Analysis: Drugmakers step up search for hearing loss medicines

ZURICH/LONDON (Reuters) – When Swiss biotech firm Auris Medical wanted to recruit patients to test its experimental hearing loss drug, it decided to enlist partygoers deafened by firecrackers on New Year’s Eve.

In the weeks leading up to December 31, 2005 it advertised in the subway and on radio stations in Munich and Berlin, urging victims of sudden firecracker-induced hearing loss to turn up at designated clinics for treatment on January 1.

“We had just one single day of enrolment, we didn’t know how many people would show up,” Thomas Meyer, managing director of Auris, told Reuters.

Luckily, his gamble paid off and the small private company is now one of the leaders in what has been an empty space for the pharmaceutical industry.

Auris managed to recruit enough people to show that its compound AM-111 posed no safety risk and has since successfully completed a mid-stage trial in acute sensorineural hearing loss, or sudden deafness, involving 210 patients.

While there is no guarantee that its drug, which is injected through the eardrum, will pass muster in final-stage tests, the progress by Auris and a clutch of rival biotech firms is making large pharmaceutical companies sit up and take notice.

There are currently no approved disease-modifying drugs for hearing loss, which affects nearly a third of people aged 65 to 74 and half of those over 75.

But the science is developing and investor interest is growing, piqued by the huge commercial success of recent new treatments for sight loss, such as Lucentis from Novartis and Roche and Eylea from Regeneron and Bayer.

British charity Action on Hearing Loss conservatively puts the potential Western market for new drugs at $ 4.6 billion a year – a figure that could grow quickly as ageing populations swell the ranks of those with hearing problems.

NEGLECTED FIELD

“It’s one of the few areas that, as yet, hasn’t really been tackled by the drugs industry,” said Kate Bingham, managing partner at SV Life Sciences Advisers, a venture capital firm with investments in new drugs for both eyes and ears.

Bingham sits on the board of Autifony Therapeutics – a hearing loss firm spun out of GlaxoSmithKline in which the British drugmaker retains a stake.

Historically, hearing loss has received little attention from Big Pharma, given the lack of obvious targets for drug intervention, the difficulties of running clinical trials and a widespread belief that most deafness could not be reversed.

Now the big companies are getting involved, although the work is early-stage.

“A drug that is therapeutic and priced right could be quite a blockbuster. That’s why they’ve put their toe in the water,” said Jonathan Kil, chief medical officer at Seattle-based Sound Pharmaceuticals, which is enrolling young iPod users in a trial of an oral drug for noise-induced hearing loss.

U.S. giant Pfizer is arguably the most advanced of the big players, with a drug in initial Phase I clinical testing trial for age-related sensorineural hearing loss that looks to enhance the function of existing hair cells.

Some of its biggest rivals are laying bets, too. Last year French drugmaker Sanofi inked a two-year research deal with privately held Dutch biotech firm Audion Therapeutics to develop small molecule drugs to improve hearing.

In October, Roche joined forces with venture capital firm Versant Ventures and biotech Inception Sciences to find molecules targeting ear hair cell protection and regeneration in the cochlea, the spiral-shaped cavity in the inner ear.

Cross-town competitor Novartis, meanwhile, struck a 2010 deal potentially worth more than $ 213 million with U.S. biotech GenVec to develop gene-based treatments to replace hair cells in the ear that transmit sound.

“We’re looking at restoration as our main line of work and we’re interested in whether there are chemicals that might also play this role instead of having to introduce a gene,” said Novartis research head Mark Fishman.

“This is an area that’s a bit more futuristic and ultimately restoring the hair cells will be the cure.”

EYES AND EARS

Unlike new eye drugs, which work by inhibiting an unwanted process, hearing drugs will need to restore damaged function – a more difficult proposition.

Experts say the first drugs will target niche areas, such as damage caused by loud noise or as a result of chemotherapy.

