Back to School

Posted by on Dec 13, 2011

Is it back to school for big pharma? It would seem so. Over the past year, one news report after another has detailed a significant new relationship between big pharma and academia. While pharma-academic collaborations are nothing new, what is striking about this new crop of deals is their size (both in dollars and scope) and the fanfare that has accompanied them.

Of the big pharmas, Pfizer has been particularly noisy, establishing an “academic network” of sorts in the form of its Centers for Therapeutic Innovation (CTI). The first CTI was established in 2010 at the University of California-San Francisco (UC-SF), with additional CTI’s formed over the last year in New York City (NYC), Boston and San Diego. Each CTI represents a multi-year, multi-million dollar commitment for Pfizer, with Boston and UC-SF topping $100 million each. Other large and well-publicized deals include sanofi’s new collaborations with Harvard and UC-SF, Gilead’s cancer research collaboration with Yale University, Bayer’s ten year “master R&D agreement” with UC-SF (enough with the UC-SF, already), and GlaxoSmithKline’s intention to forge long-term partnerships with 10 academic “superstars.”

Why now? Both parties clearly have a lot to gain from collaborations in the current environment. As federal funding becomes more limited, big pharma provides a relatively untapped and potentially large source of funding for academia. Big pharma dollars and relationships represent an alternative way for universities to cross the so-called “valley of death,” the translational gap from discovery to clinic where public and private funding is particularly scarce.

Big pharma can also benefit from closer ties to academia. Collaborations with academic research institutions offer an alternative, cost-efficient strategy for enhancing the productivity of big pharma research and development, which has come under increasing fire in recent years. Pharma is looking for new ways to outsource its costs, access more fundamental innovation and impact the relatively high rate of late stage attrition for its drug candidates. Perhaps more cynically, big pharma is also looking for good press to the effect that is has a new plan.

While pharma-academic collaborations hold significant promise, there are obvious potential disconnects. Academia places a high premium on the dissemination of knowledge, while secrecy tends to support competitive advantage in industry. Some in academia remain distrustful of industry, preferring a “pure” approach to research over what they view as “selling out.” Pharma companies, for their part, may commit but not fully, furthering that distrust. Of course, practical business disputes including ownership and control of decision making can also undermine pharmaceutical-academic collaborations, just as they do industry-based collaborations. Good management is key to collaborative success, and physical distance and cultural differences make good management of pharma-academic collaborations particularly difficult. Challenges of this type, and others, have undermined the pharma-academic collaborations of the past.

Will it work this time? There are signs that big pharma has learned some lessons. The new collaborations are generally long term, well funded and in many cases, involve physical proximity of the pharma and academic scientists. Expectations are high, even if investors have expressed some cynicism. Even those research programs that fail in the eyes of big pharma (e.g., too divergent, too risky), may present good opportunities for the universities involved. Most of the new deals involve a reversion mechanism, in which the university can advance independently those technologies and drugs that don’t meet big pharma’s requirements. Interesting new companies may be formed, and venture investment opportunities created, as a result.

What does it mean for the Southeast? At present, it is unclear. Most of the major collaborations announced to date have involved universities located in biotech strongholds, such as Boston and San Francisco. What is clear is that the Southeast has the benefit of strong academic research institutions, including 3 ranked in the top 25 nationally according to a 2010 study by Center for Measuring University Performance (MUP): Duke University (#7), the University of North Carolina – Chapel Hill (# 17) and Vanderbilt University (# 25). Based on total research expenditures alone, Duke is ranked 4th nationally. Universities in the region with high levels of research support and an entrepreneurial culture offer big-pharma and biotech an opportunity to expand on the current approach. In one recent development, Duke and Novartis announced a collaboration focused on vaccines, including basic research and translational studies.

For now, we can only watch and wait to see if the promise of the new collaborations will be realized. It will take years for the new drug candidates that may emerge from the newly announced collaborations to advance to the clinics and beyond. It may be that academia and pharma will get it right this time, offering the industry and ultimately patients, important new therapeutic advancements.

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