Biotech and pharma companies will need to work together to create value
Governments around the world are trying to cut healthcare costs, and finding new drugs is getting harder. We've taken a closer look at what this means for the biotech industry in particular.
Biotech hasn't yet changed the face of drug development
The industry is now about 30 years old but it hasn’t completely fulfilled its promise. Drugs aren't being developed notably faster, cheaper, or with less risk. The Biotech business model relied on lots of seed money from financial investors, but this is getting harder to come by as the research base moves east and emerging economies fight for their share.
Boundaries between biotech and pharma are blurring
Biotech and Pharma are effectively becoming one industry - the biopharmaceutical industry - although there's a limit to how far Pharma can go down the Biotech route. Pharma can't copy Biotech's discovery and development methodology too closely and, even if it could, Biotech hasn't brought a golden era of productivity that would justify doing so. All biopharmaceutical companies - whether biotechnological or pharmaceutical in origin - will have to adopt a very different business model.
Biotech's future lies in collaboration
What will the new business model look like? It will probably include more types of cooperation. The largest biopharmaceutical companies will be responsible for coordinating and funding federations and consortia. In return they'll get access to more innovation, reduced costs and improved productivity. Smaller biopharmaceutical companies, research institutes and academic medical centres will be responsible for generating original ideas and providing disease biology and platform technologies on a fee-for-service basis. They benefit as they will get more stable, long-term financing, better opportunities for benchmarking the value of their own contributions and access to critical regulatory and marketing skills. Realistic expectations, good data sharing, and a commitment to an "innovative culture" on the part of everyone concerned will be key.
Biopharmaceutical companies will switch from selling medicines to managing outcomes
Greater collaboration will be required not just in R&D but also in the rest of the value chain. The opportunities for generating value from stand-alone products are getting smaller and therefore biopharmaceutical companies will have to switch from selling medicines to managing outcomes. They'll need more information about how well their medicines work for which patients -- data they can only access and analyse through extensive collaboration.