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BioPharm Executive: The Price of Togetherness


6/22/2012 4:50:17 PM

The Price of Togetherness

Is togetherness the latest drug? Will touchy feeliness be the answer to the pharmaceutical industry's crisis of productivity? Collaboration certainly isn't anything new in the life sciences, but the nature and structure of partnerships is evolving to the point that many companies are now contemplating pooling their resources...and diluting their returns.

Certainly the past decade has been marked by more partnerships between industry and academia, where there has been an effort to find a win-win solution to academia's funding deficits and pharma's desire to get more helping hands in early innovation.

Out of this have grown "open-source" research efforts that use pharma's financial backing to create or aggregate data any researcher can use. Sage Bionetworks, a three-year-old Seattle-based non-profit, offers a "commons" of pooled data and resources. Merck has contributed many human and mouse disease models for open consumption. Eli Lilly has opened up its doors to compounds created at academic labs through its PD2 and other Open Innovation Drug Discovery efforts. In 2008, GlaxoSmithKline released over 300 cell lines to the National Cancer Institute's Cancer Bioinformatics Grid, open for academics to mine. The Structural Genomics Consortium is an open-access database of 3-D protein structures that counts Lilly, GSK, Novartis, Pfizer, and most recently Takeda among its members and financial backers.

While these kinds of open efforts come with a series of challenges concerning ownership, consent and disclosure, and many other issues, they exist because industry increasingly recognizes that biology is too complex for any one company, even a large one, to tackle on its own.

Major drug companies have also started to innovate the way they work with venture capitalists to help nurture early research. Johnson & Johnson announced back in January that it is partnering with Polaris Venture Partners to scout out and co-invest in biotech startups--presumably structuring deals such that venture backers can find an exit without relying on the lousy IPO market. And they're hardly alone--as I highlighted a few months ago..

But now drug companies are starting to do the unthinkable--work directly with each other. They've taken baby steps in this direction before, often with a focus on emerging markets and diseases not viewed as critical profit-drivers. For example, 13 major drug companies joined the Bill and Melinda Gates Foundation earlier this year to combat tropical diseases. But rather than just contributing medicine, some of the companies-- Abbott, Johnson & Johnson and Pfizer--are actually collaborating on research as part of the Drugs for Neglected Diseases Initiative. All the companies are sharing compound libraries.

That's not entirely unprecedented, but companies that have wanted to work closely together in the past have formally launched joint ventures, like the HIV-focused ViiV Healthcare venture between Pfizer and GlaxoSmithKline.

Now these cooperative efforts are broadening. One announcement made at the recent Biotechnology Industry Organization (BIO) convention is the formation of a consortium for neuroscience research between seven companies including Biogen, Abbott Labs and Merck. The stakes a fairly small, at least money-wise--each company is only pledging $250,000 at this point. But it is symbolically important that they are sharing all the costs of basic research, as well as their expertise, to try to quickly and efficiently get R&D off the ground.

While some of this newfound camaraderie might be difficult for companies dreaming of developing blockbusters and keeping all the profits to themselves, there is a silver lining. The growing demand for drugs in emerging markets means that some of these collaboratively developed drugs may eventually reach much broader audiences--meaning larger populations over which to recoup development costs, bigger opportunities for rare disease indications, and acceptable profits even if prices are forced lower. That should be some consolation.

-Karl Thiel

Read the BioPharm Executive online newsletter June 27, 2012.

Sign-up for the free monthly subscription to the BioPharm Executive.

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