“Hearing loss is not just one condition. It’s like cancer – there are lots of different types and there is work to be done to segment the market,” said Ralph Holme, head of biomedical research at Action on Hearing Loss.

Heading the field for noise-induced hearing loss is South Illinois University, which has launched a late-stage trial with the U.S. military for an drug to increase protection for people exposed to very noisy environments like soldiers.

Canada’s Adherex also has a late-stage trial to test a drug that may protect against hearing loss caused by platinum-based anti-cancer agents in children.

While protective treatments could become available within the next few years, regenerative approaches – such as injecting stem cells into the ear or chemically intervening to switch on genes that control cell growth – are much further off.

Despite recent promising tests in gerbils, the potential to replicate this in humans is still uncertain, said Pascal Senn, an ear specialist at the University of Berne.

“If something grows inside the ear, you must be sure that it doesn’t grow excessively or form tumors. There are a lot of roadblocks that need to be overcome in this field. It’s highly risky, but I think it’s also the hottest area,” he said.

One intriguing possibility for the future is the convergence of future drugs and devices. Hearing aid manufacturers have certainly not been deaf to the noises from the pharma sector.

Sonova, the world’s largest maker of hearing aids, has invested in two start-up companies – one in the United States for drugs to protect hearing and another Swiss biotech working on a treatment for acute tinnitus.

It bought U.S. cochlear implant manufacturer Advanced Bionics in 2009 in a bid to increase its focus on the inner ear and understand how drug treatments could work with implants.

“It will be interesting whether the innovation will be driven by pharma companies moving in or whether the hearing aid companies will branch out,” said Auris’ Meyer.

(Editing by Philippa Fletcher)

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Starbucks: We must do more on tax

2 December 2012 Last updated at 07:38 ET

Global coffee chain Starbucks has said it is in talks with HM Revenue and Customs and the Treasury over how much UK tax it pays.

It is one of several well-known firms that were criticised over the level of their corporation tax payments.

The firm admitted that it “needed to do more” in the UK on tax.

Meanwhile, Chancellor George Osborne has pledged more funds for the British authorities to tackle tax avoidance by multinationals.

He told the BBC that an announcement would be made on Monday about the ” extra investment in the part of the Inland Revenue that tackles tax avoidance by multinational companies”.

A Public Accounts Committee report on the topic of how much tax multinational firms pay in the UK is due on Monday.

In November the committee took evidence from executives from Starbucks, Google and Amazon over the amount of tax the companies have paid in the UK.

‘Competitive’

“We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more,” said a Starbucks statement.

“As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with The Treasury.”

It said more details would be released later this week.

BBC business correspondent Theo Leggett said the coffee company reported sales of nearly £400m in the UK last year, but paid no corporation tax at all.

“Much of the money it earns in this country is transferred to a sister company in the Netherlands in the form of royalty payments, leaving the UK division to report regular annual losses,” he added.

Mr Osborne did not single out any firms while making his announcement on the Andrew Marr Show.

He also said that as well as his extra funding for the UK authorities, it was also necessary to work at an international level on the issue.

“It is actually Britain who has been working with Germany and France to get those rules on the international table,” he said.

But he also warned against “pricing Britain out of the world economy”, adding that “if we make our taxes less competitive that will just mean more companies stay out of Britain”.

Monday’s PAC report is expected to be critical of the current way in which multinational firms used UK tax legislation.

After last month’s hearings, PAC chair Margaret Hodge MP said: “One of our concerns is that the ability of global companies to choose where to they put their costs and their profits gives them an unfair tax advantage that damages UK-based businesses,”

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Cargo plane crashes in Brazzaville, 3 dead

BRAZZAVILLE, Republic of Congo (AP) — A cargo plane owned by a private company crashed Friday near the airport in Brazzaville, the capital of the Republic of Congo, killing at least three people, officials said.

The Soviet-made Ilyushin-76 belonged to Trans Air Congo and appeared to be transporting merchandise, not people, said an aviation official who requested anonymity because he was not authorized to speak to the media.

