In the past six months, Duke University and UNC-Chapel Hill have opened drug discovery centers and recruited GlaxoSmithKline executives to lead them. As director of Duke's new center, Dr. Allen Roses plans to go one step further. A researcher who has spent most of his career studying Alzheimer's disease, Roses wants to establish a virtual pharmaceutical company at the university.

The idea is to "combine the brainpower of academia with the know-how and money of the pharmaceutical industry," he said.

Several universities have created drug discovery centers in the past year or two, including Emory University in Atlanta and Vanderbilt University in Nashville, Tenn.

The efforts follow years of turmoil in the pharmaceutical industry. Despite major funding increases for research and development -- from about $15.2 billion in 1995 to $44.5 billion last year -- the number of new medicines receiving regulatory approval has stagnated. Meanwhile, large drug makers are increasingly squeezed by competition from cheaper generic medicines.

Struggling to make up billions in lost sales every year, drug makers have restructured, reorganized and laid off workers to reduce expenses. In the past year, Pfizer, GSK, Novartis, AstraZeneca and Bayer have announced nearly 30,000 job cuts worldwide.

Pharmaceutical executives who lost their jobs in mergers and cutbacks used to go to the competition or become chief executives of small biotechnology companies.

Some, of course, still do that. But this time around, academia beckons with a promising new opportunity.

"Academia should help them if pharma can't do it all," said Dr. Sandy Williams, senior vice chancellor at Duke, referring to accomplished researchers looking for greener pastures outside the troubled pharma industry.

Williams contends that the business model of the pharmaceutical industry is under siege. But at the same time, he said, the National Institutes of Health is offering universities a new source of funding to speed up the discovery and development of drugs. By 2012, the NIH grant program aims to establish a consortium of 60 academic medical centers and provide them with $500 million a year.

Duke University was one of the first grant recipients in 2006; it will receive about $12 million annually over five years. In the spring of 2007, Williams started talking to Roses about returning to Duke. It seemed a natural fit.

Roses had made a name for himself in the 1990s, when he went public with data linking a gene to Alzheimer's disease. He developed his theory after becoming the first director of Duke's Joseph and Kathleen Bryan Alzheimer's Disease Research Center in 1985.

The theory was groundbreaking and controversial. Researchers working in Roses' laboratory at Duke were slighted in scientific publications, and Roses fought with the NIH over federal funding, the lifeblood of medical research at a university.

In 1997, Roses left Duke to join Glaxo Wellcome, a GSK predecessor. The company had bought the rights to his Alzheimer's discoveries three years earlier.

After 10 years, a merger and two changes in the company's research and development leadership, Roses had had enough. About to turn 65, he retired from GSK on Oct. 5, 2007.

He wasn't ready to call it quits, but he didn't want to go to another large pharmaceutical company or start a biotech company.

What he wanted to do was act on lessons he had learned while he was in charge of research departments at GSK's U.S. headquarters in Research Triangle Park.

Roses blames the pharmaceutical industry for a lot of its drug-discovery failures.

Nothing makes drug discovery more difficult and expensive than replacing the head of research and development every four to five years, he said.

"It's the discontinuity when it takes 10 to 15 years to make a product," Roses said.

Stephen Frye, GSK's former head of drug discovery research in RTP, agrees. "Every time there's new leadership, priorities are reassessed, and many projects are killed," said Frye, who left GSK in August to head UNC-CH's drug discovery center.

In 20 years at GSK, Frye worked through two mergers and saw at least five research and development heads come and go.

When Dr. Moncef Slaoui replaced Dr. Tadataka Yamada as GSK's chairman of research and development in June 2006, a reorganization followed.

Frye said he asked himself: Do I want to stay and watch that movie play out again? He didn't, so he joined his alma mater in October to build the Center for Integrative Chemical Biology and Drug Discovery from scratch.

Frye plans to match physicians at UNC's medical school with chemists from the pharmacy school to generate innovative drug research. "We're trying to unlock the gridlock," he said.

Scanning the patents

At Duke, Roses is reading patents in hopes of finding drug research ideas that the pharmaceutical industry isn't pursuing. He has seen several that look promising for his virtual company. Roses is the company's only employee; he works out of a conference center on campus.

Roses has found seven experts in different areas of drug development who are willing to help him turn the ideas into experimental drugs that can be tested in animals and humans.

In two to three years, he hopes to sell the rights to a couple of experimental drugs to pharmaceutical companies interested in bringing the medicines to market.

"The idea is to prime the pump with a few successes," Roses said.

If it works out, Duke stands to benefit from any deals Roses' company makes with the pharmaceutical industry.

The university is worried that NIH funding for basic research will decrease in coming years, but it could receive millions in milestone and royalty payments.

"He's a very clever guy," Duke's Williams said about Roses.