Life beyond the wallsMany large drug companies are now taking advantage of thespecialist skills offered by smaller biotech firms in their search fornew drugs. This trend for outsourcing elements of research isforcing a careful evaluation of licensing policy, says Adam Smith.

CAREERS AND RECRUITMENT

Over the past couple of decades, in parallelwith the ‘biotech explosion’, largepharmaceutical companies have becomemore willing to look outside their ownwalls for ideas and leads to fuel drug

development (see Nature 414, 482–483; 2001). Itmakes sense for them to benefit from the specialisttechnology or knowledge bases offered by smallercompanies. And the smaller biotech firms can gainfrom the help offered by their larger partners when itcomes to turning the therapeutic opportunities theyhave identified into commercial products.

At one time the shift towards outsourcingdiscovery efforts looked like threatening the existenceof the in-house teams at big companies. “Five or sixyears ago, prestigious leaders in the pharmaceuticalindustry were talking about the ‘paradigm shift’, inwhich pharmaceutical companies would be seen asdrug-development warehouses and biotechs as the

creative engines,” says TomiSawyer, a vice-president atARIAD Pharmaceuticals inCambridge, Massachusetts.

But what has actuallyemerged is a more symbioticrelationship. According toFranz Hefti, senior vice-president for neuroscienceresearch at Merck ResearchLaboratories in San Diego:“Biotechs now compete withthe internal discoveryprogrammes of largepharmaceutical firms.”

One of the weapons used by big drug companiesto maintain their competitive edge over biotech firmsis the PhDs they employ to scout for licensingopportunities. Until the mid-1990s, licensingdepartments tended to react to biotech’s advances.Now they’ve become much more proactive, looking ateverything from basic science to drugs ready fordevelopment. The Danish health-care company NovoNordisk has underlined the importance of licensingbasic science and discovery research by separating its

scientific licensing department from the moreestablished commercial licensing of drug-development opportunities.

To benefit from this competition, pharmaceuticalcompanies need to be sure that they understand whatis being offered to them, opting to license only the verybest ideas. “The critical factor for this approach to besuccessful is that, without an in-house knowledge base,the likelihood of harvesting the fruits of scientificlicensing is very small,” says Mads KrogsgaardThomsen, Novo Nordisk’s executive vice-president andchief scientific officer. Maintaining a critical mass ofdiscovery scientists within the company acts as a“sanity check” on the licensing decisions, according toKrogsgaard Thomsen. “You can only outsource up to alevel that you can still control,” he says.

The prediction of a paradigm shift may also haveunderestimated biotech firms’ desire to be more thanjust ‘creative engines’. “A lot of small companies are

taking the high-risk, high-profit strategy of trying todevelop their own drugs,” saysSawyer. Summing up the sensethat biotech discovery effortswill certainly complement,but never replace, discoveryresearch in big pharmaceuticaloperations, Sawyer says: “Idon’t know if anything haschanged in 10 years, in termsof the skill set that is neededto join a large pharmaceuticalcompany.”

Some larger companies,such as GlaxoSmithKline and Novartis, are busy tryingto capture the entrepreneurial spirit that smallnessfosters by redesigning their discovery teams worldwideinto a collection of ‘biotech-like’ groupings.

Another driver for such change might be theperception of a more flexible working environmentwithin biotech, and the desire to keep employees in thepharmaceutical industry happy and motivated and in“less of a coal-miner situation”, as Hefti puts it. ■

Adam Smith is editor of Nature Reviews Drug Discovery.

Tomi Sawyer: smallercompanies are attemptingto develop their own drugs.

In-house knowledge isvital, according to MadsKrogsgaard Thomsen.

NATUREJOBS | 7 FEBRUARY 2002 | www.naturejobs.com 7© 2002 Macmillan Magazines Ltd