Can In-Licensing Models Substitute for Discovery?
This article was originally published in Start Up
Executive Summary
Has a new biotech business model emerged for pure drug development companies, which start as corporate shells with top flight management teams and then proceed to in-license and further develop multiple products? While the business model is not new, clearly drug development is more fashionable today than drug discovery within the institutional investor community. The real question is whether the in-licensing model works any better than discovery.
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One way for Pharma to bolster its lagging growth would be to capture some of the value of the compounds it has shelved during development. Start-ups have created technology platforms and systems biology approaches and are in place to reposition such stalled drugs in new indications, or to reformulate marketed compounds to extend the product life cycle. Nonetheless, drug firms largely remain reluctant to part even with compounds they have decided not to develop themselves. Drug makers say the issue is resources, but it is also desire. Until Big Pharma further loosens its grip on its compounds that are stalled in development, in-licensing will remain an opportunistic, case-by-case exercise, and biotechs must accept the fact that access will depend largely on advance insider knowledge of pharma firms' pipelines.
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