Book ContentS Foreword Introduction
Life Story Early days: 1960-1969 Growing pains: 1970-1979 Putting the Phenomenon on the map: 1980-1989 Momentum: 1990-1999 Into the 21st century: 2000-2010
CLuSterS, ConSteLLationS and CLoudS Consulting and support services Electronics Engineering Healthcare and Bioscience Software Telecommunications
no CLuSter iS an iSLand Entrepreneurs Government Incubators Money Networking and meeting places Research labs Science parks Service organisations Skills and training Universities
the future iS... Challenges
LaSt word What are the secrets of Cambridge’s success? Bibliography
introduCtion
t
he first section of this book describes the Cambridge Phenomenon from a chronological, historical perspective. But it is also helpful to look at what has happened around Cambridge in the last 50 years from a thematic point of view. The drivers of growth and their impacts on the Cambridge cluster have
clearly changed over time, so the second section of the book takes a sector-led approach to the Phenomenon.
Below: EDSAC I, nearly complete, W.Renwick.
However, while we can clearly see that instrumentation was an early driver, and that the development of computing played a crucial role in the boom of the early 1980s, it becomes increasingly difficult to pigeonhole Phenomenon companies into one sector or another as we approach the present day. Instead, we find convergence and overlap as innovators discover that a combination of technologies is
the best way to solve the problems they are addressing. For instance inkjet printing, which may have been classified as industrial in its original incarnation, today encompasses electronics, software and materials, and the relatively new field of biological computing is a far cry from the 3,000 valves and 32 5-foot-long delay lines that made up the room-sized EDSAC 1. Speaking at the Cambridge Phenomenon 50th anniversary conference in October 2010, Professor Chris Lowe, Director of the Institute of Biotechnology in the University of Cambridge, highlighted one very practical example where technologies are converging, in healthcare. Lowe described the potential for a contact lens that transmits information about blood sugar levels in the tear fluid, to help doctors monitor and manage conditions such as Type 2 diabetes. These devices will combine expertise not only in bioscience, but also in materials and ICT, bringing together what might have been considered completely separate sectors 20 or 30 years ago. There are clearly exciting times ahead as technologies converge and head off in totally new directions, but for the purposes of this book, it is not necessary to get bogged down in definitions and delineations. So we take a broad-brush approach, using themes such as consulting, electronics, engineering, software, biosciences and healthcare, which help us to highlight particular sectors and activities that have stood out as the Cambridge Phenomenon has evolved. Some companies will fall under more than one category, but where repetition is inevitable, this simply serves to demonstrate how interconnected the Phenomenon companies have become.
97
ComPuting
98
On 11th January 1982, the BBC aired the first episode of a new series, The Computer Programme. Aimed at teaching the public about computers as part of the BBC’s Computer Literacy Project, the series focused on the BBC Micro, a computer that had been commissioned specifically for the programmes. The Micro was designed and produced by Acorn Computers. Founded by Chris Curry and Hermann Hauser in 1978, Acorn was one of two Cambridge companies – the other was Sinclair Research – competing for the UK’s home computer market in the early 1980s. It was commonly assumed that the launch of the BBC Micro meant that Acorn had cornered the market, but Sinclair’s ZX81, launched nearly a year earlier, was already selling well; by the end of 1982, over 300,000 ZX81s had been sold, including 15,000 a month in the US. The BBC contracted Acorn to supply 12,000 Micros, but demand quickly exceeded expectations, and the company had to expand rapidly to cope, eventually selling almost 1.5 million machines. Meanwhile, Sinclair Research launched the rival ZX Spectrum on 23rd April 1982, which would go on to sell over five million units worldwide. Cambridge in the early 1980s was thus home to two world-leading computer companies, perhaps not surprising given that the University had already chalked up several firsts in computing. The ‘difference’ and ‘analytical’ machines designed by Peterhouse alumnus Charles Babbage in the 19th century are recognised as the world’s first computers. In 1949, Maurice Wilkes, Director of the
