Cloud to separate biotech from big pharma

Cloud computing may provide the wedge that conclusively separates big pharma and little biotech into two distinct industries. The current business model joins them in an uneasy relationship in which future IP value is pawned for the means to achieve it.

But that relationship is destined to deteriorate, says Erik van Dijk, principal at institutional investment consultancy LMG Emerge. Upstart biotechs will benefit from the cloud's computing scalability in ways that minimizes or even eliminate the need for big pharma resources. And biotechs will "partner" in the cloud with complementary niche specialist in such other business areas as manufacturing.

To back up his assertions, van Dijk cites a Deloitte paper that identifies four "significant disruptions" to existing business models that the cloud will generate. The disruptions are summarized in a Harvard Business Review blog and they represent successive levels of cloud evolution and industry adoption.

The first two are related to IT infrastructure development (architecture and service delivery), but the last two are the more obvious industry shakers: a vertical restructuring of tech industries as cloud service providers transcend the infrastructure issues and get to work on industry-specific applications, followed by the harnessing and wielding of these new capabilities by companies within those industries. He foresees disruption of "an expanding array of industries with fundamentally new value propositions that will be very hard for incumbents to replicate."

- here's the van Dijk column
- see the HBR blog
- and here's the Deloitte paper