Managing Biotechnology

Chapter 3Success Through Collaboration

A significant portion of FDA drug approvals in recent years have been the product of collaborations between biotechnology and pharmaceutical companies [1]. In addition, a majority of the most promising late-stage assets under development originated at firms other than the current owner [2]. Pioneering biotechnology companies such as Amgen and Genentech started this collaboration trend by licensing their first products (Epogen/Procrit in the case of Amgen and Humulin in the case of Genentech) during development to large pharmaceutical companies, setting a pattern that most biotech companies would pursue in the decades that followed. The drivers of these early transactions—including access to, and validation of, new technologies and techniques—remain relevant today. In fact, strategic alliances have proliferated in number and variety precisely because they can be structured to meet the specific needs of the participants.

This flexibility will be relevant as the sector moves toward a future of being compensated primarily based on the value delivered, either through improved health outcomes or improved efficiency. Larger companies are more likely to develop the commercial expertise and critical mass necessary to structure and monitor outcomes-based payment arrangements. Further, as the industry moves beyond selling single drugs to creating solutions that focus on the needs of patients, one can imagine new forms of collaboration that may integrate ...