Cambridge University Mathematical Laboratory (renamed the Computer Laboratory in 1970), fired up the first digital stored program computer, the Electronic Delay Storage Automatic Calculator (EDSAC I). EDSAC II, the first full-scale microprogrammed machine, began operating in 1958, and was in turn succeeded by the TITAN in 1964, which had remote access and the first operating system. The Mathematical Laboratory was originally set up to provide services to University departments that required large amounts of number-crunching, such as radio-astronomy, meteorology and genetics, but Wilkes and his team also continued to develop the possibilities of the computer itself. Among these were graphical user interfaces and computer-aided design (CAD), which would sow the seeds of the computing cluster around Cambridge. The small size of the computer department and the University’s policy of short-term contracts meant that researchers who could not get permanent positions had to find some other way of making a living in their chosen field. So while Acorn and Sinclair Research may have been the first Cambridge companies to design and market computers, hardware and software firms were not new. Some 11 companies were represented at the first meeting of the Cambridge Computer Group, held in the Eagle pub in
Above: ZX81 - the ZX81 was a home computer produced by Sinclair Research and manufactured in Scotland by Timex Corporation. Left: BBC Micro (or BBC Microcomputer System) . www.computinghistory.org.uk
CLuSterS, ConSteLLationS and CLoudS Electronics
Far right: CAD Group 1968. Members of the CAD Group outside the Mathematical Laboratory (it was renamed Computer Laboratory in 1970). l to r Robin Forrest, Richard Pankhurst, Peter Woodsford, Andrew Armit, Phil Cross, Malcolm Wood, Peter Payne.
1979. At the second meeting later that same year, around 35 companies gave short introductions to what they were doing. By the time Sinclair and Acorn launched the era of the personal computer in the UK, Cambridge was already home to some of the leading players in the industry and beginning to see itself as a centre for computing excellence. Shape Data was one of the first to emerge, founded in 1974 by members of the University’s CAD group, Charles Lang, Alan Grayer, Ian Braid and Peter Veenman. In 1978, Charles’ brother Jack founded software consultancy Topexpress with John Ffowcs-Williams, the company numbering the Ministry of Defence among its clients. Topexpress was sold to Vickers Ship Building and then on to Computer Science Corporation, and its current incarnation has around 2000 employees in the UK. The CAD Centre itself would become a private company in 1983, and a publicly quoted company in 1996. It is now known as Aveva, with offices in 39 countries, a market capitalisation of more than £1bn and revenues of over £148 million in 2010. But the early promise heralded by Acorn’s and Sinclair Research’s booming sales, along with the accompanying glamour of Acorn-sponsored F3 racing cars, private planes,
and a knighthood for Clive Sinclair in 1983, was overcome by production problems and unfortunate business decisions, and neither company survived. In 1985, Acorn relinquished 79% ownership to Olivetti; a year later, the Sinclair computer brand was sold to Alan Sugar’s Amstrad. Despite this, the two companies have had a lasting, and decidedly positive, effect on the Cambridge Phenomenon. Hermann Hauser and Andy Hopper of Acorn co-founded the Olivetti Research Lab in 1986. Sixteen years later, when the lab was closed by its then owners, AT&T, a number of new companies were born out of the Lab’s existing projects, including Real VNC and Ubisense. Hauser went on to found Amadeus Capital Partners in 1997 and has been a driving force in the funding of technology companies ever since. Ex-employees of Sinclair Research have been involved in a number of Cambridge success stories, including world-leading DSL company Virata, (the first spin-out from the Olivetti Research Lab in 1993), which hit a market capitalisation of over $5 billion in March 2000; and a dozen Acorn employees set up a spin-out in 1990 to exploit a new microprocessor architecture they were developing, founding the company known today as ARM.
arm
“one of the most successful
spin-offs in the history of European technology-based industry. Garnsey, E, Lorenzoni, G, and Ferriani, S. 2008. Speciation through entrepreneurial spin-off: The Acorn-ARM story. Research Policy 37 (2008) 210–224.
