Corporate venture capital can offer a strategic boost to firms that maintain pipelines of innovative products.
Pharmaceutical companies are engaged in an uphill struggle for growth. The challenge of the creation and maintenance of a promising drug pipeline is compounded by the pressure of expiring patents on existing products, where they lose their markets to cheaper generics. When the pipeline of successor drugs is not enough to maintain their past level of sales, this then results in what is known as a “patent cliff”.
Pharma companies take on big risks when developing new drugs. In a paper for INSEAD GEMBA, we found that 40 percent of the pharma industry’s R&D spending occurs in the activity through phase one of clinical development. The chance of an investigational drug – one that is under study but not legally available – making it as far as phase one has a less than one in 10 chance of ultimately becoming an approved medication
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