Company Business Outcomes

In order to perform all the research and market preparation for a new product, a company will need to create various collaborations and alliances to complete all the work. In the industry overview chapter, a figure (Fig. 1.33) for research and business collaborations was provided. In this outcomes discussion, we need to briefly reiterate a few points about collaborations as outcomes for R&D. Clinical research organizations are research companies focused on performing any or all of the clinical trials, on behalf of a pharmaceutical companies, picking up the overload of clinical trials work that almost always will occur. They will conduct the whole study or any segment (e.g., patient recruitment or statistical analysis). A full discussion of CROs will appear in the clinical operations chapter in this book. In the basic science area, collaborations are very common with universities especially or small companies with very specialized expertise, in order to expand the opportunities for discoveries in disease biology, target identification, lead identification, or new molecules with different mechanisms of action (e.g., monoclonal antibodies, small-molecule drugs, and antisense molecules for the same disease mechanism). In clinical research, the university is the site where the clinical trials usually are conducted. A small company or other company collaboration may provide access to key technology, such as throughput screening or x-ray crystallography. A small company may need a larger pharmaceutical company collaboration to perform the clinical research in the expanded late phase 2 and especially phase 3 clinical trials work.

Product licensing is yet another outcome for the R&D organization, and it is a major process to obtain molecules for clinical research and expand the pipeline of a company in complementary areas from outside the company (Fig. 3.23). Some market analysts consider in-licensing a key success factor in product development. In order to license in molecules, a company needs to be a desirable partner for a smaller company. The risk of failure is high in most collaborations, but the benefit is high also, if the product works and makes it through the development process to the market. Such licensing is done by all companies, in addition to the internal discovery activity of a company, which is demonstrated in this next diagram for the Amgen company from 1980 to 2002.

The sources for research outside a company include universities, the government (NIH), and especially other, often smaller, companies. The acquiring company will completely take over all the research and development of a molecule or share the research work. The acquirer will receive the vast bulk of sales revenue after approval, usually over 90%. The out-licensing partner will receive usually payments in a variety of installments, for example, up-front cash payment or stock purchase, milestone cash payments as research is done successfully (e.g., phase 2 vs. phase 3 vs. NDA filing), and likely royalties on future sales of the product after it is marketed. The size of the payments from the acquirer company to the discovery partner is based on the novelty of the molecule, any competitive advantage or being first in a class to market, size of the future market, stage of research, and the risk of failure (later stage molecules have successfully passed

Internal Discovery


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