BioWorld International Correspondent

BOSTON - Can the industry innovate fast enough to avoid extinction? This was the question posed at an innovation meeting sponsored by the venture capital firm PureTech Ventures in Boston earlier this month.

As Frank Douglas, PureTech partner, noted in his introduction, there currently is a "feeding frenzy" among pharma companies desperate to acquire new drug assets. There may be sufficient cash to finance this at present, but with $60 billion in drugs about to go off-patent, and downward pressure on pricing and reimbursement in all major markets, big chunks of business are eroding.

Add to this the market segmentation that is implicit in the move to pharmacogenomics and personalized medicine, and as Joe Miletich, senior vice president of R&D at Amgen Inc. noted, "The economic model of blockbuster drugs funding everything is broken."

At the same time, pharma has grown too big to innovate on a large scale, said Eliot Forster, CEO of Solace Pharmaceuticals. "Scientists get lost in the infrastructure."

Steven Paul, executive vice president for science and technology and president of Lilly Research Laboratories, said he believes the root of the problem is the lack of innovation in pharma's late-stage pipeline. "I don't know of a bad early stage pipeline," he said.

The need to fill this gap is "leading to a substantial and tremendous escalation of price," Paul said. "When you lose a major compound in late Phase III, you've got to do something, and it's really hard to fill a Phase III gap."

What pharma needs is a strategy for capturing innovation sooner, said Paul.

The maturing of technology platforms represents one route to achieving that. Whereas a decade ago platforms were seen merely as research tools, companies are developing the platform and then applying them to generate validated compounds. Acquiring those companies - such as Pfizer Inc's purchase of DNA vaccines specialist PowderMed Ltd. - is a way of accessing innovative products at relatively modest prices.

At the same time, pharma needs new strategies to grow its pipeline organically. One way in which the industry is attempting to capture innovation is setting up incubators, such as those recently established by Pfizer Inc and Biogen Idec.

But Paul said outsourcing to biotech start-ups is not the answer. "I don't think small biotech has been that productive either."

Instead he proposed a system of global networks, allowing pharma, biotech and academe to pull their combined weight.

"Academia provides the substrate, so are there more efficient ways of extracting value mutually? Are there more efficient ways of going to universities and saying let's discover a drug together?"