Back to previousHenry Wellcome's legacy: The Wellcome Trust
20 January 2009. By Penny Bailey
"With the enormous possibility of development in chemistry, bacteriology, pharmacy and allied sciences…there are likely to be vast fields opened for productive enterprise for centuries to come." (Sir Henry Wellcome's will)
Early years
Following Wellcome's death, the Trustees ran into a number of teething problems, which were aggravated by the demands of World War II and postwar reorganisation.
First, they had to appoint a Board of Directors to run the Wellcome Foundation Ltd (the pharmaceutical company), which had been largely under Henry Wellcome’s personal control
They also had to decide what to do with Wellcome's collections, most of which at the time of his death remained unpacked in storage. This was exacerbated by confusion caused by the fact that Wellcome's museums and collections were formally assets of the Foundation. To simplify matters, the Trustees later made themselves legal owners of the history of medicine museum and library, while the research laboratories remained assets of the pharmaceutical company.
The bombing of the Foundation’s headquarters in Snow Hill in Holborn in 1941, and their subsequent move to the Wellcome Research Institution at 183 Euston Road, further disrupted plans to unpack, catalogue and display the museum and library.
The Trustees also had to bring Wellcome's two excavations in the Middle East (Jebel Moya in Sudan and Lachisch in Palestine) to a proper conclusion. The research was completed and published after Wellcome’s death.
Drug discovery
The complexity of Wellcome’s affairs and diverse enterprises - along with the need to pay enormous Estate Duties - kept the Trust’s income fairly low in its first 20 years: the total charitable expenditure for the period was £1.2 million.
But from 1966 to 1986, the Wellcome Foundation evolved from a pharmaceutical company with sales of £32 million to one with sales of over £500 million. This huge jump in profits allowed the Wellcome Trust to greatly increase funding of scientific research over the period.
Rather than the traditional trial-and-error method of drug discovery, Hitchings and Elion pioneered what is now known as 'rational drug design' - investigating specific molecular targets for potential drugs.
This approach led them to develop the first effective leukaemia drug, 6-mercaptopurine (6-MP). They developed a number of other related drugs using the same principle and found these suppressed the immune system. This made it possible for patients to receive organ transplants without their bodies rejecting the new organs.
The team also developed allopurinol, a drug successful in reducing the body's production of uric acid, thereby treating gout, a condition caused by the build-up of uric acid in the joints.
Elion's research was essential in the development of acyclovir, an antiviral drug that interferes with the replication process of the herpes virus. The same principle led her colleagues eventually to develop AZT, the first important weapon in the arsenal of AIDS medications.
Hitchings and Elion were jointly awarded the 1988 Nobel Prize in Physiology or Medicine, together with James Whyte Black.
Share sales
Until the 1980s the Wellcome Trust remained the sole shareholder of the Wellcome Foundation Ltd. By the end of 1985, the Wellcome Trust's grant allocation was around £26.5 million and the Wellcome Foundation was valued at £1 billion.
Sir David Steel, Chairman of Trustees since 1982 (and ex-Chairman of British Petroleum), believed that rather than depend upon one source of income the Wellcome Trust’s income could be increased if it converted some of its interests in the pharmaceutical company into a well-managed investment fund.
So in February 1986, the Wellcome Foundation was floated on the stock market as a private limited company, renamed Wellcome plc. The Trust sold off a quarter of its holdings during the flotation. Reinvestment by the Wellcome Trust produced £211 million.
Under the guidance of the next Chairman, Sir Roger Gibbs, in 1992 the Trust sold a further 288 million shares in Wellcome plc, reducing the Trust's shareholding in Wellcome plc to 40 per cent. As a result, the Trust doubled its income and became the world's largest grant-giving charity.
To protect the Trustees, who were liable for the entire share sale worth £2.3 billion, during the 1992 sell-off a new corporate entity was formed: the Wellcome Trust Ltd. This private limited company became the sole Trustee of the Wellcome Trust, and the Trustees became Governors instead. The Governors, aided by the Executive Board, now act like a board of directors managing a company. They are responsible for the activities of the Wellcome Trust, including its expenditure and investments, but have no personal liability for the Trust’s assets.
In January 1995, the Trustees sold most of their remaining interest in Wellcome plc to Glaxo plc, enabling a takeover. This increased the Wellcome Trust's total assets from £5.3 to £6.8 billion. The Wellcome Trust kept a small 4.7 per cent stake in the new company, Glaxo Wellcome plc.
The merger between Glaxo Wellcome and SmithKlineBeecham in 2000, which created GlaxoSmithKline (GSK), left the Wellcome Trust with a shareholding in the new company of less than 3 per cent. It sold a further tranche of shares in 2002 for £1.78 billion.
This asset diversification led to a period of extraordinary growth for the Trust: between 1988 and 1 October 2000, the Wellcome Trust's asset base grew from 3.4 billion to some £15 billion. And its annual spend on research increased from an average of £28 million in the 1980s to £650 million in 2007.
This growth has allowed the Wellcome Trust to help fund one of Henry's wishes: "the advancement of medical and scientific research to improve mankind's wellbeing." As an editorial of the 'British Medical Journal' stated (rather prophetically) upon the creation of the Trust in 1936: "The Trust has every appearance of being a big undertaking, bigger in the next generation than it can be in this. Upon the Trustees, especially those representing medicine and the ancillary sciences, a great responsibility will rest for the worthy investment of the sums which periodically become available...The acceptance of the Trust could only be regarded as a public duty - a duty not only to the past, to carry out the wishes of the testator of a philanthropic vision, but also to the future, to the various work with unimagined possibilities which may be started as a result of this inheritance."
Reference
Editorial: The Wellcome Trust. Br Med J. 1937 January 30; 1(3969): 224-225.