Live from BIO: Making deals with Big Pharma

WASHINGTON, D.C. -- As the number of venture capital deals grows smaller and the patent cliff looms, Big Pharma is looking for quality deals with small biotechs, according to a panel at the BIO International Conference, and the industry is focusing first on the best science.

The panel--which included representatives from GSK, AstraZeneca, Merck and Roche--emphasized the delicate balance between their internal R&D efforts and the need for biotech deals. Dealmaking has resulted in a 30 percent decrease in GSK's infrastructure, and the funds have been reinvested into its R&D, according to Ian Tomlinson, senior VP of worldwide business development at GSK. Roche's head of pharma partnering, Dan Zabrowski noted that experts within Big Pharma's R&D are still needed to assess the quality of potential deals, not to mention their own research work. "We can't be making these incremental little tweaks [to drugs on the market,]" Tomlinson added. "We're trying to make medicines that actually make a difference to patients."

Small biotechs' main priority when looking for Big Pharma partnerships shouldn't be the biggest financial reward, the panel agreed. "What we're all trying to get better at is trying to turn opportunities around in a much more thoughtful and considerate way," noted Shaun Grady, VP and head of SPBD at AstraZeneca. And Tomlinson said that when GSK purchased his company, Domantis, it was a perfect partnership, which kept the company running smoothly. Similarly, Zabrowski explained that financing isn't the overall goal in emerging market deals. "From our experience, the most important currency [Big Pharma] can bring to the deal is [its] R&D know-how."

No matter the deal, the representatives agreed that once a company has Phase I data, it's time to look for partnerships. Before that, Merck's VP and Chief Licensing Officer Barbara Yanni says it's difficult to make any financial valuation. "There's no point in messing around if you have a drug at hand that makes a difference," Tomlinson said. "Let's get on with it and let's get that medicine to the patients."

Editor's Note: The article previously stated that GSK's R&D had decreased by 30 percent due to dealmaking. In fact, GSK reduced its infrastructure by 30 percent and reinvested the funds into R&D. We regret the error.