The plane was coming from Congo‘s second-largest city, Pointe Noire, and tried to land during heavy rain, he said.

Ambulances rushed to the scene in the Makazou neighborhood, located near the airport, but emergency workers were hampered by the lack of light in this capital, which like so many in Africa has a chronic shortage of electricity.

“At the moment, my team is having a hard time searching for survivors in order to find the victims of the crash because there is no light and also because of the rain,” Congolese Red Cross head Albert Mberi said.

He said that realistically, they will only be able to launch a proper search Saturday, when the sun comes up.

Reporters at the scene fought through a wall of smoke. Despite the darkness, they could make out the smoldering remains of the plane, including what looked like the left wing of the aircraft. A little bit further on, emergency workers identified the body of the plane’s Ukrainian pilot, and covered the corpse in a blanket.

Firefighters were trying to extinguish the blaze of a part of the plane that had fallen into a ravine. They were using their truck lights to try to illuminate the scene of the crash. Although the plane was carrying merchandise, emergency workers fear that there could be more people on board.

Because of the state of the road connecting Pointe Noire to Brazzaville, many traders prefer to fly the roughly 400 kilometers (250 miles).

Africa has some of the worst air safety records in the world. In June, a commercial jetliner crashed in Lagos, Nigeria, killing 153 people, just a few days after a cargo plane clipped a bus in neighboring Ghana, killing 10.

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Katie Holmes in “Dead Accounts”: what did the critics think?

LOS ANGELES (TheWrap.com) – With her marriage to Tom Cruise firmly ensconced in the rearview mirror, Katie Holmes has returned to Broadway to star in Theresa Rebeck‘s “Dead Accounts.”

But the “Dawson’s Creek” actress who will forever be synonymous with one mega-star’s epic Oprah freakout, got credit from many critics for giving it the proverbial college try – although most reviewers savaged the production.

“Dead Accounts” centers on a hotshot Wall Street-type (Norbert Leo Butz) who returns to his Cincinnati home with a dark secret. Holmes plays his sister who is still living at home and nursing their father through a kidney stones attack. It marks her second appearance on the Great White Way after a tepidly received turn in a 2008 revival of Arthur Miller‘s “All My Sons.”

“Dead Accounts,” which also stars Josh Hamilton and Jane Houdyshell, premiered Thursday at the Music Box Theatre.

In the New York Times, Ben Brantley was surprisingly gentle in his treatment of Holmes even as he dripped acid over Rebeck’s attempt to say something profound about America’s post-Recession doldrums.

“Let me assure you that Ms. Holmes, who was a tad unsteady in her Broadway debut four years ago in Arthur Miller‘s ‘All My Sons,’ appears much more at ease playing a worn-down country mouse to the hyped-up city mouse of Mr. Butz,” he wrote. “Gamely unkempt and lumpen, Ms. Holmes suggests what might have happened to Joey Potter, the ultimate girl-next-door she once portrayed on TV in ‘Dawson’s Creek,’ had she never found true love or left town.”

His overall assessment of the action onstage was far more dire, faulting it for devolving “…into a limp chain of anticlimaxes.”

Also declaring “Dead Accounts” D.O.A. was New York magazine, which, in an unbylined piece, compared Rebeck to Tyler Perry for white people (sorry, “Madea Goes to Jail” fans, it’s not a compliment). However the critic was charitable in assessing the third Mrs. Cruise.

“Holmes is insanely miscast but sunnily game in the role of a ground-down never-was with body image issues and a crater where her confidence should be,” the reviewer wrote.

Those relatively benign notices aside, some critics were clearly sharpening the kitchen-ware for Holmes. In the New York Post, Elisabeth Vincentelli took a cleaver to the actress and the play.

“She’s got one note – shrill, impatient – and yells it at top volume, making a vein bulge on her slender neck. (A recurring joke about Lorna going on a diet falls flat.),” Vincentelli wrote.