100
ARM-based chips lie at the heart of many of the devices we use or rely on every day. The original SWOT analysis for the company, dated 18th December 1990, lists the strengths of the underlying technology as low power, low cost, simple and small. It is these qualities that have led to ARM’s ubiquity, with ARM designs being found in everything from smartphones to household appliances, and from computers to cars. By the end of 2010, over 20 billion chips based
on ARM designs had been manufactured. At the 2011 Consumer Electronics Show (CES), the biggest technology trade fair in the world, CEO Warren East pointed out to a Daily Telegraph journalist that “over 70% of all the stands have a product built on our technology.” Not bad for a company that started with 12 engineers in a barn. ARM grew from a project to design a faster and more efficient microprocessor for Acorn computers in the early 1980s. The project was backed with what Acorn co-founder Hermann Hauser described as “the only two things we had: no money and no people”. By 1985, Acorn’s engineers had designed the world’s first RISC processor. It was 20 times faster than the 6502 chip found in Acorn’s BBC Micro, but by this time the UK home computer market had collapsed and Acorn had to be rescued by Olivetti. By the end of the year, the RISC project was in danger of being closed down. Luckily, Apple was going to need a fast, low-powered chip for its Newton Notepad, and a deal between Apple and Olivetti/Acorn, with support from chip manufacturer VSLI, resulted in a new company, Advanced RISC Machines. The first employees were 12 Acorn engineers, including Tudor Brown (President since 2008), Jamie Urquhart and Mike Muller (now Chief Technology Officer). Robin Saxby (knighted in 2002) joined full-time as CEO in 1991. The team
Warren East – Chief Executive Officer.
CLuSterS, ConSteLLationS and CLoudS Electronics
101
Above: The chip which powered the very first Apple Newton and is arguably the reason why ARM Ltd was founded in the first place.
moved into a converted barn in Swaffham Bulbeck, saving money by putting in the telephone system themselves— “Andy Smith crawled through some very tiny spaces” according to the Acorn Newsletter that Spring.
Above right: ARM’s first office
a ‘chipless chip company’
Below right: The 12 founders from Acorn were all engineers. They were joined by Robin Saxby as CEO to add some commercial experience. At the end of 2010, ARM employed nearly 1,900 people; the majority of them are engineers. (ARM Annual Report 2010)
Saxby decided that ARM would licence its designs to semiconductor companies. These companies could then develop chips based on the ARM designs for their own customers. ARM would receive a fee for each licence, and then a royalty for every ARM-based chip the licensee company sold. This tied ARM’s success to the success of its semiconductor partners, but avoided the problems associated with manufacturing, or partnering with just one company.
the CamBridge Phenomenon 50 years of innovation and enterprise
ARM TOTAL REVENUES AND ROYALTIES 1995–2010 450 400 350
£ million
300 250
revenues £m royalties £m
200 150 100 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
102
Saxby knew the company would have to survive by selling licences until the royalties started coming in, and it was far from certain that the risk would pay off. Warren East joined the company in 1994 to set up a consulting offering so that ARM could work directly with semiconductor companies and their design teams. The turning point came when Texas Instruments licensed an ARM design in 1994, as part of its strategy to “win the mobile phone business of a relatively unknown Finnish company, Nokia” (Garnsey et al 2008). “It was an industry secret,” President of ARM Holdings Tudor Brown told Cambridge Business Editor Jenny Chapman, “but others
Above: an example of an ARM Powered® product.
started to take licences from us on the back of that.” By the time the new generation of Nokia phones was launched in 1997, consulting was a profit centre and ARM’s licence-royalty model started to bear fruit. Revenues more than doubled between 1998 and 2000. Warren East took over from Saxby as CEO in 2001. “The Nokia deal was key to making ARM central to the markets,” he points out. Today, more than 200 semiconductor companies have purchased over 700 licences, and royalties now account for some 50% of total revenue. The launch of the iPhone in 2007 gave ARM another boost, as it and competing smartphones rely on
Right: ARM1 building at Fulbourn Road Cambridge. Below: ARM9 processors play an important part in the IceCube project — a neutrino-detecting ‘telescope’ buried deep under the ice in the Antarctic.
