Experts advise Big Pharma to shift to in-licensing

Morgan Stanley's experts are suggesting a new drug development model for Big Pharma that will surely tickle most biotech execs pink.

Rather than continue to develop new therapies in-house, says Morgan Stanley, pharma companies should abandon their R&D empires in favor of in-licensing drugs that have reached the proof-of-concept stage. And they add that Sanofi-Aventis and AstraZeneca--which announced plans last week to carve $1 billion out of its R&D budget--would benefit most by this strategy while Bayer and GlaxoSmithKline would see a big jump in valuations.

The economics in play: Big Pharma companies spend a third of their R&D budget on early-stage drug development, which is an odds-makers' nightmare. Only one in 10 early-stage drugs make it to the market, with the odds rising to 20 percent at Phase II and 50 percent at Phase III. Maximum returns dictate later-stage bets, which is where in-licensing can be most effective.

- check out the article in the Financial Times

Suggested Articles

A few years ago, one of our Fierce editors met a Big Pharma R&D chief for the first time. “You’re the ones with the scary name,” he joked.

Pfizer's eczema hopeful has been building its case to challenge Sanofi and Regeneron's Dupixent, but safety issues could stand in its way.

Cedrik Britten, M.D., becomes the biotech’s new chief medical officer to help run its adoptive cell therapy and TCR bispecifics platform.