Of the play, the Post critic said it should be back to the drawing board; “With its cardboard characters and implausible developments, ‘Dead Accounts‘ feels like a rough first draft.”

Chris Jones of the Chicago Tribune was far kinder when it came to Rebeck’s writing, admiring her for taking on weighty topics, even as he complained she often fell flat in her execution. His views on Holmes were harder to decipher. Though never pejorative, Jones seemed to feel that Holmes’ tabloid past interfered with her stage work.

Still, he was intrigued by the way her own Midwestern background intermingled with that of her character.

“‘Dead Accounts’ hints at the very worthwhile notion that two Americas have grown up alongside each other, one in the thrall of religion, the other of money,” Jones wrote. “Holmes, one suspects, knows a good deal more about that kind of stuff than her character ever gets to say here.”

People Magazine’s Tom Gliatto praised Holmes’ for doing what she could with an underwritten role. He didn’t exactly make her seem Tony bound, but he argued that the fault rests more with the script than the actress.

“Holmes gets her moments in the second act: Lorna is given a simple, tender monologue about planting a tree when she was a child, followed by a full-throttle, over-the-top tirade against money, banks and fiduciary wickedness,” Gliatto wrote. “Holmes gets a big laugh there, but you have the nagging realization that the little memory about the tree slipped by without registering emotionally – that it was a lot more meaningful than the tirade, and that Holmes should have been directed to dig deeper. Or that Rebeck, creator of NBC’s Smash, should have written deeper.”

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South Africa makes progress in HIV/AIDS fight

JOHANNESBURG (AP) — In the early 90s when South Africa‘s Themba Lethu clinic could only treat HIV/AIDS patients for opportunistic diseases, many would come in on wheelchairs and keep coming to the health center until they died.

Two decades later the clinic is the biggest ARV (anti-retroviral) treatment center in the country and sees between 600 to 800 patients a day from all over southern Africa. Those who are brought in on wheelchairs, sometimes on the brink of death, get the crucial drugs and often become healthy and are walking within weeks.

“The ARVs are called the ‘Lazarus drug’ because people rise up and walk,” said Sue Roberts who has been a nurse at the clinic , run by Right to Care in Johannesburg’s Helen Joseph Hospital, since it opened its doors in 1992. She said they recently treated a woman who was pushed in a wheelchair for 3 kilometers (1.8 miles) to avoid a taxi fare and who was so sick it was touch and go. Two weeks later, the woman walked to the clinic, Roberts said.

Such stories of hope and progress are readily available on World AIDS Day 2012 in sub-Saharan Africa where deaths from AIDS-related causes have declined by 32 percent from 1.8 million in 2005 to 1.2 million in 2011, according to the latest UNAIDS report.

As people around the world celebrate a reduction in the rate of HIV infections, the growth of the clinic, which was one of only a few to open its doors 20 years ago, reflects how changes in treatment and attitude toward HIV/AIDS have moved South Africa forward. The nation, which has the most people living with HIV in the world at 5.6 million, still faces stigma and high rates of infection.

“You have no idea what a beautiful time we’re living in right now,” said Dr. Kay Mahomed, a doctor at the clinic who said treatment has improved drastically over the past several years.

President Jacob Zuma’s government decided to give the best care, including TB screening and care at the clinic, and not to look at the cost, she said. South Africa has increased the numbers treated for HIV by 75 percent in the last two years, UNAIDS said, and new HIV infections have fallen by more than 50,000 in those two years. South Africa has also increased its domestic expenditure on AIDS to $ 1.6 billion, the highest by any low-and middle-income country, the group said.

Themba Lethu clinic, with funding from the government, USAID and PEPFAR, is now among some 2,500 ARV facilities in the country that treat approximately 1.9 million people.

“Now, you can’t not get better. It’s just one of these win-win situations. You test, you treat and you get better, end of story,” Mahomed said.

