Megan McArdle comments on this article that appeared in the economy [link removed, here's why] speaking about how Big Pharma is destroying Biotech by pushing all the risk onto venture funded companies and then stiffing them when it comes to the reward side for all that risk.
I work for a Biotech, so I will get my bias out there, but this is absolutely true. As long as Venture Capitalists were willing to keep sheltering the risk, there was no reason for the Big Pharma to do anything other than let them. But the party is over, and with Big Pharma shedding R&D capability quite readily, and Biotechs running out of venture funding, who is going to be left to find new treatments?
I have personally witnessed every one of these tactics highlighted in the article. I think part of the problem is the “one product biotech” model is fundamentally flawed and unworkable, because the odds of any single program succeeding through to an approved drug, and then being a market success, are very small. Big Pharma would be far better partnering with many different biotechs with novel approaches to different parts of the drug discovery problem, and then figuring out what works and what doesn’t. They should be looking for innovation, and not necessarily programs. You can decide what innovation is worthwhile by what programs can be developed out of them.
Big Pharma is mostly good at regulatory compliance and marketing, and not so good at innovation. Biotechs are better at innovation, but don’t have the capital to do regulatory compliance or marketing. In order for this model to work, Big Pharma has to be willing to share risk and reward with investors. Until they figure that out, the industry is going to continue its downward spiral, and sadly, that’s going to mean fewer new treatments hitting the marketplace over the next decade.
P.S. – If any of my readers are venture capitalists with some money to spend on a Biotech with an innovative approach to drug discovery, let me know in the comments :)