Playing the Expectations Game
PHARM EXEC: How does a Big Pharma player like Pfizer—with deep pockets—look at the value proposition around biotech?
MCLOUGHLIN: Pfizer is not purely product-driven in our search for opportunities. We are very interested in investing in innovative, discovery-stage
platform technologies. Also, we try to differentiate between products and technologies that represent an exclusive arrangement
with us, and are secured at a premium price, or those that can be shared more widely and will perhaps lead to more adaptation
or indications once they are out in the marketplace. One of the key factors we must evaluate is whether an investment with
an external partner is better than relying on our in-house programs. Do we want or need two such programs simultaneously?
What is the right mix of investment that will drive the portfolio toward commercialization?
LICHTER: Big Pharma still has not abandoned the old approaches. Despite the expressions of interest around "partner of choice," companies
have not been as active as presumed in negotiating outside deals. The internal venture capital funds often serve as nothing
more than an additional layer of bureaucracy. The due diligence required to invest can be torture for the small startup. You
cannot discount the enormous process and culture differences between Big Pharma companies with 100,000 employees and startup
biotechs, who might be highly innovative but exist with a payroll of only a dozen or so people. Meeting the expectations of
Big Pharma is difficult when you are up against a heavy resources gap.
KATHY BOWDISH, PRESIDENT AND CEO, ANAPHORE PHARMACEUTICALS: My company puts significant emphasis on platform partnerships. We work at the preclinical stage and are seeing strong interest
in not only the platform itself but in the programs we are developing. Hence I am more optimistic about the power of partnerships
to drive commercialization, even though I agree that Big Pharma has become so bureaucratized it takes much effort to navigate
internally to the point where you can get to the right person who can sign off on an agreement.
Kathy Bowdish, President & CEO, Anaphore Pharmaceuticals
NEWELL: The onus is on us to invest in the skills and capabilities that will give us credibility in the relationship with Big Pharma.
We have to work at being good partners too, in order to ensure an effective collaboration.
LICHTER: In return, Big Pharma has to act quickly and recognize that our timelines are short. There is little margin for us if it
takes two years just to seal the contract on a deal. In a cash-constrained environment, the best thing Big Pharma can do is
make a quick and crisp decision.
XANTHOPOULOS: Two decades of exposure to the deal environment indicates that it takes an average of 18 months to negotiate a partnership,
from first meeting to executing the contract. This is after Big Pharma sifts through the mass of opportunities, where you
have lots of companies that are essentially "me too" partners—not offering much differentiation but requiring the same basic
level of due diligence. The bottom line is that all of this is very time consuming. You have to stand out and show that the
platform is a novel one, measured against the competition and the internal programs of Big Pharma.
PHARM EXEC: Does Big Pharma have a threshold on valuing deals, with low priority accorded to investments of a relatively modest amount?
MCLOUGHLIN: No, this is no longer true. In fact, Pfizer's main criteria is that a deal should address an unmet medical need. At present,
we are actively looking for collaborations in the orphan drugs arena.