Corporate venture arms step in where traditional players fear to tread

Big Pharma's corporate venture arms have been flexing their financial muscles this year. Coming into the venture game with a patient attitude and a big interest in earlier-stage R&D enterprises, Bloomberg reports that the corporate groups put up 12% of all the venture bucks--and one in four of the deals--going to private biotechs in the first half of this year. That's up sharply from the 5.3% of total dollars the VC arms accounted for in 2010.

VC groups in general have been complaining loudly this year, angry about the FDA's regulatory grip and anxious that ever-lengthening timelines and a painfully tough IPO market prevents them from cashing out on their own terms. But Bloomberg notes that the corporate VC groups don't play by those rules. Equipped with plenty of cash, they can afford to take risky gambles on long shots. That approach gives them tight relations with potential partners and takeover targets at a time their own R&D efforts are often under intense scrutiny after years of largely fruitless efforts.

"Large firms can't be as nimble, and they can't be as typically innovative either," Brooks Houghton's Kevin Centofanti tells the business news service. "Frankly, it's a cheaper way for them to get into the drug development game."

Bloomberg uses Amgen's ($AMGN) investment in the fledgling MiRagen as an example, focusing on the big biotech's crucial early support and the rep it helped create for the biotech. Once past the Valley of Death, the biotechs can find it easier to gin partnership deals and attract traditional VC backing.

- here's the article from Bloomberg

Special Report: Amgen - Biotech's Biggest Spenders 2011