The pharmaceutical and biotechnology industries are at a critical point in their evolution. Industry experts at Datamonitor,
an independent market analyst firm, say that in 2002 about $30 billion worth of blockbuster drugs lost patent protection.
By 2008, an additional $35.5 billion worth of products is expected come off patent. At the same time, a host of scientific
innovations in drug discovery including the use of high-throughput screening techniques, new classes of therapeutics such
as aptamer technology and RNAi, and genomics-driven discovery methods, have resulted in large numbers of new drug candidates.
Jennifer A. Filbey, Ph.D
These patent expirations and innovations are driving a growing wave of biopartnering alliances. Companies are searching for
new technologies capable of extending product life cycles by creating improved, next-generation versions of important, widely
selling therapeutics. They are also looking for the means to turn molecules that otherwise might not become viable therapeutics
into valuable product candidates.
But in an increasingly global, increasingly specialized world, few companies can do it all. Hence, corporate alliances have
taken on an increasing importance, as partners are needed to create viable, value-added therapeutics, to bring larger numbers
of products through development, and to address large, global markets. Industry analyst Recombinant Capital reports that in
the three-year period from 2000 to 2002, the combined market value of global alliances was $19.4 billion, or approximately
$6.5 billion per year. This represents an increase of 75 percent over the previous three-year period. When you examine the
previous ten-year period, alliances among big pharmaceutical companies, biotech companies, and drug delivery companies have
grown even more — by over 350 percent.
Today, almost one-third of new drug products are developed through collaborations. According to a June 2004 Visiongain report
titled "Collaborations and Licensing in Global Pharmaceuticals and Biotech," pharmaceutical companies derived an average 20
percent of total sales from in-licensing deals in 2003; by 2009 this figure is expected to reach 40 percent. Collaborations
and joint ventures are an important ingredient of success in the pharmaceutical and biotechnology sectors, and current trends
suggest that their importance will grow in the future.
In addition, a November 2004 study on biopartnering from the IBM Institute for Business Value suggested that fewer than one-half
of all alliances are currently successful. The authors concluded that while 15 percent of alliance failures can be attributed
to factors considered beyond the control of management, better alliance practices could salvage 85 percent of the value now
lost to failed partnerships — a potential savings of $2.7 billion.
So what elements make biopartnering a success? First and foremost, it's important to pick the right partner. No single aspect
of a prospective partnership — including the amount of money offered — makes a particular company the right one. Instead,
a variety of factors should be considered. What is the prospective partner's track record in the marketplace? Has this company
previously been involved in a similar partnership, for a similar type of product? If so, how successful was the arrangement?
How experienced are the people who would comprise the core team of the partnership? Is there good chemistry and a compatible
corporate culture between the prospective partner company and your own? Does the staff communicate well, and are they responsive?
Few things are as frustrating and limiting to success as poor communication between partnering companies, especially if one
member of the partnership is much larger than the other.
If you are partnering to gain access to drug delivery systems or other technology, are you getting intellectual property protection
for your partnered product at the same time through access to unique, patented technology? How flexible is the offered technology?
Can it be readily tailored to your drug? Does your prospective partner have systems in place — including manufacturing and
process development, as well as clinical development and compliance/regulatory affairs — to make development a truly joint
A successful partnership relies on a mutual understanding of the needs of both companies involved, and of what will make the
relationship work, right from the start. Moreover, the most successful alliances have champions on both sides who can become
personal allies, as well as cheerleaders for the partnership within their respective companies. These individuals should be
well connected within their respective firms, having some clout in corporate decision-making processes.