But it hasn’t always been that way.

In the 1990s South Africa’s problem was compounded by years of misinformation by President Thabo Mbeki, who questioned the link between HIV and AIDS, and his health minister, Manto Tshabalala-Msimang, who promoted a “treatment” of beets and garlic.

Christinah Motsoahae first found out she was HIV positive in 1996, and said she felt nothing could be done about it.

“I didn’t understand it at that time because I was only 24, and I said, ‘What the hell is that?’” she said.

Sixteen years after her first diagnosis, she is now on ARV drugs and her life has turned around. She says the clinic has been instrumental.

“My status has changed my life, I have learned to accept people the way they are. I have learned not to be judgmental. And I have learned that it is God’s purpose that I have this,” the 40-year-old said.

She works with a support group of “positive ladies” in her hometown near Krugersdorp. She travels to the clinic as often as needed and her optimism shines through her gold eye shadow and wide smile. “I love the way I’m living now.”

Motsoahae credits Nelson Mandela’s family for inspiring her to face up to her status. The anti-apartheid icon galvanized the AIDS community in 2005 when he publicly acknowledged his son died of AIDS.

None of Motsoahae’s children was born with HIV. The number of children newly infected with HIV has declined significantly. In six countries in sub-Saharan Africa — South Africa, Burundi, Kenya, Namibia, Togo and Zambia —the number of children with HIV declined by 40 to 59 percent between 2009 and 2011, the UNAIDS report said.

But the situation remains dire for those over the age of 15, who make up the 5.3 million infected in South Africa. Fear and denial lend to the high prevalence of HIV for that age group in South Africa, said the clinic’s Kay Mahomed.

About 3.5 million South Africans still are not getting therapy, and many wait too long to come in to clinics or don’t stay on the drugs, said Dr. Dave Spencer, who works at the clinic .

“People are still afraid of a stigma related to HIV,” he said, adding that education and communication are key to controlling the disease.

Themba Lethu clinic reaches out to the younger generation with a teen program.

Tshepo Hoato, 21, who helps run the program found out he was HIV positive after his mother died in 2000. He said he has been helped by the program in which teens meet one day a month.

“What I’ve seen is a lot people around our ages, some commit suicide as soon as they find out they are HIV. That’s a very hard stage for them so we came up with this program to help one another,” he said. “We tell them our stories so they can understand and progress and see that no, man, it’s not the end of the world.”

Health News Headlines – Yahoo! News

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South Korea November exports show fragile, uneven global recovery

SEOUL (Reuters) – South Korean exports last month marked their first back-to-back growth of the year, but demand from the advanced economies was weak, data showed on Saturday, indicating any global recovery would be fragile at best.

November exports grew by 3.9 percent over a year earlier to $ 47.8 billion on top of a revised 1.1 percent rise in October, while imports last month rose by 0.7 percent to $ 43.3 billion, the Ministry of Knowledge Economy data showed.

The November data, released for the first time by a major exporting economy, and the robust survey findings in China disclosed earlier in the day offered fresh signs of the global economy regaining some momentum.

Shipments to China and the southeast Asian countries posted sharp gains over a year earlier, whereas demand from the United States and the European Union shrank, according to break-down figures for the November 1-20 period released later.

“Robust data from China and today’s Korean data increase the chances for Korean exports maintaining a modest recovery,” said Park Sang-hyun, chief economist at HI Investment & Securities.

RARE ANNUAL DROP IN EXPORTS

Data released earlier on Saturday showed China’s manufacturing sector activity was at a seven-month high in November, while South Korea’s October industrial output also expanded for the second straight month.

“But as Europe and the U.S. are not getting any stronger soon, any global recovery will be an uneven and fragile one for the time being,” Park added.

Analysts in a Reuters survey had forecast November exports would grow a median 2.6 percent over a year before on top of a revised 1.1 percent gain in October, when overseas sales posted their first growth in four months.

