like an obvious qualification, but it has worked.The business has thrived, acquiring companies and forging alliances in that most fashionable of all areas of high technology, pharmaceuticals. OMG's origins were as a software house, developing computer aided molecular design software and other IT tools. Bioinformatics is the label for this hinterland between information technology and biotechnology. OMG, says Marchington, leads the field in bioinformatics. "Our capability there is number one." Marchington's history is more than just steam rallies. After taking a degree in chemistry at Oxford, he stayed on at the university to work on a PhD with Graham Richards in an area of research that was to become bioinformatics. "It was following what was then a really novel concept," says Marchington, "that you could use computers to calculate the properties of molecules and try to relate those properties to pharmaceutical activity." The concept interested ICI, which recruited Marchington. But he soon began to have reservations, both scientific and personal. "I had only been there about a year and it was clear that this technology was being grossly over-sold. People said that you could design drugs by computer which was complete rubbish." On the other hand, the hysteria gave Marchington's the idea of starting a company to develop the technology. He also decided that he wasn't cut out to be a research scientist. "Intrinsically I always knew that I would be my own boss." So in 1980, he went back to Richards and suggested starting a company. Marchington was persuaded not to abandon his position as ICI's rising star, instead making the switch inside the company. "One Friday night in January 1983, 1 was a jeans-and-sweatshirt young scientist running computer jobs, and on Monday morning I was a guy in a suit preparing to negotiate with a Japanese company for a new active ingredient." Steam rallies came next on the career path, first for charity, then for profit. Before long, Marchington was putting on six rallies a year. Eventually he decided he would become a full-time, professional organiser of steam engine rallies, which he did until the call came from Oxford. A change in the rules gave universities more control over their own commercial destinies. This prompted Oxford University's own spin-off company Isis, to ask Marchington if he would think again about commercialising the bioinformatics research At first he was sceptical. "I said that eight years was a long time in this game, they should license it out." Isis soon came back to Marchington with the tale of one chief executive who had refused to get on the train from London to look at the new generation of science in Oxford. Right, said Marchington, and OMG, was born. OMG, has had its ups and downs. At first it was difficult to raise the princely sum of ú350,000. Then, in 1991, the cash dried up. "We had one month where we delayed salaries," says Marchington. "But the products were improving all the time and we were learning an awful lot. We started to get a belief in ourselves that we were going to succeed?" A nail biting second venture-capital round raised another million, enough to stay in business - just. OMG's April 1994 flotation price of 80 pence raised £9.3m net. In mid-November 1996, it was 370 pence, with capitalisation at around £225m. Since the float, OMG, has bought up a number of competitors, including several in the US. It has also changed its business strategy. No longer is the company dedicated solely to IT tools for the pharmaceuticals industry. It has also entered into drug development alliances. Here, the strategy is to assemble small "virtual teams" to develop drugs, combining the modelling expertise of OMG, 'with scientific skills drawn from the company's network of academic contacts. Such an approach fills what Marchington's sees as a gap in the expertise of the large companies, the ability to demonstrate "proof of concept", showing that a scientific idea has the makings of a new pharmaceutical compound. Marchington's envisages a rapid increase in contract research revenue from eight per cent in 1994 to over 30 per cent this year. Marchington has put OMG in an interesting position. It not only collaborates with the likes of Glaxo Wellcome to develop core technologies in bioinformatics, it works with drug developers to create the all-important new chemical entities. And, coming as it does with computers rather than biology, OMG, is free to roam the whole of medicine. With the prospect of a formidable royalty stream to go along with the income from its own sale, OMG could stay in steam for a few years yet. |
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Michael Kenward ©2000 Last changed 07 February 2008 |
