Sanofi sets up biotechnology incubator

Reuters is reporting that Sanofi-Aventis has announced a 200 million euro plan to convert a French factory to biotechnology and partnerships. The group’s Vitry-sur-Seine factory near Paris will be dedicated to researching, developing and producing biotechnology products and its facilities will be available to be used in partnerships with smaller biotechnology companies.

Elan seeking a partnership

Reuters is reporting that the Irish drugmaker Elan is was seeking a partnership with a big pharmaceutical company, after reporting a 14% rise in first-quarter revenues and a wider net loss. According to Reuters the comments come before the release of a strategic review of Elan’s business by Citigroup, which was hired in January to look at options including a possible sale or merger.

AstraZeneca passes on mega-mergers

The FT is reporting that David Brennan, CEO of AstraZeneca has ruled out participation in the round of mega-mergers currently underway in the pharmaceutical sector opting instead to focus on collaborations and partnerships. He is reported as saying:

Our view is more orientated to collaboration than consolidation. I would love to see some late-stage pipeline opportunities.

The Motley Fool casts doubt on pharma mega mergers

That doyen of the investment websites, the Motley Fool, is none too impressed with the wave of mega mergers going on in the pharmaceutical sector. It is particularly unimpressed with the Pfizer and Merck acquisitions because:

If all the cost savings fall into place, Pfizer and Merck will benefit from the acquisitions in the short term, but there’s still the long-term issue of expiring patents and less-than-stellar research and development.

The Motley Fool solution? In a word ‘partnerships’:

The solution is to let smaller drug developers be the R&D departments for the pharmaceutical industry. Smaller companies are more nimble, and they’re probably more effective, because researchers need to make discoveries to keep their company going — slack off, and the funds to pay salaries dry up pretty quickly.

Roche hasn’t fallen in the ‘bigger is better trap’:

Roche has also made it perfectly clear that smaller is better by insisting that it plans to leave Genentech alone and not taint the culture that’s produced so many blockbusters. Maybe it’ll be smart enough to spin Genentech back out in a few years — again.

Cisco and IBM tap partners for acquisitions

Gigaom is reporting that both Cisco and IBM are looking to current partners as acquisition targets in the escalating data centre wars. From our partnering-focused perspective concentrating on current partners when looking to acquire makes a good deal of strategic sense. It must also significantly reduce the chances that the acquisition will fail.

UK universities ‘overvaluing the value of their IP’

A survey of the attitude of UK based companies to partnerships with academic institutions conducted by Advanced Institute of Management Research has just surfaced via BiotechWeek. According to the study as reported in BiotechWeek, a majority of surveyed industrial players said they feel that university officials are impeding collaborations with long pre-partnership negotiations. They also said they believe their academic counterparts hold unrealistic expectations about the economic value of their IP. Fifty five percent of respondents blamed administration and university regulations for the slowdown; while about 49 percent felt that universities ‘constantly’ overvalued their IP. Curiously, respondents saw far more barriers to and far fewer benefits from collaborating with universities than a similar study conducted in 2004. This does not bode well for the future value of UK university research. The only benefit from collaborating with universities that increased between 2004 and 2008 was the ability to use collaborations with universities to source employees.

Of course, a similar survey of university IP directors would doubtless conclude that industry constantly undervalues their IP. Hence the move by universities to commercialise their IP through spin-outs.

The full report, dated January 2009, is available here.

Japanese sit out the mergerfest

The Japanese pharmaceutical companies have been conspiciouly absent from the merger mania that has overtaken some of the major European and American pharmaceutical companies. Reuters reports that they have decided instead to adopt a strategy of smaller acquisitions combined with partnerships.

“I would not speak against a big pharma model, but in the coming era we have to focus on improving efficiency and productivity,” Eisai President Haruo Naito is quoted as saying last month.

Lilly and AstraZeneca come into the sights of the pundits

The Wall Street Journal reckons that the mergers will continue in the biopharma sector with Eli Lilly, AstraZeneca, Sanofi-Aventis and Johnson & Johnson the most frequently mentioned candidates. However, Lilly has publicly set its face against mergers.

But will the pharmaceutical companies go after promising biotechnology companies? According to the Journal there are some 180 publicly-traded biotechnology companies with less than a year’s supply of cash, which could be takeover candidates. On the other hand pharma’s best strategy may to strike new partnerships with biotechnology companies rather than buying them. “You don’t want to bring them in to the mother ship because then you ruin it,” says Chris Viehbacher, Sanofi’s CEO is quoted as saying. We’re not sure how well positioned the alliance management teams in newly-merged companies are going to be in terms of signing up and then managing alliances with biotechnology companies.

Sanofi-Aventis to swap internal research for partnerships

Sanofi-Aventis’ CEO Chris Viehbacher is reported to be planning to cut his company’s budget for early-stage research in half and invest it in partnerships on drugs being developed by smaller companies. The company spends several hundred million dollars a year on pre-clinical research and early-stage clinical trials.

“Part of the reason the pharma model didn’t work is we just kept throwing money at things and hoping the next blockbuster would come along,” he is reported as saying.

Easier said than done. Successfully managing alliances – particularly in the early stages of the pipeline – requires a strong partnering culture, a team of experienced alliance managers, a commitment to scientific excellence and a reputation for being a successful partner. All four takes years of hard work to build up. It’s not clear how, in the meantime, Sanofi-Aventis is going to persuade young biotechnology companies, full to the brim with scientists, that it is the right partner for them. Sacking lots of scientists is probably not the best start.

IBM releases report on alliances in the life science

The in-depth report, called ‘Imperfect harmony: Alliances within the life sciences industry’ outlines the characteristics biotechnology companies and academics are looking for in a partner and suggests ways larger companies can become more attractive suitors. A pdf copy of the report is available at this link. Hat tip to ThotWave LifeScience.

Disclosure: Silico worked with IBM in collecting some of the data used in the report.