In my area, there are tons of start up firms in the pharmaceutical/drugs area. Many seem to attract quick financing, and many have gone on to success. But I wonder, how do these firms compare with older, large established firms? take a firm like Merck-in business over 100 years, huge research facilities, well funded. In contrast, a startup firm has to build up from scratch-they have to hire personnel, set up procedures, obtain financing, etc. has anyone ever studied this? A startup happens because a determined scientist (or group) sees a new idea, and decides to make it happen. The payoff can be enormous (like a drug that cures Alzheimer’s disease), or the firm can crash. Is there any way to compare the success of startups with that of established companies?
The two types of company are complimentary to one another, and address different stages of drug development. The cost of this process increases the further you go along, with clinical trials for efficacy in humans being exorbitantly expensive. As a result, it’s only really the big players who can pilot a drug through the latter phases.
At the other end of the process, at the start, is where you need the most innovation in terms of target selection, fundamental biology and assay development, design and synthesis of drug candidates etc. A smaller biotech company is better suited here as costs are lower and the environment is [arguably] leaner and more innovative - historically big pharma carried a lot of dead-wood, middle managing chair warmers, but not so much nowadays.
Certainly the smaller company benefits from having one therapeutic area and a small number of projects as its complete focus.
So the model that has emerged, in broad terms, is that the small biotech takes the initial risk and develops an agent up to pre-clinical stage. It will then partner up, or cash out, by selling it on to big pharma who have the clout to put it through clinical trials - the drug candidate will be well understood in certain directions at this point, but it is still a huge unknown as to whether it will be efficacious in man (phase 3), so that’s the risk big pharma are taking on.
As an aside, I did hear a guy speak recently who challenged the idea the dogma of the costs all being weighted toward the clinical trial end. The attrition of pre-clinical drug candidate development is so great, that the cumulative costs of all the failures becomes very signficant.