‘Greedy? Short-termist? No, quite the opposite’

In the 1880s two young American salesmen-cum-pharmacists, Silas Mainville Burroughs and Henry Wellcome, invented the ‘tabloid’. It was not a cut-down newspaper but a form of compressed pill — the name was an elision of ‘tablet’ and ‘alkaloid’ — which they imported to Britain. Helped by its sales, their company Burroughs Wellcome achieved huge success: insulin was another of their inventions, while Henry Wellcome created the first proper medical bags, giving them to Stanley for his trips to Africa and Scott for his walk to the Pole.

When Sir Henry Wellcome (as he became) died in 1936, he left a fortune which he asked five trustees to distribute for the improvement of human and animal health. Through canny investment, the Wellcome Trust is today the world’s biggest medical charity (just beating the Gates Foundation) with funds worth £14 billion. Over the past two decades the portfolio has seen average returns of around 15 per cent; returns from its venture capital interests have averaged 90 per cent over ten years.

That’s why Sir Bill Castell, Wellcome’s chairman, couldn’t understand the fuss earlier this year when Wellcome disclosed plans to back a bid for Alliance Boots with Terra Firma, the private equity house. Ironically perhaps, the tabloids lashed out at Wellcome’s involvement with greedy, short-termist private equity. Even academics — eager recipients of the trust’s millions — denounced the deal.

Wrong, says Castell. ‘One of Wellcome’s greatest advantages is that it can invest for the long term.That’s exactly what we saw in the Boots investment. There has been neither a switch in strategy nor any abuse of the trust’s guiding principles.’ He adds that the trust has always invested in a broad range of asset

classes to maintain higher-than-average returns.