Sanofi's Viehbacher spotlights Big Pharma's new role creating biotechs

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One of Chris Viehbacher's favorite themes since he's taken the helm at Sanofi is the woefully low level of R&D productivity in the business and how that has to change. So it's no surprise that when Forbes magazine recently highlighted the fact that new drugs at some pharma companies could cost as much as $8 billion to $12 billion each, on average, he seized on the numbers and used them to illustrate the industry's dilemma in a speech yesterday in North Carolina. And he highlighted Sanofi's recent decision to join forces with a prominent Boston VC group on a $125 million company launch as a new business model that can work for everyone in biotech.

Biopharma R&D in the U.S., said Viehbacher at the CED Life Science Conference in Raleigh, rings up at a cost of $100 billion a year and delivers 20 to 30 new medicines annually. "On average," he told the crowd, "studies have shown that if you spend a dollar on research and development it will return 70 cents."

Meanwhile, he says, biotech executives routinely come to him about a dire lack of venture funding. "I am approached by companies with Phase II assets, and there's no funding for Phase III." Combine those two trends, and something has to give. In Sanofi's case, where the focus in R&D has shifted from in-house work to an "open environment" where researchers are charged with collaborating with investigators outside the company, the trend pushed Viehbacher not to just partner with a biotech company, but to actually join hands with Third Rock Ventures to launch a new company.

"We created not only a company, but a process for Third Rock," said the CEO, referring to Warp Drive Bio. "Third Rock had the capability and funding, we brought a library of compounds." That deal helps put Sanofi in the center of a hub of scientific activity in Boston, accelerates discovery work and helps back the venture side of the business.

"Every VC is interested in an exit," he told the audience. "If you partner with Big Pharma, there is that."

And while it still may be risky, a company the size of Sanofi can always move on.

Said Viehbacher: "This thing can sunset if it doesn't work and we can put our money elsewhere."

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