Innovara Digest: R&D Partnerships – the New Norm
Back in 2009, Pwc’s Pharma 2020 report, Challenging Business Models, predicted that by 2020, pharmaceutical companies would no longer be able to remain competitive by keeping all R&D in-house. Pwc believed that all pharmaceutical companies would need to collaborate with a number of organizations in order to reduce costs, minimize risk, serve emerging markets, and continue to innovate.
According to MM&M, there were 4,000 R&D partnerships between 1995 and 2004; this number more than doubled to 9,000 between 2005 and 2014. PharmaVoice’s Denise Myshko firmly states, “R&D is not something that can be done in a silo. Collaboration…has now become the norm.” This week’s Innovara Digest focuses on how companies approach and tackle the challenges of this new norm.
R&D Partnership Models
In Partnership Models Structure R&D Change, Jum Prutow and Benjamin K. Gill identified a number of common partnership models:
- Peer-to-peer collaboration. This enables pharma companies to leverage their mutual strengths and tackle large issue togethers. For example, TransCelerate Biopharma, Inc. was formed to standardize methods of drug development and discovery in order to reduce costs.
- Alliances between many firms. Consortia such as BioPontis Alliance exist to connect the most promising therapies in academia with for-profit companies.
- Contract Research Organizations (CROs) represent one of the most common partnership approaches.
- University and academic medical center relationships. According to Pharmtech, all large pharmaceutical companies have at least one of these relationships.
- Organizations receive money from others but perform research on their own terms. in 2012, the National Institutes of Health (NIH) raised money from 8 companies in order to further the study of industry-abandoned drug compounds.
R&D Partnership Challenges and Prescriptions for Success
R&D partnerships may offer a near-limitless number of possibilities for innovation and cost-reduction, but there are a number of challenges that pharma companies and their partners. According to the Perils and Promise of Strategic Partnering with CROs by Pharmaceutical Outsourcing, many “are skeptical that a true ‘partnership’ is even possible between companies with such different business models, in large part due to the different economic incentives under which they operate.” The author urges all members of a partnership to increase transparency, make sure that expectations are realistic, and take joint training.
PharmTech cites a survey by HRI, who found that 47% describe their partnerships as an arms-length vendor relationship. PharmTech suggests breaking out of a project-oriented mindset and moving to an “owning the disease” business model, focusing on delivering value rather than increasing volume, and embracing a broader systems approach. PharmExec’s Keith Bailey believes that the largest challenge for pharmaceutical partners is the alignment to new or misaligned objectives. His prescription for success: regular multi-day immersive sessions with team exercises, as well as the appointment of an independent partnership ambassador.
Pharma companies are responding to these challenges by keeping their doors open from the beginning. Novartis lists on their website that partnerships in pharma are a “two-way street,” citing a variety of recent partnerships with other pharma companies, non-profits, and biotech companies. Bayer does the same—listing 24 examples, including academic institutions, small companies, and large companies. Takeda addresses concerns by listing “the pluses of partnering with Takeda” on their website, which include respect for independence and decision-making, clear two-way accountability, and a dedicated alliance management team.
BMS goes one step further, providing case studies on their various R&D partnerships. Paul Biondi, Head of Business Development, says of their relationship with PsiOxis: “We lead with our science, which is reflected in the deals we have executed and how we have transformed, and we are focused on opportunities that make sense strategically and financially, for us and our partners. PsiOxus is a great example of our global partnering strategy and focus on long-term collaborations.”
R&D Partnerships Done Right
With over 9,000 R&D partnerships between 2005 and 2014, it would be difficult to list even a fraction of the successful ones. Here are five strong partnerships:
- The Pistoia Alliance brings together members from companies large and small, academia, nonprofits, and government agencies. Their mission: “Our projects transform R&D innovation through pre-competitive collaboration. We bring together the key constituents to identify the root causes that lead to R&D inefficiencies. We develop best practices and technology pilots to overcome common obstacles.”
- GSK and Johns Hopkins have formed a long-term collaboration to block the side effects of rosacea, sponsored by GSK’s Discovery Partnerships with Academia (DPAc) program.
- To cut costs from their R&D budget, Pfizer enlisted Parexel and Icon as their two preferred CROs. Pfizer’s John Hubbard believes that “the two-partner model will simplify our processes, significantly reducing the number of external service providers we use for clinical trial execution, and clarify accountability in risk and quality management.” FierceBiotech estimates the deal at $6.75 billion USD.
- Eli Lilly partnered with Parexel for a different reason, taking advantage of their reach to expand into the Asia-Pacific region.
- Teva’s National Network of Excellence in Neuroscience (NNE) consists of members from 10 of Israel’s leading universities and teaching hospitals to “create a collaborative and supportive ecosystem for discovering and developing novel therapeutic approaches.” Watch A Day in the Life of Teva’s NNE in Israel:
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