This headline comes from the very good Life Sci VC blog. It asks whether the large uptick in Big Pharma and Academia broad R&D pacts (see Sanofi-Harvard, Pfizer-Washington U, Bayer-UCSF, UCB-Harvard, Sanofi-Stanford, Gilead-Yale, Pfizer-UCSF, etc.) will exhaust VC opportunities for startup deals?
In a word, No! In two words, Hell No!
Life Sci concludes that this type of deal making still only impacts a very small proportion of the total academic projects out there. For example, the Sanofi-Stanford deal announced this week is for a maximum of 5 programs per year in an institution with literally more than 100 with 50 departments and 100's of falculty. The pool is not exactly dry as a result of Sanofi's commitment.
Life Sci also argues that this new association of academia and pharma will help academia better understand the requirements for translational activities and what it really means to run a lead optimization program to industrial standards. Moreover, big pharma can help with academia funding gaps by covering more overhead in these deals and also fill a role in providing more early stage funding that VCs are shying away from in today's more risk-averse environment. VCs can jump in later on projects that may lose funding from their initial partners for a variety of "non-program" reasons.
Also while Big Pharma offers another alternative for academia partnerships and early funding, it may not be for everyone as there will be varying tolerances of academic groups for big pharma bureacracy as projects move inside the pharma R&D organization in later stages. Some good academic groups may choose not to engage with such a model.
The post concludes:
At the end of the day, I think there's a (mostly) healthy vetting process conducted by early stage VCs in evaluating, co-creating, funding and helping govern new startups out of academic labs. When done well, Pharma benefits from this, as does academia. I don't see these broader partnerships as threatening or significantly reshaping this important role of VC and their startups in the process of translating discoveries into clinical innovations.
I would agree. I think big pharma is adding not subtracting by entering these relatinships. It's broadening the model. It brings more commercial knowledge to earlier stages toward discovery. It has more of an evolutionary feel to big pharma R&D model than revolutionary feel to me. It may help create a more collaborative and open environment in the process -- that will hopefully result in more translational successes - that I think emboldens and actually helps everyone involved. Success breeds success.
Posted by Bruce Lehr April 20th 2011.