Executive Summary

The drug industry's preoccupation with late-stage products means they're largely ignoring early-stage companies. But unlike earlier years, these biotechs have no financing alternative: the stock market now marches in lockstep with Big Pharma trends. But as the extraordinary valuations of the large biotechs shows, the early-stage companies of today can be the late-stage companies of tomorrow--and the source of Big Pharma's late-stage product opportunities. If drug firms don't act now to encourage early-stage investment--either through lobbying for governmental investment incentives or through their own venture investing--they may, in focusing so exclusively on late-stage deals, be eating their own seed corn.