CLuSterS, ConSteLLationS and CLoudS Electronics
several, more complex processors, multiplying the royalties ARM gets for every phone sold. But the company has always sought to extend its market beyond the mobile technology arena, and other products that rely on ARM include bar code readers, anti-lock braking systems, ATMs and hard disk drives. The company has also extended its business model, so that it not only designs the underlying architecture for chips, but also provides data engines, 3D processors, digital libraries, embedded memories, peripherals, software and development tools, analogue functions and high-speed connectivity products. ARM’s low-power mantra fits perfectly with efforts to reduce energy consumption. Each generation of ARM designs have been more efficient and used less power, going, as Warren East puts it, from needing the energy equivalent of seven custard creams to run the first chips to needing only a crumb in the latest generation. There is enormous potential for ARM designs to help reduce power consumption across a range of applications, including the big server farms that sustain the internet, and the 10 billion electric motors produced annually. ARM listed on the London Stock Exchange and NASDAQ in 1998. In 2010, market cap hit $6bn and ARM knocked Cadbury out of the FTSE100. In January 2011, Microsoft announced that ARM chips will power the next version of the Windows operating system, Windows 8, getting ARM into yet more devices around the world.
“Most people will use at least one ARM microprocessor – often several – each day, without knowing it. Financial Times 30 July 2007
103
BioSCienCe
144
A school leaver who started his training at ICI and a graduate from Imperial are among the founding fathers of the bioscience industry in and around Cambridge. Today, there are several science and research parks dedicated to biotech in the region – including the Babraham Research Campus, which recently announced a £44 million grant from the government to support bioscience innovation – but when Sir Christopher Evans, the Imperial graduate, launched his first company, Enzymatix in 1987, things were very different. Enzymatix had a £1.3 million investment from British Sugar, but despite this, its first home was an old sheep shed without any sinks. Starting out selling batches of enzymes for £750 a box to pharmaceutical companies, the
company would go on to develop a form of phospholipid that helped premature babies to breathe (which Evans and his colleagues tested on themselves), and a natural compound that ensured farmed salmon had pink flesh without the need for chemical dyes. The latter was sold to Abbott for £4 million. By 1992, Evans had met Alan Goodman. Goodman had come to biotech via ICI, Ciba-Geigy, Trebor, Agricultural Genetics Company and Medeva. He founded Advanced Technology Management (ATM) in 1992 to invest in and provide consultancy to biotech businesses, and Enzymatix was one of ATM’s first clients. Goodman’s advice was to split the company, which resulted in the formation of Chiroscience and Celsis. Chiroscience went on to list on the London Stock Exchange in 1994 with a market cap of £102 million, then merged with Slough company Celltech in 1999. The combined company was sold to Belgian biopharmaceutical company UCB in 2004, while several ex-employees, including Andy Richards, had already
Above: Professor Sir Christopher Evans OBE, in Enzymatix in the Daly Research Laboratories at Babraham. Left: Alan Goodman, founder and chief executive of Avlar BioVentures Limited, has spearheaded a number of biotechnology companies including Acambis, Oxford BioMedica, Intercytex and CeNes Pharmaceuticals.
CLuSterS, ConSteLLationS and CLoudS Healthcare and Bioscience
A busy laboratory at MedImmune Cambridge.
