BIO-Europe 2009: an opportunity to hunt for deals

The world's top 20 pharma companies will send teams of scouts to Bio-Europe 2009, Europe's top partnering conference, to be held November 2-4 in Vienna, Austria. Representatives of firms such as Abbott, GlaxoSmithKline, Merck & Co., Novartis, Pfizer, Roche, Sanofi-Aventis, Takeda Pharmaceutical and Teva will attend, principally in order to network with biotechnology and other organizations with a view to establishing successful business ventures, comments the Switzerland-based industry group Swissbiotech.org.

It bodes well for biotech that big pharma is increasingly involved in the industry. The ad-hoc cooperation typical of the 1980s has been eclipsed by strategic alliances and acquisitions. Almost all major pharma firms have in-house biotech programmes or biotech units that seek out promising start-ups. In the last 10 years, 75% of significant funding increases at privately-held biotechs stemmed from takeovers rather than initial public offering, Swissbiotech noted.

'The speed of change within large pharma is tremendous compared to the middle part of the last decade', said William Ringo, Pfizer's senior vice president for worldwide business development, strategy and innovation, in the latest edition of partneringNEWS. 'Consider our Wyeth acquisition: one of the key reasons for doing that was to move more into biotherapeutics. It's an important place for us to be, because of patent protection, the possibility of biosimilars, and balancing our portfolio. I think large pharma got infatuated with small molecules because of the high profit margins, low manufacturing costs, and huge upside. We now have more research centers, we clearly recognize the importance of partnering with biotech companies,' he added.

Given the relative rarity of IPOs, the companies most likely to get funded today are those that embrace a partnering strategy from the outset. A firm built to be taken over after achieving proof of concept ' typically a successful Phase II trial of its leading drug candidate - need not be nearly as big as one that hopes to take its compound through the approval, launch and marketing process. This means, says Swissbiotech, thatP venture capitalists can put up less cash and reap rewards sooner.