Increasingly, over the past few years, large pharmaceutical and biotech companies have been slashing in-house basic R&D budgets at a fast clip. But at a time when the industry is performing remarkably well and basic R&D is more critical than ever, this trend may appear confusing to many observers. However, what many do not recognize is that this is not a cost-cutting trend (though it is saving considerable money for many firms). Rather, it is reflective of a novel means by which the R&D pipeline is being approached from the ground up, reflecting major changes in the industry over the past decade. In the past, pipeline gaps were filled with the intent of maintaining market share, and in order for a biotech to be a fit, the product needed to be relatively far down the pipeline. Now, all of that is changing.
The reason is a massive paradigm shift in the collective “big pharma” psyche. The nature of the marketplace has changed in that the best researchers with the best ideas are no longer seeking out positions within big pharma, but are starting their own companies, largely due to the fact that CRO’s and other outsourcing partners in the space have made it possible to do groundbreaking research with minimal investment in infrastructure. Some might see this is a problem, as big pharma seems to be starved of innovation and desperately needs to refill dry pipelines. However, this isn’t necessarily bad news – the opportunity for pharma to selectively buy into independently developed projects on a global basis allows for a geared ROI on the R&D budget and introduces an enormous amount of fresh capital to the marketplace at the early stage (an area that many VC’s have all but abandoned).
To read the full, original article click on this link: Big Pharma Pursues Early Stage Opportunities for Direct Investments – Life Science Nation
