Pharma-Academic Alliances: What the Numbers Don’t Tell You
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new drug targets while continuing to search small biotechs for hot potential medicines. This course makes sense given that a recent study revealed that 13 percent of newly approved drugs originated in academia, where numerous labs are already focused on the drug discovery process. Why have so many deals been established in just the past few years? There are two reasons. First, many Big Pharma companies are facing patent expirations on their best selling drugs within the next few years. This will cut significantly into the cash flow that they could use to fund more research. Secondly, these companies remain locked in mortal combat with each other, resulting in a heated rivalry to sign up entire departments worth of Key Opinion Leaders before their competitors can. Again, it’s just like sports: make sure you sign the crucial free agents before the other teams do.
One other likely advantage for pharma in setting up these alliances is a streamlining of legal paperwork. A single drafted agreement should eliminate the need for a large number of individual Material Transfer Agreements, each of which may require lengthy negotiations with a university technology transfer group. Overworked lawyers on both sides struggle to negotiate and complete these deals, which I have seen drag on for years before they are either finished or abandoned. Scientific advances often obviate them before they are concluded. I routinely advise biotech companies that they should find an alternate investigator to collaborate with if they can’t complete these agreements in a timely manner (e.g. ideally less than three months, but certainly less than six).
It’s also not surprising that these alliances are being established at a time when academic departments at many universities are suffering from deep budget cuts. The success rate for obtaining basic (e.g. NIH) research grants is currently very low, putting additional financial pressures on academic researchers. These deals are injecting some serious money into academic departments sorely in need of financial resuscitation. The initial going rate for these agreements appears to be in the $5 to $15 million per year range, but one can readily imagine all sorts of success clauses that would pump these numbers higher. I’m not surprised that the exact terms of these pharma-academic department agreements are seldom publicized; Big Pharma likes to hold its cards close to the chest. I wonder, though, exactly what academic departments have promised their Big Pharma partners in order to obtain their industry funding?
Many people would argue that a large shift from basic to more applied research in academia is, almost by definition, a good thing. I’m not convinced. Much of today’s applied research is built on … Next Page »