Big pharma to outsource for fresh ideas

Many of the larger pharmaceutical companies dedicate huge amounts of money towards discovering the latest drugs that could cure ailments and heal balance sheets, with a large proportion of research and development conducted in-house.

However, with productivity yields from in-house research dropping alarmingly, many companies are spending increasing amounts on outsourcing to smaller teams of academics to help develop the next money-spinning medication.

According to MIT Technology Review, drug companies spend ten times more than they did on R&D since 1980, while the number of approved drugs entering the market each year has stayed relatively flat.

According to GlaxoSmithKline, nearly 60 percent of the drugs they have in late-stage testing have been developed by other companies, which represents a jump of 20 percent in just three years. They are also sending roughly half of their $6.3bn R&D budget to outside companies.

Glaxo’s head of R&D, Moncef Slaoui, told Technology Review: “It took a lot of work within R&D to make it really clear that reaching out to a team that we judge to be better than us to prosecute an idea, or because they have a great idea, is just one way of doing R&D in the company.”

The industry is suffering from a lack of discoveries in new drugs, coupled with countries like India that do not traditionally respect drug patents. While many firms have outsourced their R&D to companies in India, the effect of the government’s reluctance to enforce patents rules in the country means that many may divert funds away.

Marijn Dekkers, CEO of Bayer, who recently lost a patent application for a cancer drug, Nexavar, in the country, told Forbes: “The danger of pushing the prices of prescription drugs down, down, down is that at some point the business model of developing these drugs will lose its attractiveness…India is becoming very reluctant to respect intellectual property for Western companies and that is becoming a challenge for us.”