Competitive new technologies or products based on Genomics, Proteomics & Pharmacogenomics duly supported by information technology are likely to have an edge in the market. R&D timelines of chemical synthesis approach can be long and expensive. There is no time to waste in finding and qualifying opportunities, and negotiating deals that produce long-term value for the organization and its shareholders.
Today the ever discovering and developing biotechnology-enabled drug development companies have dwarfed the traditional vertically integrated pharmaceutical players with their R&D focus on the chemical synthesis approach to drug design and carved out a new role for the biotech players.
The history of the biotechnology industry goes back to 1982 when US FDA approved human insulin the first biotech product produced from genetically modified bacteria. The biotech sector has shown rapid growth in the first few years of the current decade, with global revenues rising from $22.7bn in 2000 and coming close to $50.0 bn in 2005. The biotech sector remains a relatively small proportion of the total drug market (8% globally), approximately 27% of new medicines in active development are now biotech products.
An analysis of the pipelines of four "mega corporations" that emerged during the first half of the current decade- Astra Zeneca, Glaxo SmithKline, Pfizer, and sanofi-aventis shows that although spending on R&D increased significantly, the number of new chemical entities in late-stage research has declined for all four mega corporations.
Similarly, generics manufacturers have undergone some of the fastest growth in the pharmaceutical sector in recent years - many of the top ten fastest growing drug companies in last couple of years were generics specialists. Cost containment measures in many developed countries have further led to the growth of the generic players but to their dismay, the most important parameter in the run up to the success "biogenerics" is still far from being close to them.
As in recent past, no generic versions of biological products have been made successful in any of the developed markets. This is not because the manufacturers are not ready, unfortunately for them, however, regulatory agencies are understandably cautious and have found it difficult to reach decisions on the appropriate approval paths for biological copy products.
All the above explains why the worldwide biotech market is lucrative, long term with extended product life cycles and in return profits for the organization.
Biotechnology licensing activity grew by 30% to account for approximately 68% of all licensing agreements signed across the biopharmaceutical industry in the first six months of 2006, will surely represent a growing proportion of the blockbuster market in near and far future; while competition gets tougher.
Licensing biotechnology (in or out) has become and is increasingly becoming more complex, more costly and more time consuming. Yet licensing is still the best and the fastest route to new markets, expanded business opportunities and increased profits. In the past, the rules of collaborating for biotechnology licensing were very straight forward: biotech companies conducted discovery and early-stage R&D and then handed their products to integrated pharmaceutical partners for late-stage development and marketing. In a stark contrast to past a glance at recent agreements, however, suggests newer models, wherein the out licensing biotechnology company retains significant bargaining power in negotiating co-commercialization terms for late-stage development compounds. There are many options of the partnering models being used for developing mutual synergies:
1. Outsourcing
2. Cooperative relationships
. Co-marketing
. Co-development
3. Licensing
. Out-licensing
. In-licensing
. Reach-through licensing
. Product acquisition
. Product fostering
. Early versus late stage licensing
Biotechnology companies are doing more deals than ever with pharmaceutical companies. But deals between biotechnology companies and with academia account for the greatest growth in recent licensing activity, demonstrating the renewed ability of large, well-financed biotechnology companies to act as senior partners in late-stage development, approval, and marketing.
Licensing deals have moved downstream and are being delayed until drugs enter late-stage development. More and more, biotechnology companies are retaining a greater stake in ongoing collaborations and are selecting their partners more carefully. Whereas in response to the changing licensing environment, pharmaceutical companies have become more aggressive in hunting out potential licensing opportunities and making earlier contact with potential partners.
The partnering / licensing process involves many levels of self and market analysis which include self-evaluation of inventory of intellectual property, initial financial analysis, evaluation of intellectual property versus strategy , due diligence of the partnering organizational intellectual property , infringement of third party rights.
The shift in industry dynamics will result in biotechnology companies retaining greater ownership of their products and pharmaceutical companies will have to compete for commercial interests in those products.
(The author is founder & CEO Onco Life Sciences, Pune.)