The ministry’s data showed South Korea ran a trade surplus of $ 4.48 billion for November, compared with a revised surplus of $ 3.73 billion in October. The country’s trade balance has been in black for all but two months since early 2009.

Meanwhile, exports for the January-November period were 0.8 percent less than the comparable period of 2011, making it highly likely the country will miss its export target of a 3.5 percent gain set for the whole of 2012.

Reuters calculations show South Korean exports this year would post an annual loss unless shipments in December grow 9 percent or more on a year-on-year basis. The country’s exports grew in all but three years for the past 50 years at least.

South Korea is home to some of the world’s largest suppliers of cars, smartphones and ships. It sends roughly a quarter of its total exports to China and about 10 percent each to the European Union and the United states.

(Editing by Ron Popeski)

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African Union asks UN for immediate action on Mali

DAKAR, Senegal (AP) — In an open letter Thursday to U.N. Secretary-General Ban Ki-moon, the president of the African Union urged the U.N. to take immediate military action in northern Mali, which was seized by al-Qaida-linked rebels earlier this year.

Yayi Boni, the president of Benin who is also head of the African Union, said any reticence on the part of the U.N. will be interpreted as a sign of weakness by the terrorists now operating in Mali. The AU is waiting for the U.N. to sign off on a military plan to take back the occupied territory, and the Security Council is expected to discuss it in coming days.

In a report to the Security Council late Wednesday, Ban said the AU plan “needs to be developed further” because fundamental questions on how the force will be led, trained and equipped. Ban acknowledged that with each day, al-Qaida-linked fighters were becoming further entrenched in northern Mali, but he cautioned that a botched military operation could result in human rights abuses.

The sprawling African nation of Mali, once an example of a stable democracy, fell apart in March following a coup by junior officers. In the uncertainty that ensued, rebels including at least three groups with ties to al-Qaida, grabbed control of the nation’s distant north. The Islamists now control an area the size of France or Texas, an enormous triangle of land that includes borders with Mauritania, Algeria and Niger.

Two weeks ago, the African Union asked the U.N. to endorse a military intervention to free northern Mali, calling for 3,300 African soldiers to be deployed for one year. A U.S.-based counterterrorism official who saw the military plan said it was “amateurish” and had “huge, gaping holes.” The official insisted on anonymity because he was not authorized to speak on the matter.

Boni, in his letter, said Africa was counting on the U.N. to take decisive action.

“I need to tell you with how much impatience the African continent is awaiting a strong message from the international community regarding the resolution of the crisis in Mali. … What we need to avoid is the impression that we are lacking in resolve in the face of these determined terrorists,” he said.

The most feared group in northern Mali is al-Qaida in the Islamic Maghreb, or AQIM, al-Qaida’s North African branch, which is holding at least seven French hostages, including a 61-year-old man kidnapped last week.

On Thursday, SITE Intelligence published a transcript of a recently released interview with AQIM leader, Abu Musab Abdul Wadud, in which he urges Malians to reject any foreign intervention in their country. He warned French President Francois Hollande that he was “digging the graves” of the French hostages by pushing for an intervention.

Also on Thursday, Islamists meted out the latest Shariah punishment in northern city of Timbuktu. Six young men and women were each given 100 lashes for having talked to each other on city streets, witnesses said.

___

Associated Press writer Virgile Ahissou in Cotonou, Benin and Baba Ahmed in Bamako, Mali contributed to this report.

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Mayim Bialik files to end 9-year marriage in LA

LOS ANGELES (AP) — Court records show Mayim Bialik filed for divorce from her husband of nine years on the same day she announced the couple’s split in a blog post.

She cited irreconcilable differences with husband Michael Stone in the documents filed Nov. 21 in Los Angeles.

Bialik currently stars on the CBS comedy “The Big Bang Theory” and rose to fame as the star of the TV show “Blossom.”