gone on to found new companies. Celsis, which focused on developing enzyme technology to detect microbial contamination, was listed from 1993 to 1999, when it was acquired by Chicago company J O Hambro Capital Management Group. Goodman and Evans would go on, separately and sometimes together, to found, co-found and fund numerous other companies, including Peptide Therapeutics (later Acambis, sold to Sanofi-Aventis in 2008 for £276 million), Enviros, Cerebrus, Merlin Ventures, CeNes, Oxford Biomedica, Amura, Salix and Avlar BioVentures. Evans even launched a non-biotech company, Toad, which developed car security systems. Cambridge University’s Laboratory of Molecular Biology (LMB) has also played a significant role in the development
of biotech. Set up by the Medical Research Council in 1947, LMB started out in the Cavendish – conveniently near the Eagle Pub where Watson and Crick would announce their discovery of the structure of DNA – and eventually moved into purpose-built premises on the Addenbrooke’s Hospital site on the outskirts of Cambridge in 1962. In 2012, LMB will move into new buildings on the same site, costing £200 million and partly funded by royalties from antibody research at the lab. With 13 LMB scientists sharing 9 Nobel prizes between them (including Fred Sanger who won twice), it’s not surprising that several biotech companies have been founded based on LMB research. Among them are Domantis, Ribotargets, BioGen and Cambridge Antibody Technology, CAT, which is now known as MedImmune.
medimmune
146
What we now know as MedImmune started out as Cambridge Antibody Technology, CAT, in 1990. Jane Osbourn, Site Leader for MedImmune in Cambridge and vice president, research, likes to talk about the nine lives of CAT, from the founding idea through building the product pipeline and listing on the London Stock Exchange to today’s presence as a global drug discovery and development organisation. Osbourn has been with the company since 1993, when she joined some 20 fellow employees working at the laboratory bench. Today, MedImmune Cambridge has over 500 employees and occupies three buildings in Granta Park. Work by David Chiswell, Greg Winter, John McCafferty and others in Cambridge University’s Laboratory of Molecular Biology in the 1980s demonstrated that human antibody fragments could be created and isolated using bacteriophages, opening up the possibility of the
therapeutic use of human monoclonal antibodies. Previous efforts to develop therapeutic antibodies from mice had been unsuccessful, so this research represented a major breakthrough. Winter and Chiswell, supported by the Medical Research Council, founded CAT in 1990 to develop their work into drug products. CAT spent its first few months in Winter’s laboratory, before moving to the Babraham Research Campus. Within two years, the company had moved to Melbourn Science Park, where it grew year by year to eventually occupy nine buildings. By 2000, another move was clearly indicated, this time to two buildings on Granta Park, and in 2008 MedImmune expanded into a third building. In the meantime, CAT had listed on the London Stock Exchange in 1997, raising £43 million. A secondary fundraising on the market in 2000 raised a further £93 million, and CAT also listed on NASDAQ in 2001. One of the early tasks was to develop the technology and use it to create an internal product pipeline. Licensing was seen as one way to build revenue to fund further development, and numerous licence deals were signed with a number of pharmaceutical and biotech companies, including Genzyme, Merck, Monsanto, Pfizer and Wyeth. By 1993, CAT had discovered a promising drug candidate, which they named D2E7. A collaboration with BASF produced the clinical candidate, which was christened Adalimumab and began early clinical trials in 1999. Abbott bought BASF’s pharmaceutical division in 2001, and proceeded to take Adalimumab through clinical trials to FDA approval under the brand name Humira (Human Monoclonal Antibody in Rheumatoid Arthritis) in 2002.
