3:07 PM
Feb 08, 2018
 |  BC Innovations  |  Finance

External rethink

PPP review: why companies are competing with academics for research partnerships

As the industry seeks to develop new ways to access external innovation, companies are re-evaluating the value of public-private partnerships, and increasingly turning to other companies for research partnerships in lieu of broad deals with academic institutions. BioCentury’s seventh annual analysis of PPPs shows that while enthusiasm for forming the partnerships has leveled off, inter-company research deals have risen sharply in the last two years.

Industry leaders who spoke with BioCentury attributed the shift to at least three factors. Aside from the ease in aligning priorities between companies, stakeholders point to opportunity costs of open-ended, single-institutional agreements and a growing distaste for multiparty consortia that lack follow-through or don’t wind up serving the company’s needs.

BioCentury Innovations defines a PPP as a preclinical research-based collaboration between at least one drug development company and at least one organization from the public sector, and excludes licensing deals and deals involving CROs.

PPPs still remain a core part of company strategies for identifying translational opportunities and exploring new biology. In the last four years, the number of new PPPs created has hovered between about 220 and 250 per year, although that represents a 17-27% drop from the 302 formed in 2013.

In the same period, the number of research partnerships between companies has quadrupled, rising from 17 in 2013 to 67 in 2016 and 69 last year. The trend is common to big pharma and smaller companies: in 2017, half of the alliances between companies involved one pharma; none involved alliances between two pharmas (see “PPP Alternatives”).

According to Juan Harrison, head of strategic academic alliances at Takeda Pharmaceutical Co. Ltd., the change is partly due to the need for companies to access assets that can fuel their pipelines.

He said one factor is that it’s simple to partner with a company because it likely already has a strategy and mentality to progress candidates into products. “Companies have a commercial mandate, and because of that they are relatively focused in the kinds of programs that they pursue. It allows a company like us to say ‘we need to collaborate around this very specific thing.’”

By contrast, academic centers tend to be broad and disease area-agnostic. Those deals have their own advantages because accessing an innovative asset is often inexpensive, and “there’s a galaxy of opportunities that are available,” said Harrison.

Figure: PPP alternatives

Driven by growth in industry-industry preclinical research alliances, external innovation deals have risen each year since 2014, up 11% overall.

Left panel: Public-private partnerships (PPPs) grew modestly in 2017 after a 2016 drop, but interest in the model has remained fairly level over the last four years. Industry-industry partnerships in the same time period increased (purple line).

Right panel: While PPP deals have remained steady, companies have increasingly looked to industry partners for early stage research agreements. Most notably, from 2015 to 2016, the industry-industry partnerships more than doubled to 67 deals. During the same period, public-private partnerships (PPPs) dropped by 27 deals. Inter-company deals held steady from 2016 to 2017; about half involved big pharmas. Source: BioCentury Archives

Evolving models

Over the past five years, companies have altered their approach to forming PPPs, moving away from broadly defined institution-wide pacts and toward more focused deals with specific labs and pre-negotiated end points.

Historically, pharmaceutical companies took a hands-off approach to accessing academic institutions, said Harrison. “We’d cut a large check, see where the institution takes that money and see if innovation comes out that would be of use to the pharmaceutical industry. That has been a failing model and it has produced very little, as far as I can tell.”

In response, some academic centers have worked to improve their product development capabilities, and industry has adjusted its approach to provide...

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