Pharma relying on biotech innovations for its future

A steep decline in innovation levels, combined with the threat from generics and drug recalls, is causing concern to several pharmaceutical companies, says a new study from Frost & Sullivan. As a result, drugmakers across the world are collaborating with biotechnology firms, thus relying on external resources to boost their innovation and productivity levels.

"Having unsuccessfully implemented merger and acquisition strategies to boost their falling productivity levels, pharmaceutical companies are now developing strategic alliances and licensing deals to improve weakening drug pipelines and achieve sustainable revenue growth," notes F&S research analyst Raghavendra Chitta.

In keeping with the trend of licensing deals, currently, 70% of the industry's drug pipeline is with biotechnology companies. Moreover, the industry is exhibiting significant changes as an increasing number of pharmaceutical firms are focussing their efforts on licensing early-stage compounds due to spiralling costs of late-stage compounds. However, while early-stage compounds are less expensive, they possess a higher risk quotient.