If big pharmaceutical companies do not get genomics, do not blame Jan Leschly. As the former CEO of SmithKline Beecham, he is known for giving the rallying cry for genomics in 1993, when he told the industry it would be dead without it.

If big pharmaceutical companies don't get genomics, don't blame Jan Leschly. As the recently departed CEO of SmithKline Beecham, his advocacy of genomics made a huge impact not only there, but also across the entire industry. He's known for giving the rallying cry for genomics in 1993, when he told the industry that it would be dead without it.

Before Mr. Leschly joined SmithKline in 1990 (and became CEO in 1994), the firm, like all the other big pharma companies, didn't have genomics on its road map. By last December, when he left SmithKline, it was widely regarded as the most genomic-savvy big pharma company in the industry. Mr. Leschly is now CEO and chairman of the private equity firm Care Capital, based in Princeton, New Jersey.

SmithKline Beecham made some good bets on the future. Its venture arm, SR1, helped jump-start biotechs like Amgen (Nasdaq: AMGN) -- now the world's biggest biotech, with sales well over $3 billion. The firm had a hand in the newest generation of biotech firms, too, like Orchid Biosciences (Nasdaq: ORCH) (a spin-off from SmithKline and Sarnoff).

Mr. Leschly turned heads again when he paid Human Genome Sciences (Nasdaq: HGSI) $125 million in 1993 for the rights to future genomic discoveries. It was a huge validation, not just for HGS, but for all of biotech. That deal triggered a slew of collaborations and acquisitions between big pharma and biotech. It was not the first time big pharma looked to biotech for fresh product possibilities, but it was the biggest at the time and now widely regarded as the most important.

Ever the deal maker, Mr. Leschly went after Glaxo Wellcome in 1999, whose genomics credentials included close ties to the Wellcome Trust, which had helped fund the Human Genome Project and some of the world's earliest genomics discoveries. The end result is what is now known as GlaxoSmithKline (NYSE: GSK).

Now as a CEO at Care Capital, Mr. Leschly is at it again. His co-investors include Morgan Stanley Dean Witter (NYSE: MWD) and Rho Management. Once ranked the world's tenth-best tennis player, Mr. Leschly knows the industry well and says he's having the time of his life now putting all his energy into investing. 'I don't miss the life I left. Not for a minute,' he says of his new life as a CEO. 'Now I can really go out and be myself.'

LESCHLY SPEAKSThere's now a notion on Wall Street that biotech deals are good for big pharma business. What's changed?

Genomics. Pharma has always had a keen interest in interesting startups. With a biotech [deal] you automatically get insight into products and technology you wouldn't otherwise have access to because these deals typically come with board seats on the smaller company. Now everybody recognizes that in order to be competitive in the future, big pharma needs a good handle on genomics.

Has big pharma and its big-drug fixation run its course? Most VCs nowadays won't even touch a company betting its future on a therapeutic compound.

Yes, yes, I know. Big pharma is everybody's whipping boy. But, you can hardly argue with the kind of money a drug makes when compared with a piece of software and a database.

When you cut the deal with Human Genome Sciences, the pharma industry was at a crossroads. Can you describe the thinking at SmithKline Beecham at the time?

Throughout the early '90s, there was a huge debate in the U.S. about health care reform. Inside the industry, people were particularly concerned about R&D. What will R&D look like ten years from now? And how to plan for it now? I remember the whole concept of R&D was up for grabs. Everyone just wanted more compounds, more bang for the buck. As an industry we were still cranking out some very valuable compounds, but I knew it couldn't last. As a company, we simply couldn't continue to bank our future on chasing down 15 different therapeutic areas to try to stay competitive.

What kind of immediate impact did theяHGS deal have on the company?

It gave us access to full-length genes with function, [to] what I think is easily one of the biggest genomics patent portfolios in the world. That made us the top genomics company overnight. But, more than anything, those two events changed the attitude and morale. All of a sudden our top people were easier to retain and top scientists around the world were flocking to get a job with SB.

But will this genomics experiment deliver better medicine?

It will. We have novel drug targets that we never would have seen without genomics. We are now drowning in targets. Even if only a few of those pan out, they will represent something that was inaccessible before now.

Why didn't you invest in gene-mapping tools to expand and complement your genomic focus?

The power to map the genome is not in and of itself a competitive advantage. Indeed, all that data being produced will soon be just a commodity. And the patent portfolios built around that data [are] still not known. The real insights will come from 'snips' [single nucleotide polymorphisms, SNP, or 'snips' for short]. They will totally dominate the pipeline five years from now.

Will genomics really change everything?

Yes and no. Genomics gives you better targets, but developing drugs is still about pharmacokinetics, combinatorial chemistry, optimization of a compound, and chemists. Far from being obsolete, I'd say chemists are in more demand now than ever before. They are still the master drug builders.

There's a constant din about genomics' impact on drug discovery and development, but will it really make drugs better, faster, cheaper?

Better, yes. It will help us build drugs tailor-made for a patient's specific genetic makeup -- efficacy and no side effects. Faster, insofar as there will be less guesswork as to which targets make sense to develop and which ones should be scrapped before putting them into testing. Cheaper insofar as we can better predict how drug compounds will perform once they are prescribed in ever-larger quantities to a more diverse patient population.

That's where diagnostic tests come in. They used to be of little interest to entrepreneurs; why all the interest now, and from biotech companies?

Genomics gives you the power to build molecular diagnostics. These diagnostics will have an impact through pharmacogenomics. This is where you create a profile of the compound and of the patient.

So, what is the value proposition?

Once you've found out exactly which patients will respond to a test treatment, then you screen your clinical trials for patients that fit that precise genetic profile. It will reduce the time and money because now you can run preclinical tests to find out how different patients will respond to your new compound. That dramatically increases the safety profile of the drug.

Are we approaching a time when drug labels will read: 'If your genetic makeup is X, this drug is for you, but if it is Y, this drug will destroy your liver and kill you?'

Pretty close. It's in all of our best interests. It will reduce health care costs, improve productivity because sick patients won't get sicker from their medications, and dramatically reduce the cost of developing a drug. Companies won't have to take the time and money to find 2,000 patients for a trial. They will be able to do smaller trials, say, 400 patients, because the trial and patients would be absolutely specific to the type of patients the drug was intended to cure.

Certainly it's in the best interests of the firms paying most of the patient's bills. And arguably these are the firms that could start to rebel if drug prices continue to skyrocket.

HMOs, Medicare, private insurance -- how much more would they pay for a drug that doesn't prolong the expense of treatment as a result of side effects, one that they can be sure will actually work?

So, what kind of deals are you looking at now?

Care Capital has a $100 million fund built from co-investments from Morgan Stanley Dean Witter and Rho Management. Our typical investment is no less than $5 million, more likely $10 to $15 million, with the idea that we will play a role in that investment. We have not funded anything yet. We are focusing on molecules and pharmaceutical companies with molecules -- any molecules. We are not looking at anything early-stage. We're only going to do five to six deals in the next 6 to 12 months.

You obviously respect entrepreneurs with vision, but I get a sense that you also like playing the role of vision critic now.

I get enjoyment out of that and giving advice, not just putting in another $10 million. Anybody can write a check these days.