Dr. Saav Solanki observes that many breakthrough medicines don't follow a linear path within one organization. Instead, they are developed collaboratively, often starting in a university lab, moving to a small biotech for initial development, and finally being acquired or licensed by a large pharma company for commercialization.
Related Insights
Industry partnerships are crucial for more than just funding. Collaborating with pharmaceutical companies provides translation-focused questions that guide the design of advanced cell models, ensuring they are predictive, scalable, and compatible with real-world development workflows.
VC Bob Nelsen argues that even if large pharma companies appropriate ideas or gain leverage over US biotech, their financial success is ultimately beneficial. Profitable pharma companies must deploy massive cash reserves, much of which flows back into the biotech ecosystem through M&A, funding the next generation.
Luba Greenwood reframes competition in biotech as a positive force. When multiple companies pursue the same biological target, it validates the target's importance and accelerates discovery. This collaborative mindset benefits the entire field and, ultimately, patients, as the best and safest drug will prevail.
Successful acquisitions don't just benefit the acquired company's investors. These investors often reinvest their profits into new, earlier-stage ventures, providing crucial capital that fuels the entire biotech ecosystem's growth and innovation.
Responding to Wall Street pressure to de-risk, large pharmaceutical firms cut internal early-stage research. This led to an exodus of talent and the rise of contract research organizations (CROs), creating an infrastructure that, like cloud computing for tech, lowered the barrier for new biotech startups.
The biotech ecosystem is a continuous conveyor belt from seed funding to IPO, culminating in acquisition by large biopharma. The recent industry-wide stall wasn't a failure of science, but a halt in M&A activity that backed up the entire system.
With patent cliffs looming and mature assets acquired, large pharmaceutical companies are increasingly paying billion-dollar prices for early-stage and even preclinical companies. This marks a significant strategic shift in M&A towards accepting higher risk for earlier innovation.
When seeking partnerships, biotechs should structure their narrative around three core questions pharma asks: What is the modality? How does the mechanism work? And most importantly, why is this the best differentiated approach to solve a specific clinical challenge and fit into the competitive landscape?
ProPhet was founded through Ion Labs, a venture studio created by AstraZeneca, Merck, Pfizer, and Teva. This model allows established pharmaceutical giants to identify acute internal challenges and recruit external talent to build dedicated startups aimed at solving them.
Contrary to common belief, a BioCentury analysis revealed that two-thirds of out-licensing deals from Asian innovators were with Western biotechs, not large multinational pharmaceutical corporations. This indicates a significant trend of smaller Western companies actively sourcing innovation from Asia.