Left: David Chiswell, former CEO of Cambridge Antibody Technology
CLuSterS, ConSteLLationS and CLoudS Healthcare and Bioscience
Left: A teaspoon of the CAT library containing 100 billion medicines, part of the MedImmune technology portfolio Right: A vial of CAT libraries can contain up to 1011 antibodies
In 2003, CAT initiated legal proceedings challenging the level of royalties Abbott was paying on sales of Humira. The resulting court case found for CAT in December 2004, but the situation was only resolved when the two sides settled shortly before an appeal hearing. The litigation had depressed CAT’s share price, preventing the company’s proposed purchase of Oxford GlycoSciences in 2003. Humira became a ‘blockbuster’ – more than $1 billion in annual sales – in 2005, and global sales exceeded $5 billion in 2009. The resolution of the Abbott royalty case freed CAT to proceed with an alliance with AstraZeneca. The alliance had an ambitious scope of 25 projects over five years focused on respiratory diseases and inflammation. An innovative partnership structure was created which promoted joint collaborative discovery and development, and shared funding and management. AstraZeneca made a strategic decision to move into biologics two years later. Their experience of working with CAT in the alliance, in retrospect a form of practical due diligence, made CAT the obvious choice for an acquisition,
but CAT in return, knowing they needed a strategic partner because they did not have the resources to fund clinical development, spoke to several other big pharma companies and conducted their own due diligence on AstraZeneca, visiting their research centre at Alderley Park. The eventual result was that AstraZeneca bought CAT for £702 million in 2006. In 2007, AstraZeneca announced it had bought US company MedImmune for over $15 billion. Merging the new acquisition with CAT created a single biologics division, combining MedImmune’s manufacturing capacity and drug development pipeline with CAT’s antibody libraries and expertise in drug discovery. The resulting organisation took the MedImmune name because of its wider recognition in the important American market. MedImmune’s Cambridge operations focus on drug discovery to proof of concept (Phase II). The number of employees has increased by over 50% in the last two years, as the company builds its capacity to develop promising biologic drug candidates.
PRE-ORDER YOUR COPY TODAY TO SAVE ON THE RETAIL PRICE AND HAVE YOUR NAME LISTED IN THE BOOK AS A SUBSCRIBER
advisory Board order copies in advance, and make sure you or your company become part of this enduring record. Subscribe Supporter Sponsor Patron
£45 plus p&p (one copy and your name listed in the book) £225 plus p&p (5 copies and company logo listed on the Supporters page) £1,350 free delivery (30 copies, company logo on the end papers, logo listed on the Sponsors page) £4,500 free delivery (100 copies, customised dust jacket, own text on the inside front and back flaps, logo listed on the Patrons page)
Order online at www.cambridgephenomenon.com or visit the Third Millennium Publishing website at www.tmiltd. com (see The Cambridge Phenomenon under Forthcoming Titles). The retail price of the book after publication will be £50.00. If you would like to find out more about the Patron opportunity, please contact Charles Cotton on charles.cotton@cambridgephenomenon.com
about tmi Third Millennium Information (TMI) Ltd is the leading publisher of high-quality illustrated books celebrating great institutions. At Cambridge TMI has published books with ten colleges and also the official publication for the University’s anniversary celebrations – The University of Cambridge: an 800th Anniversary Portrait. Third Millennium Information, 2–5 Benjamin Street, London EC1M 5QL T: +44 (0)20 7336 0144 / F: +44 (0)20 7608 1188 / E: cambridgephenomenon@tmiltd.com
III
www.tmiltd.com
Gerald Avison Alan Barrell Billy Boyle Nigel Brown Matthew Bullock Deborah Cadman David Cleevely Charles Cotton Sherry Coutu Neil Davidson Warren East Harriet Fear Elizabeth Garnsey David Gill Prof Lynn Gladden Hermann Hauser
Walter Herriot Jack Lang Mike Lynch Sir Michael Marshall Bill Mason Tim Minshall Andy Richards Robert Sansom Christopher Saunders Sally Simmons Chris Smart Prof Michael Thorne Alex van Someren Shai Vyakarnam Bill Wicksteed
about Cambridge Phenomenon Ltd Cambridge Phenomenon Ltd, founded by entrepreneur Charles Cotton in 2009, has been set up to acknowledge the people, organisations, products, events and initiatives behind Cambridge’s unique information technology, bioscience and medical cluster. Our current initiatives have all been stimulated by the 50th anniversary of the Cambridge Phenomenon in 2010.
Cambridge Phenomenon Ltd Board of directors Charles Cotton, Chris Chapman, Theodoros Koutroukides, Joelle du Lac, Christopher Saunders, Jeff Solomon and Teri Willey.
the editor Kate Kirk has been a freelance editor and writer for more than 20 years. She has worked for international organizations, think tanks, specialist publishers and several leading European business schools. She grew up in Cambridge and has close family ties to the Phenomenon.