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Corgentech/BMS: Finding Specialty Appeal in a Drug/Device Combo

Executive Summary

Bristol-Myers Squibb is the latest Big Pharma to step into a specialty market, via a deal to co-promote a drug/device combination being developed by Corgentech. The product is meant to prevent vein graft failure common after bypass graft surgery in the heart and the legs. For the Big Pharma, the appeal of this specialty product is all about higher margins from lower costs, since it will be sold to surgeons in hospitals. The biotech originator wanted a partner to help it get to market faster, manage the product's life cycle, and handle quotidian tasks that add costs but not value to a small firm.

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Gauging the Risks of Financing Convergence Start-Ups

A handful of recent biotech-device company deals have highlighted the potential of drug-device convergence as natural extensions of the ever-popular repurposing and drug delivery models espoused by investors aiming to reduce the risks associated with drug discovery. Venture capitalists are eager to get in on the game, but drug and device hybrid business models are few and far between. True convergence start-ups remain thin on the ground, a fact VCs say reflects the additive nature of drug risk and device risk.

Bristol's Bid for Revival

Without the revenue increases to fuel R&D budget growth, Bristol-Myers' new CSO James Palmer must make more of existing assets. As he describes it in this interview, his conservative approach is symbolic of an entire industry waking up to its over-reliance on internal discovery and unvalidated targets. And as part of his risk-lowering strategy, he will continue to move the company away from low-acuity primary-care markets to far more specialized, higher-acuity segments where safety is less of a concern with regulators than efficacy.

Why Less Is More: The Hidden Cost of Complexity in Pharma Alliances

Drug firms are paying more in non-cash costs--and risking more frequent failures--as biopharmas, intent on building corporate capabilities, not just maximizing the value of a product, demand and receive larger, often overlapping roles in collaborations. Those pharmas who win in this environment will have a complete, measurable understanding of complexity-the hidden cost of dealmaking. They'll forge deals in which, perhaps counter-intuitively, less collaboration creates more value for both parties.

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