In recent years it has been observed that most of the novel discoveries in the field of biotechnology have been made by smaller companies and start-ups. The products, however, are often brought to the market by large pharmaceutical or biotech companies. The symbiosis between start-ups and large pharma was recently analysed in an academic study by Gina Melchner von Dydiowa, Sander van Deventer and
Daniela S. Couto. We summarized the key highlights from this study:
The study set off to analyse the success rates of start-ups that had either direct or indirect (through Venture Capitals) involvement from the 50 largest pharma companies by 2018 sales. The involvement could be in any stage of the development of the start-ups as a secondary goal was to see when the collaboration was the most efficient. The time frame they selected was 15 years – between 2004 and 2019.
From the data, a clear trend was determined: Smaller companies would benefit from involvements in any stage compared to peers. Start-ups with a large pharma investor or who have relied on in-licensing from large pharma had a higher success rate and higher market capitalisation and acquisition value. It is, however, worth noting that these numbers may be influenced by other factors such as the selection strategy of large pharma companies as investors or the expertise that they bring during the developmental and de-risking stages of the start-up life cycle.
While benefits from involvement were present during all stages of the start-up, the study showed that large pharma investments as early as the preclinical stage boost the success rate significantly. Ties to such companies might be influenced by previous relations, investors or geographical proximity.
Overall, having strong ties to large pharma companies seems to have a boosting effect on start-ups. However, these relationships are sometimes harder to maintain due to the constant change in investment strategies.
If you want to learn more about collaborating with pharma companies to accelerate your start-ups success, please read the study or get in touch with us to discuss how we can support you.