Access Capital via “External R&D”
“….private VC-funded biotech is a tiny fraction of the scale of the bigger BioPharma part of the sector in every major financial dimension. Small percentile changes to a Big BioPharma company’s market can swamp the scale of the biotech sector…..because of the scale difference, even small changes in the resource allocation practices within large BioPharma companies’ coffer has the potential to dramatically alter the biotech ecosystem. Assume these big BioPharma companies channeled just ~5% of their balance sheet cash into private biotech companies – this capital flow would fully fund the entire VC-backed biotech sector for a year (~50 companies).”
“….this differential in size makes Pharma’s increasing “externalization” of their R&D functions (via partnerships and M&A) a significant financial “buffer” against the cyclic ups and downs of the public capital markets”
Source: “Data Snapshot: Dwarfed By Big Pharma, Biotech by The Numbers” Bruce Booth, Forbes 2/16/15
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