Paolo Pevarello

Small companies and difficult times

This is a time of turmoil for the pharmaceutical industry both in Europe and in the USA, no doubt about it. Over a span of just one year we have witnessed three major mergers/take-overs (Roche/Genentech; Pfizer/Wyeth; Merck&Co/Schering-Plough) and a myriad of minor (in some cases not so minor) deals. This activity keeps on, bringing about significant changes in our industry.
A cursory look at the content of just one weekly issue of Scrip ( or In Vivo Blog ( is sufficient to convey a good idea of what is setting the pace of this frantic business activity and how players in the field are reacting to it, or trying to shape its transition.
More specifically:

a) Big pharma is facing, at the same time, the so-called patent cliffs of expiring
major products and the difficulties of introducing new drugs to market to counteract the consequent loss in revenues
(Nature Reviews Drug Discovery 2010, 9, 203-214);

b) Many pharmaceutical companies are moving towards diversification (generPERSPECTIVEics, animal health, medical devices,..) trying to capture any possible marketing opportunity (;

c) As a consequence of a) and b), big pharma is axing R&D expenses, closing down or down-sizing internal research centres, and outsourcing products, services, facilities, sometimes even entire projects. The recent headcount reductions at GSK and AstraZeneca are a painful reminder of the ongoing process (;

d) Small companies struggle to endure financial straits, also due to the depressed economic climate (at least in Western Countries), finding more and more problems in financing advanced clinical trials (Nature Biotechnology 2009, 27, 123–124).

This is a hard time for scientists in our industry, particularly for those who are engaged in preclinical drug discovery. Yet the current situation may give some hope for a better future, at least for small pharmaceutical companies, start-ups, and organizations emerging from academic,
governmental, and charity sectors. This hope is mainly based on the outgoing approach big pharmaceutical companies are likely to adopt in the light of the current internal re-organizations. In this regard I would like to offer some points for further discussion and thinking:

a) A reduction in the internal drug discovery effort should lead big pharmaceutical companies to increasingly rely upon external products/projects (discovery externalization), thus giving small companies an opportunity to partner their own drug discovery programs at an earlier stage. By comparing the number of licensing deals between biotechnology and the top-20 pharmaceutical companies for R&D assets, an increase of 70% in 2005-2009 over 1995-1999 is reported (Nature Reviews Drug Discovery 2010, 9, 183).

b) Small companies, which often cannot afford an extended target validation effort, may benefit from a number of new by paolo pevarello*
6 targets/projects that big pharmaceutical companies cannot pursue or develop internally any longer.
To fully exploit the new chances, small companies should be prepared to:

a) Increase their scientific flexibility and ability to get out of their comfort zone (i.e., the elected therapeutic indication/area or the small synthetic molecule vs. biologics specialization) so to be ready to seize any promising business

b) Strive for executional excellence: big pharmaceutical companies are usually accustomed to high standards when it comes to planning, executing, analysing and reporting activities. Although counting on a lower budget and limited resources, small companies should make all the effort to meet with these standards;

c) Tackle rare/orphan diseases for which a scientific link can be drawn with the mechanism of action of their compounds/drugs. Obtaining market approval for a drug in a niche indication is easier, less expensive and faster, and opens the way to further approvals in other indications
(for further information, see the following links:;;;
and even big pharma is much more attentive to the field than it used to be in the past.

d) Enhance their organizational agility to cope with the inevitable ups and downs of the ongoing transition. Care should be taken not to expand activities too rapidly or inflate one sector of the company with a short-term view. An organic growth and acquisition of internal competence should always be balanced with a careful assessment and exploitation of external services and resources.

The task is certainly an unprecedented and daunting one, but, with some luckiness, the fittest companies may be able to survive and thrive even in the current, dim situation.

By Paolo Pevarello,
Preclinical Research Director Newron Pharmaceuticals S.p.A (Milano)



Gabriele Costantino
Univ. of Parma, IT

Editorial Committee

Erden Banoglu
Gazi Univ., TR

Lennart Bunch
Univ. of Copenhagen, DK

Leonardo Scapozza
Univ. of Geneve, CH

Wolfgang Sippl
Univ. Halle-Wittenberg, DE

Sarah Skerratt
Pfizer, Sandwich

Executive Committee

Gerhard F. Ecker President
Roberto Pellicciari Past Pres.
Koen Augustyns Secretary
Rasmus P. Clausen Treasurer
Javier Fernandez Member
Mark Bunnage Member
Peter Matuys Member

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