She has been a proponent of “attachment parenting” and the former couple have two sons together, ages 7 and 4. Bialik has said their parenting style was not a factor in the divorce and she is seeking joint custody of the children.

The 36-year-old wrote in her post last week that the divorce is “terribly sad, painful and incomprehensible” for children.

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Kenya village of AIDS orphans hangs hopes on trees

NYUMBANI, Kenya (AP) — There are no middle-aged adults in the Kenyan village of Nyumbani. They all died years ago. Only the young and old live here.

The 938 children here all saw their parents die. The 97 grandparents saw their middle-aged children die. But put together, the bookend generations take care of one another.

UNAIDS says that as of 2011 an estimated 23.5 million people living with HIV resided in sub-Saharan Africa, representing 69 percent of the global HIV burden. Eastern and southern Africa are the hardest-hit regions.

Saturday is World AIDS Day.

Nyumbani is currently planting tens of thousands of trees for the fourth straight year in the hopes that the village will soon harvest the hardwood and become self-sustaining.

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Amazon’s Robotic Future: A Work in Progress

If you were watching Bloomberg TV recently, you may have seen our correspondent, Cory Johnson, standing in the middle of Amazon’s (AMZN) newest distribution center in Arizona. It’s an impressive facility, brand-new and owned by one of the hardest-charging, most-innovative companies to come onto the retail scene since Sam Walton opened a five-and-dime.

So where are the robots?

After all, aren’t robots supposed to be the future of such places as distribution centers and warehouses? Didn’t Amazon buy a robot manufacturer, Kiva, in March? The online retailer announced in October that it was taking on 50,000 additional part-time workers for the holiday season. Shouldn’t some of those spots be taken up by mechanical arms and wheels?

Maybe not. For all the anxiety over robots coming to take jobs, there are still limitations to what they can do—or what they can do well. Bruce Welty is chief executive officer of Quiet Logistics, an order-fulfillment company that manages the online inventory and distribution for retailers like Gilt, Zara, and Bonobos. He uses robots made by Kiva, the company Amazon purchased, but his warehouse in Massachusetts is not bereft of humans. “Robots aren’t very good at picking up things,” he says. “They aren’t very good at looking at a bin of different things and distinguishing one item from another.”

Welty’s robots do one task and one task only: They move racks of merchandise to workers, who then remove the products from the racks and pack them up for shipping. Saving workers the time and effort to retrieve products offers considerable benefit. “In a typical warehouse, that’s about 60 to 70 percent of the labor,” Welty says.

In addition to what the current state of robotic arts does well, there are further reasons for the continued presence of human beings in warehouses. Labor flexibility is one of the larger ones. “Automation won’t help Amazon in periods of peak demand,” says Stephen Graves, a professor of management science at the Massachusetts Institute of Technology. “People are far more flexible.”

The capital expense to add robots means they need to make sense 12 months out of the year, not two. “The only way to handle spikes in demand is by adding temporary workers,” says Jim Tompkins, CEO of supply-chain consultancy Tompkins International. “If you bought a whole bunch of robots to handle the holiday shopping season, you’d have a whole bunch of robots looking at you, come January.”

So if Amazon just spent nearly a billion dollars buying Kiva, but the robots they produce can’t make a huge difference in how the company operates, what are Amazon’s intentions?

For starters, it’s still early. An acquisition like that of Kiva will take a while to digest, during which time new applications for the robots will surely be devised. “They’re really in a test mode,” says Welty. “They’re going to work on getting it right before any major rollout.”

The Kiva acquisition may have had as much to do with software as it does with hardware, adds Tompkins. “Mechanically, there’s nothing that special about Kiva,” he says. “But what they do have is software that makes sure the robots are in the right place at the right time. This was a software play.”

That’s not exactly how most people would view the deal. But it may be just the head-fake that Amazon CEO Jeff Bezos intended. “I bet Jeff Bezos loves that people are running around trying to put more robots in their distribution centers,” Tompkins says.

Businessweek.com — Top News

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