Still beyond the numbers what the rules of the game are changing

The pharmaceutical industry has always, a key partner for biotechnology companies for which it provides everything from clinical expertise to funding for their research from early asset validation, or their shareholders exit doors. But in times of crisis, it is a still more crucial source of funding. In 2009, the number of agreements at the global level between the biotech and pharmaceutical groups, increased by 172 to 189, according to the data of Ernst & Young. On the other hand, the total potential value of these agreements is in slight decline, from 42 to $ 40 billion. Still, beyond the numbers, what the rules of the game are changing. The transformations underway in the pharmaceutical industry, have implications for biotechnology companies.

Obligation of result. "Pharmaceutical companies are now in a logic of obligation of results, says Pascale Augé, consultant, responsible for Ernst & Young life science". For each new launched product, they must now prove a superiority over existing products. "Biotechnology companies, they did not necessarily took conscience, because they work at least developed stages of development. "But this imperative will affect them through partnerships as they are with pharmaceutical groups, says Pascale Augé." They require more early evidence of performance of the products or technologies that biotechnology companies can give them access.

This is manifested by the increasing number of agreements that include options: pharmaceutical group does not purchase or does not license an asset. It pays for the right to take a license, product or technology when they or it are shown (for example, in the light of the favourable results) of a clinical trial. GSK and Novartis have been, in 2009, most followers of these conditional agreements, observed the Ernst & Young report.

It is true that in proof of concept, many biotechnology companies still have progress to make in terms of rigour. "I see too many companies develop their molecules without the necessary standards," observes Pascale Augé. This means likely to focus on a more limited number of projects, she concludes, with more work with biomarkers, such as early indicators of effectiveness and relative tolerance.

Evolution of priorities. The pharmaceutical laboratories that, for many, are struggling to replenish their portfolio of products, are also trying to expand their activity with a global offer, including devices and services on the pathologies. The quest of new molecules or new technology is no longer their sole concern. While in recent years, pharmaceutical companies were in competition with biotech firms trying to convince them that they are the partner of choice, they are rather today biotechnology companies who must convince pharmaceutical groups in an inversion of the report, view report Ernst & Young.

Risks mergers. The new wave of concentration across the pharmaceutical industry finally, it also provides, the batch of changes. Mergers, such as Pfizer with Wyeth and Merck with Schering Plough, lead to a freeze on external agreements, management is too captured by internal integration operations. And, in the end, the possible number of pharmaceutical partners for an asset is reduced accordingly.

New opportunities. But the changes at work in the sector of the pharmacy will also create new opportunities. As many drug groups is refocusing on therapeutic areas, they will have less means to carry out front all their research projects. Insofar as they withdrew from the competition may have a less cautious policy of license on their undeveloped assets. This may create opportunities launch of start-up companies with a "business models" original, "provided whether married teams experienced with these assets", considers the report.