How can large pharmaceutical and small biotech companies form mutually beneficial partnerships that harness the strengths of each side in order to bring new therapies to patients? Sanofi CEO and Genzyme Chairman Chris Viehbacher shared his thoughts on that question and several other topics, including the growing importance of emerging markets, at a Fireside Chat at the 16th Annual BIO CEO & Investor Conference on Monday.
He reflected that as the leader of a big pharma company, there are several keys to successful partnerships, the most important of which are trust are respect. The small biotech company needs to trust that their partner is truly invested in the success of the asset, because for them, the asset is the company. With a big pharma, there are many products in the pipeline. Potential partners need to know that a large pharma won’t bail at the first sign of trouble and move on to the next thing.
Mr. Viehbacher also noted that small biotechs have more options these days to move their asset forward. In the past few years, a big pharma partnership or buyout was the only option for VC investors to cash out. Now IPOs are an increasingly attractive option:
“We had about fifty IPOs last year. In the last three or four years, the only way that VCs could get out of a biotech was through a pharma group. And that made life nice and comfortable for a lot of us at pharma, because one way or another, most interesting companies were going to knock on our door. And at that point you were competing largely on the financials or whatever non-financial things you could bring, in terms of if you had someone with a particular expertise in a disease. Now people have a choice. I think if you’re going to partner, it’s no longer because someone needs to get their VCs out the door or out of the company, or that they need the funding. They’re going to do a partnership if they see some other value-added.”
One area that a big pharma can be an especially helpful partner is emerging markets. Increasingly, biotech companies forming deals want to keep the market rights to Western Europe in addition to the US. But emerging markets are beginning to outpace the US in terms of revenue. With 80% of the world’s population living in emerging markets, companies can’t afford to ignore them – financially or ethically, Mr. Viehbacher said.
He advised small biotechs looking at a potential partnership to do their homework. How has the big pharma treated past partners? Don’t just look at the financials. Talk to current or previous partners and ask about their experience, because this is a relationship that will be critical to the success of your company.