Can Big Pharma effectively develop new drugs?

When it comes to drug development, is bigger really better? That is the question Borje Eckholm, president and CEO of Investor AB--and one of AstraZeneca's biggest shareholders--poses in the London Times. Big Pharma is under increasing pressure to churn out blockbuster drugs while at the same time control costs, fend off generic competition and create shareholder value. Eckholm thinks the vertically integrated pharma model can't effectively meet all those demands.

"You have to ask yourself: Do you have economies of scale in R&D? It's not clear but one of the fundamental ways that companies create value for shareholders is strong R&D. It raises the question: is big better? Maybe you have to split it up into smaller parts." He suggest that Big Pharma would be better off outsourcing projects to smaller developers who posses the independent spirit needed to discover groundbreaking new drugs.

Some of the industry's biggest players have indicated that reorganization is necessary. Pfizer, for instance, has set up a biotech incubator to foster growth. Meanwhile, AstraZeneca has established a biotech focus, merging purchases Cambridge Antibody Technology (CAT) and MedImmune into one biologics powerhouse. The company also spun off its Swedish R&D facility for gastrointestinal therapies.

- read more in this London Times report

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