Collaborative innovation: Partnering for success in Life Sciences.

The ability of Big Pharma to tap new sources of innovation is becoming more important than ever, as declining R&D productivity, the “patent cliff” and intense generic competition all take their toll on Big Pharma. If the industry leaders are to collaborate with biotech companies as effectively as possible, they will need to create explicit strategies and operating models for capitalizing on external R&D. They will also need to build a supporting information infrastructure and master the skills required to conduct networked R&D.

In 2009, nearly half the therapies approved by the U.S. Food and Drug Administration and European Medicines Agency were biopharmaceutical products – clear evidence of the growing contribution biotechnology is making to the development of new medicines and compelling grounds for Big Pharma to collaborate with biotech companies.

Our analysis shows that the seven pharmaceutical companies that biotech firms have most wanted to work with over the past four years are also those with the strongest financial records. Between 2006 and 2008, they enjoyed higher sales growth. They also earned returns on invested capital that were, on average, 70 percent higher than those achieved by the companies that were deemed the least desirable partners.