The comments Eli Lilly's Steven Paul made recently on the soaring cost of drug discovery are chilling. If he's right and the average cost of an approval jumps from $1.2 billion to $2 billion in four years, pharma's drug discovery model is essentially unsustainable. But his note that biologic success stories offered a ray of hope also underscores the role of smaller, more nimble biotech companies in the discovery process. New biotech companies are springing up all the time, and they're setting out with some innovative ideas on how to keep costs down--at least through Phase I, when they'll be more likely to gain a licensing partner to help pay the freight through to approval. In many ways, biotechnology is the R&D arm for big drug companies. And as such we'll also continue to see more buyouts as bigger companies go on the prowl for better pipeline prospects. It won't be enough to solve the rising cost of R&D but it's a big step in the right direction. - John Carroll