Growing popularity of virtual biotechs promises boon to outsourcers

The recent news that tiny FerroKin BioSciences earned a big buyout deal with Shire ($SHPGY) has helped spotlight the growing popularity of the virtual biotech model. And that has big implications for everyone in the outsourcing industry. Like other virtuals--such as Stromedix, recently acquired by Biogen Idec ($BIIB)--FerroKin had only a handful of employees working full-time for the company. CROs, CMOs and other outsourcers created a network of support vendors that carried out much of the heavy lifting in drug research. And with some proof-of-concept data in hand, FerroKin made a tantalizing morsel for an acquirer looking to build up its pipeline without having to acquire a sizable research infrastructure it didn't need. Story

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