Late-Stage Alliances: Still Worth the Price?
Which generates more value for the biotech: a late-stage alliance with a Big Pharma--or an outright acquisition?
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Some VCs insist that only 25%-30% of device investments find a successful exit -- significantly better than the 10% of biotech deals, but still far from a sure thing. As a result, over the past year or so, there has been a marked increase in interest in late-stage dealmaking -- investments made at Series C or later or via alternative vehicles such as PIPE deals and SPACs.
Traditional databases marketed by IMS and NDCHealth are not patient-centric and therefore can only describe what happens to a prescription, not a patient. But managed care, driven by the Medicare Modernization Act, will force drug companies to focus on a new view of customers-and in particular, keeping them longer. But drug companies aren't by and large using the new patient-centric data available in a variety of forms from a variety of vendors. The problem is as much habit as awareness.
The higher the cost of late-stage alliances, the likelier acquisitions are. And that's just what our statistical view of significant acquisitions is showing--the number of $100mm-plus biotech acquisitions has increased dramatically over the last half-decade, including an increasing percentage from Big Pharma.