The Allure Of High-Hanging Fruit: Why VCs and Biotech Execs See Value In Difficult Drug Targets
This article was originally published in Start Up
An agile and energetic cohort of biotech platform companies plans to capture Big Pharma's imagination--and its pocketbook--by going after intractable drug targets that have long eluded the industry, and they're doing it on a shoestring budget.
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The emphasis within the pharmaceutical industry right now is on capital efficiency. That's led a number of firms - and their venture backers - to make what a few years ago would have been a heretical decision: eschewing drug development in favor of cutting platform-related deals. And how have such deals been valued? An analysis by START-UP of average deal value from 2007 to 2010 for platform, preclinical and Phase I assets shows pharmaceutical licensers are approaching alliances with a "budget" mindset, with average deal values declining across all stages of drug development.
Pharmaceutical companies are attempting to solve unprecedented R&D and commercial challenges via business development, emphasizing cheaper, earlier-stage alliances and building up a base in emerging markets. An analysis of dealmaking trends from 2007 to 2010 shows big companies are embracing new kinds of partners, and shifting away from historic areas of interest to pursue hyper-specialty products and generics.