Less is less

Biotechnology companies, groping for alternatives to the closed financing window, are likely to find partnership deals harder to come by over the next six to 12 months, and with less favorable terms than in the recent past.

The changes are not yet obvious, because the deals now being announced have been in the works for some months. But conversations with licensing executives from 11 pharmaceutical companies indicate that $50 million deals with extensive co-marketing rights will be rarer now than in the heady days of 1991-92, when open-handed investors gave biotech companies more leverage in negotiations.

The shift in bargaining power will be reinforced by changes in the pricing structure of the drug industry. Pharma companies are under pricing pressures they haven't seen before, with some experiencing quarterly losses for the first time since the Depression, said Ronald Henriksen, who was director of business development at Eli Lilly and Co. before joining Khepri Pharmaceuticals Inc. as president and CEO in April. Until uncertainties over health care regulation are resolved, big pharma has every incentive to husband its resources carefully.

'Window is closed'

"The partnering window is closed," said Henriksen, who expects to see 50 percent fewer deals this year than in 1992. "A lot of the deals being reported now have been in the cooker for nine or 10 months. Fewer fresh deals are being started."

Michel Bergh, until recently director of business development for biotech at Schering-Plough Corp., also expects

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