Strategic Alliances in World Pharma and Biotech Markets

In the last decade or so, strategic alliances and partnerships among pharmaceutical and biotech companies have doubled to around 700 per year per sector, although most of this increase came in the early years.

Regardless of its size, every pharma or biotech company has certain limitations in their own research although usually they have enough capacity in development to bring new compounds to the market very effectively.

However, on a number of occasions, the inhouse development capacity may get prioritized in favor of other products within the company's portfolio.

A product may also be facing competition internally from other projects, not necessarily similar compounds, but perhaps programs better aligned to the overall R&D activities. All these make collaboration a viable option, not only to enhance company's product range, but also its geographic coverage.

For most of these ventures, shareholder value is the ultimate driver, access to new compounds, novel technologies, or IP rights not the only reason; however, sharing risk in product development can be just as important a reason for partnering. In addition, even though all big pharma companies have a good selling and marketing capacity (and can always increase it as needed) many alliances are created to optimize the commercialization of products through, for example, detailing to different audiences, marketing with synergistic products or in particular territories where a partner is stronger than the originator.

Recent statistics indicate that all the big pharmaceutical and biotechnology companies have in fact become quite dependent on products deriving from collaborations and the on an average, 15%-20% of the sales revenue of top 20 companies comes from licensed products, while around 40% of their pipelines is due to compounds externally sourced.

This report examines the synergies between biotech and pharmaceutical companies, discusses the feasibility and economics of strategic alliances, and profiles major pharmaceutical and biotech firms, and how mergers have affected them.