Pharma-Academic Alliances: What the Numbers Don’t Tell You
If you’ve been following the drug industry at all for the past few years, you know that Big Pharma has gone alliance crazy.
It seems that every other week a new deal is announced in which a pharmaceutical company has partnered with an academic institution to help identify or develop new drugs for a variety of diseases. Pharma business news these days is often indistinguishable from the sports section. When you read that someone has inked a $36 million, six-year contract, it could be referring to a relief pitcher signing with the Yankees or a biology department’s deal with Pfizer. Let’s review some recent examples to see how these deals are coming together.
Gilead Sciences signed a cancer research deal with the Yale School of Medicine that could pay the School $100 million over 10 years. Sanofi-Aventis recently announced a three-year diabetes research deal with an investigator at Columbia University (funding not disclosed) as well as a translational research agreement with Harvard University (funding not disclosed). UCSF in particular has gone on a partnering tear, inking deals with Sanofi-Aventis (financing amount not disclosed), Pfizer (up to $85 million over five years), and Bayer Healthcare (financial terms not disclosed). GlaxoSmithKline signed Harvard’s Stem Cell Institute to a 5 year, $25 million deal. In addition, GlaxoSmithKline announced a plan to sign up 10 academic “superstars” for long-term partnerships to develop new medicines. Their first choice, Prof. Mark Pepys at the Royal Free and University College Medical School in London, colorfully acknowledged this new arrangement by commenting “we all agree that big pharma is useless at discovering new drugs and has to get its ideas from somewhere else.” I’m sure this remark was well received by the company’s leadership group. Over on the more tech side of biotech, Agilent Technologies signed the new Synthetic Biology Institute at UC-Berkeley to a “multiyear, multimillion-dollar commitment”.
In decades past, academic-industry collaborations generally comprised agreements with individual investigators at specific universities and research organizations. More recently, however, this process has metamorphosized into agreements where pharma has established alliances with entire departments or research institutions. What’s the difference between a collaboration and an alliance? While many people use these terms interchangeably, I see a clear distinction. In general, a collaboration is established when (usually two) partners decide to work together on a specific, well defined project to answer a specific question. Once the project is completed, the collaboration is essentially done (although publications and presentations may still be in the works). Alliances, in contrast, tend to be more open ended, larger in scope, involve many more people, and often lack fully defined, detailed goals at the outset. Key decisions may not get made until the work progresses to a certain decision point, which may be accompanied by a “right of first refusal” to any discovery. As such, alliances generally require a significantly greater level of management skill than collaborations if they are to be successful.
What’s driving this sudden surge of pharma-academia deals? The primary motivator appears to be the shortage of new drugs coming out of Big Pharma’s research labs. Despite increasing their investments in research and development over the past decade, Big Pharma’s hoped for steady stream of new medicines is down to a trickle. Part of this results from a past focus by Big Pharma on developing “me, too” drugs for targets that have already been validated by competitors. For example, it was reported in 2006 that 77 percent of the drugs approved by the FDA for neurological indications during the proceeding five years were copycat medicines. Accordingly, many Big Pharma executives have belatedly decided that it’s time to try a fresh approach. They understand now that their own research investigations, while significant, are but a small fraction of the total world effort.
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