Warburg Pincus' favored health care business models eliminate as much time and risk as possible from the drug discovery and development process. Competition for such investments is increasing, but Warburg reckons its size, and experience, set it apart.

Too often, new discovery platforms brought in from biotechs have increased the risk and complexity of the R&D process. Drug companies have begun to recognize this and have been cutting back on their discovery dealmaking. Thus, at a time when many platform-based start-ups are having trouble interesting Big Pharma in dealmaking, it is notable that TransForm Pharmaceuticals has managed to announce two major deals this month, both of which explicitly address the issue of R&D risk.

Now that several waves of novel discovery technologies have failed to deliver promised efficiencies, pharmaceutical sciences once dismissed as boring are attracting increasing numbers of admirers. Appreciation for the practical is easing the way not only for precedented disciplines such as drug formulation and delivery, but also for utterly new technologies that offer solutions to specific R&D problems. Start-ups today know they bear a high burden of proof. Some have been hunkering down to get evidence they hope will in time convince skeptics and increase the value of their offerings, while others are agreeing to demonstrate their worth via pilot programs. Emerging start-up models are enabled by two key factors: huge stockpiles of venture capital and an expanded audience of potential partners-namely, big biotech and specialty pharmaceutical firms that are relatively wealthy and hungry for products.