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Big Pharma Becoming Biotech Angels

October 14th, 2011

Big pharma is turning to small pharma as everyone scrambles for innovative next generation products to replace drugs with expiring patents.

EvaluatePharma says that some $255 billion in sales are at risk between now and 2016 as patents on some of the biggest and best selling pharmaceuticals expire, making them fair game for generics.

In the advisory site’s annual review, World Preview 2016 “Beyond the Patent Cliff,” EvaluatePharma writes:

The shift in the pharmaceutical industry’s focus from the dominant US market towards emerging markets is a symptom of patent expirations coupled with poor R&D productivity, rather than any fundamental economic weakness in the US market.

So what’s a pharmaceutical company to do? Invest in startups, of course.

The latest to launch an investment arm is Merck, according to Xconomy. It recently created Merck Research Venture Fund and endowed it with $250  million. Merck also created a second fund — Global Health Innovation Fund — with another $250 million.

Merck now joins nearly all of big pharma — Pfizer, GlaxoSmithKline, Novartis, Eli Lilly, Roche, J&J, and AstraZeneca — in the competition to fund promising early stage biotech companies. Besides the potential for a future payday,  being on the inside early gives the big firms a leg up in negotiating for the rights to new drugs.

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