Biotech, Drugs, deals

How Biotechs Can Stand Out in the Competition for a Big Pharma Partnership

Peppi Prasit 9/17/09

[Editor's Note: this piece was co-authored by Hari Kumar of San Diego-based Amira Pharmaceuticals.]

The benefits of partnerships between emerging biotech companies and major drug developers are numerous and well known. The smaller biotech company gets cash to support its innovative R&D, and the Big Pharma company gets hot new patented drug candidates to replace its aging blockbusters as they start to face competition from cheaper generics. However, obtaining these partnerships is becoming increasingly difficult for biotech companies in the current climate of increased economic pressures and mergers and acquisitions between major drug developers.

In recent months, major drug developers such as Genentech and Schering-Plough, who were previously partnering targets, are now going through the process of mergers (with Roche, and Merck, respectively). This means it is likely that there will be a continued gradual decrease in the number of potential partners looking to acquire co-ownership of new drugs going forward.

As big drugmakers continue to merge, the consolidated portfolios will also change. At first glance it would seem like the mergers and acquisitions would allow the combined company to expand its portfolio. However, these mergers often result in management trimming off ‘excess’ to increase focus on the most profitable areas. Therefore, not only is the number of companies decreasing, but the number of disease indications being pursued by these companies is also likely to continue to decrease.

Consequently, as small companies have ever decreasing choices, major drug developers have more options from which to choose when selecting a partner. It is no longer enough for a start-up biotech to be first-in-class. Instead, it is more important than ever for biotechs to see their own programs from the perspective of major drug developers and create fully enabled programs that are attractive to potential partners in multiple ways.

Identifying a Target

The discovery and the identification of game changing therapeutics have been central to the success of the likes of Genentech and Amgen. Others, such as Gilead Sciences, emerged as a leader in their field through the demonstration of being the best-in-class.

The right decisions at the earliest stages of target selection are instrumental in eventually attracting partners. One of the first questions to ask is, “If we have a program in the clinic in 3 or 4 years, will there be a partner across the table from us?” Or, simply ask, “Is this therapy going to make any difference to the treatment paradigm?”

Companies need to identify targets that will be appealing in the future, which may not necessarily be attractive now. This selection process should include …Next Page »

Peppi Prasit is the co-founder and chief scientific officer of San Diego-based Amira Pharmaceuticals.