Collaboration key for Merck, others in new landscape
Big Pharma partnerships are changing drug development
When Merck & Co. inked an agreement with Roche that commits the two companies to collaborate on researching hepatitis C treatments, it brought together two of Big Pharma's biggest names — but more importantly, it indicates the wider approach that's engaging partners large and small, and changing the way medicines and cures end up in the nation's health care system.
C. David Nicholson, senior vice president and head of worldwide licensing and knowledge management at Merck, in the Whitehouse Station section of Readington, said collaboration has become a critical piece of the company's development pipeline, including last week's announcement with Switzerland-based Roche.
"We are really committed to having first-in-class and best-in-class candidates in our pipeline, amongst our products, and to do that, we need to work both internally and externally with a broad spectrum of partners," Nicholson said.
David Finegold, dean of the school of management and labor relations at Rutgers University, said the increase in partnering is an industry-wide trend.
"The shift has been particularly pronounced for Merck, because among all of pharma, they had one of the strong traditions of in-house development," he said.
In 2010, 64 percent of Merck's revenue came from collaborations, a number that has been consistent the past few years, Nicholson said. Those partnerships range from large partners — like AstraZeneca, with whom Merck partnered on joint Phase 1 clinical trials back in 2009 — to arrangements with small biotechs and academic institutions.
Last year, Merck signed 46 deals it termed significant; of those, about one-third were with partners in academia, while the majority were with smaller biotechs, Nicholson said.
Debbie Hart, president of biotech trade group BioNJ, said such deals are significant for the health care community as a whole.
"It's really important, because collaboration is really the way that innovation will be done into the future," Hart said.
Hart said large pharmaceutical companies like Merck have been boosting their portfolios of partners for the past decade in response to shrinking internal pipelines and the fast-approaching "patent cliff" that will see the patents on many blockbuster drugs expire within the next couple of years.
While the business of Big Pharma is changing, Nicholson said the biotech landscape also is shifting, as a result of the troubled economy.
"Biotechs are having difficulty being funded, and biotechs are also having difficulty with their exits, because the public markets essentially remain closed to biotech exits," he said. "Biotech is looking to partner with pharma as their exit opportunity number one."
Nicholson said one way Merck is trying to deal with issues facing biotech is by taking a more proactive role with potential partners.
"What I'm working on quite hard with my colleagues at Merck is to try to establish a more symbiotic relationship between the venture community and Merck and biotechs, where we have much more collaborative discussions at an earlier stage," he said.
This week, BioNJ will host a two-day International BioPartnering Conference aimed at sparking conversations between the Garden State's biotech community and Big Pharma. Nicholson, who will be a keynote speaker at the event, said such conversations must begin well before any agreement is signed.
As biotechs look for partnerships, Nicholson said Merck can afford to be selective. Ideally, he said, Merck wants partners with a molecular target with clinical validation, human genetic validation or robust proof of concept data in trusted animal models.
Finegold said the need to bring in outside innovation is good for smaller firms, in the sense that Big Pharma will be interested.
"If you're a small firm, and you've got good human data about a drug or potential pipeline of drugs, then I think you're really in the driver's seat," Finegold said.
Still, finding the funding to survive long enough to get that data is increasingly difficult, he said.
"The challenge is that most of the large pharma companies, and most of the VCs, are not keen to invest earlier than that," he said.
The risk is on for the large players like Merck, too, Nicholson said.
"Going for real innovation means we take the necessary risks, because we want to be on scientific innovation — but we do have a first-in-class, best-in-class strategy, which means that we are looking for best-in-class compounds against molecular targets that we truly believe in," he said.
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